The effects of the keiretsu on the export performance of Japanese companies: help or hindrance?

Abstract

This study investigates the effect that membership in a financial keiretsu has on the export performance of Japanese manufacturing companies. Companies that belong to one of the six major financial keiretsu are found to have lower export ratios than similar companies who are not members. The negative effects of keiretsu membership appear confined to producer goods companies where intergroup linkages such as preferential trading relationships are tightest. Additional evidence from the producer goods sector showing that keiretsu members do less well on other measures of company performance supports the argument that the cartel-like properties sometimes ascribed to the keiretsu actually reduce competitiveness, thus dampening export performance. In general, the data do not support recommendations that non-Japanese companies might look to keiretsu-type alliances as an organizational strategy that will lead to competitive advantage in global markets.

Product and international diversification among Japanese multinational firms

“…Non-keiretsu affiliated firms are more diversified on both the international and the product dimensions than are keiretsu members. We confirm Hundley and Jacobson's (1998) finding that non-keiretsu firms show export ratios more than five percentage higher than keiretsu-affiliated firms. However, while these same firms are also consistently higher performers, only ROA, of the performance variables, shows a significant difference between the two groups.…”

“…Various authors suggest that keiretsu membership may affect product diversification strategy, as keiretsu tend to rely on group relationships to gain economies of scope and scale rather than on internal diversification or true markets. Various studies also address the issue of whether keiretsu membership affects export performance (Hundley and Jacobson, 1998). Internal sales, the existence of group trading companies, and possible negative competitive effects are discussed by Hundley and Jacobson (1998) as being related to lower export sales on the part of horizontal or financial keiretsu.…”

“…Contextual effects -keiretsu affiliation. We used a dummy variable to represent membership in one of the six major financial or horizontal keiretsu groups, similar to the formulation in Hundley and Jacobson (1998). The literature has focused on these groups, which have been generally stable for over 30 years and have strong institutional ties (Flath, 1993;Yoshinari, 1992;Lawrence, 1991).…”

“…Positive keiretsu membership in this study represents only the closest level of affiliation, those companies which are part of the "president's council" or equivalent. Hundley and Jacobson (1998) provide a good discussion of the effects and meaning of such affiliation.…”

The Mediating Effect of Cognitive Social Capital on Knowledge Acquisition in Clustered Firms

“…District membership was established when the firm was located in one of the industrial districts identified by previous research. We therefore incorporated a dummy variable to distinguish between district member and nonmember firms, similar to other previous studies (Hundley and Jacobson 1998;among others). 4 In order to reinforce the internal consistency of the objective measurement of district membership, we included a perceptual variable in the questionnaire to measure feeling of belonging.…”