The Fable of the Keiretsu

Abstract

Central to so many accounts of post-war Japan, the keiretsu corporate groups lacked economic substance from the start. Conceived by Marxists committed to locating "domination" by "monopoly capital," they found an early audience among western scholars searching for evidence of culture-specific group behavior in Japan. By the 1990s, they had moved into mainstream economic studies, and keiretsu dummies appeared in virtually all econometric regressions of Japanese industrial or financial structure. Yet the keiretsu began as a figment of the academic imagination, and they remain that today. Regardless of the keiretsu definition used, cross-shareholdings within the "groups" were trivial, even during the years when keiretsu ties were supposedly strongest. Neither does membership proxy for "main bank" ties. Econometric studies basing "keiretsu dummies" on the available rosters produce predictably haphazard and unstable results. In the end, the only reliably robust results are the artifacts of the sample biases created by the definitions themselves.We gratefully acknowledge the helpful comments and suggestions of Christopher

Japanese keiretsu: Past, present, future

“…Hoshi (2006) similarly analyzes the business group response to distressed firms. Therefore, conflicting results regarding the impact of the keiretsu could equally be due to samples having been drawn at different points in time and not due to a non-existent distinction among keiretsu and non-keiretsu firms in Japan as Miwa and Ramseyer (2002) assert.…”

“…The Dodwell reference ascribes different degrees of keiretsu affiliation depending not only on the degree of debt/equity ties but also according to more informal indicators, chief of which is membership on the President's Council. Miwa and Ramseyer (2002), however, contend that the president's council is merely a "lunch club" conveying no special additional levels of commitment to the group. They argue that the reason for so many conflicting results regarding keiretsu impact is due to the heterogeneous/ haphazard classification employed.…”

“…An in-depth discussion of the Miwa and Ramseyer (2002) perspective is beyond the scope of this paper. However, it raises an important issue for future research on keiretsu and on Japanese industrial organization.…”

“…Keiretsu membership: Instrumental or ceremonial Miwa and Ramseyer (2002) are highly critical of research on the keiretsu effect. They review the standard references for categorization of the keiretsu-Research on the Keiretsu (ROK; Keiretsu no kenkyu) in Japanese and Dodwell's Industrial Groupings in Japan-and dismiss both as sources of the "keiretsu fable."…”

The cross holding of company shares

“…Under such circumstances, the former zaibatsu groups such as Sumitomo, Mitsui, and Mitsubishi resumed collecting shares in the market and reorganized the dissolved affiliated groups by way of cross shareholding in the group companies, leading to the creation of the keiretsu system. (Miwa, Ramseyer, 2002) This marked the birth of cross shareholding in Japan in the post-war period.…”