Strategic divergence of <i>keiretsu</i>

Abstract

Does keiretsu in the Japanese automotive industry vary by company in terms of firm performance and strategic behavior? This paper classifies parts-supply keiretsu into (1) Toyota suppliers and non-Toyota suppliers and (2) Nissan suppliers and non-Nissan suppliers and then conducts a comparative analysis of the suppliers to test differences in (a) firm performance, (b) customer scope, and (c) product diversity. The following results emerge from the analysis: (a) in regard to "firm performance (return on sales)," Toyota suppliers outperformed non-Toyota suppliers, but there was no difference between Nissan suppliers and non-Nissan suppliers; (b) with respect to "customer scope," both Toyota suppliers and Nissan suppliers outperformed non-Toyota suppliers and non-Nissan suppliers, respectively; (c) as for "product diversity," Toyota suppliers have less product diversity than non-Toyota suppliers, but there was no difference between Nissan suppliers and non-Nissan suppliers. These results indicate that the strategic behavior of Toyota suppliers differs from that of Nissan suppliers in that Toyota suppliers achieve high profitability by broadening customer scope and simultaneously narrowing product