Mitsubishi Research Institute, Inc.
Otemachi 2-3-6, Chiyoda-ku
Tokyo 100-8141, Japan
NBER Working Papers and Publications
|June 2008||Determinants of Firm Boundaries: Empirical Analysis of the Japanese Auto Industry from 1984 to 2002|
with Sadao Nagaoka, Akira Takeishi
in Organizational Innovation and Firm Performance, George Baker, Takeo Hoshi, Hideshi Itoh, and Sadao Nagaoka, organizers
|April 2007||Determinants of Firm Boundaries: Empirical Analysis of the Japanese Auto Industry from 1984 to 2002|
with Sadao Nagaoka, Akira Takeishi: w13063
We have assessed the determinants of the choice of integration, relational contracting (keiretsu sourcing) and market sourcing by seven Japanese automobile manufacturers (OEMs) with respect to 54 components in light of contract economics. Our major findings are the following. First, the specificity and interdependency of a component significantly promotes vertical integration over keiretsu and keiretsu over market, consistent with transaction cost economics. Second, interdependency is a more important consideration for the former choice than for the latter choice, and the reverse is the case for specificity. This suggests that the hold-up risk due to specific investment can be often effectively controlled by a relational contracting based on keiretsu sourcing, while accommodating non-contr...
Published: Nagaoka, Sadao & Takeishi, Akira & Noro, Yoshihisa, 2008. "Determinants of firm boundaries: Empirical analysis of the Japanese auto industry from 1984 to 2002," Journal of the Japanese and International Economies, Elsevier, vol. 22(2), pages 187-206, June. citation courtesy of