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Asia Pacific Journal of Management

, Volume 23, Issue 4, pp 453–466 | Cite as

Japanese horizontal keiretsu and the performance implications of membership

  • Takehiko IsobeEmail author
  • Shige Makino
  • Anthony Goerzen
Article

Abstract

Our study investigates the effect of Japanese horizontal keiretsu group membership on firm risk and return. Like prior studies, our results show that horizontal keiretsu membership has a negative effect on firm profitability. However, we find that horizontal keiretsu networks are likely to increase the gap between targeted and realized returns, which we call the outcome–aspiration gap. Moreover, in contrast to prior studies, our results indicate that keiretsu membership does not enable member firms to reduce risks by smoothing profitability. Instead, our findings provide evidence that is counter to the conventional notion that Japanese horizontal keiretsu allows their member firms to trade off profits for reduced risk.

Keywords

Horizontal keiretsu Performance Risk sharing 

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Copyright information

© Springer Science+Business Media, LLC 2006

Authors and Affiliations

  1. 1.Research Institute for Economics and Business AdministrationKobe UniversityKobeJapan
  2. 2.Department of ManagementThe Chinese University of Hong KongShatin, N.T.Hong Kong
  3. 3.University of VictoriaVictoriaCanada

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