Role of Inter-organizational Networks: The Case of Japanese Corporate Groups

Abstract

The existence and functioning of inter-organizational or corporate groups has long been a focus of economic research on Japan. Their specific features have been understood to differ substantially from a more market-oriented behaviour displayed by Western, especially US firms. However, in the wake of the collapse of the bubble economy, these networks have come under increasing criticism for their allegedly closed and non-innovative character. On the basis of a survey conducted among large Japanese manufacturers key restructuring issues for corporate groups are identified and explained. Strategies that support mutual learning, clearer performance criteria and greater decision autonomy for group members are given relatively more weight than before. An indepth case study reveals in more detail that in the future corporate group success in Japan will depend to an even greater extent than before on finding the crucial balance between the ‘centrifugal’ and ‘centripetal’ forces underlying the actual functioning of these networks.