Horizontal Keiretsu

Horizontal Keiretsu

In Japan, a number of independent but related companies centered on and financed by a single bank and/or a joint stock company. A horizontal keiretsu is essentially a diversified conglomerate; that is, it may have companies in several completely unrelated industries so as to reduce the risk of loss if one industry or other has a bad year. A horizontal keiretsu is thought to promote sustainability over quick profits; however, critics of this system contend that it is inefficient.
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Conversely, while the practices of long-term subcontracting relationships, lifetime employment, and emphasis on generalists, job rotation, and vertical and horizontal keiretsu facilitate organized technology fusion, they are inimical to spontaneous technology fusion" (p.
The President Council membership of the six major corporate groups was used to identify horizontal keiretsu members.
11) Horizontal keiretsu are groups of firms across a wide range of industries, typically centered around a main bank that owns significant shares in these firms.
This corporate structure is known as the financial or horizontal keiretsu.
This structure, known as financial or horizontal keiretsu, produces a group of firms centered on affiliated banks and financial institutions (Hoshi, Kashyap, and Scharfstein, 1990b).
Horizontal keiretsu may usually be comprised of several diverse industries such as commercial banks, trust banking, life insurance, and trading company.
Toyo-Keizai's Keiretsu Soran was used to classify firms into vertical keiretsu, horizontal keiretsu, and independent companies.
The horizontal keiretsu are deeply involved in services such as banking, insurance, transport and trading.
Companies in the horizontal keiretsu are more often unrelated, with looser supplier-customer relations.
l0 Consistent with Weinstein and Yafeh (1995) and Wu and Xu (2005), firms are classified as being affiliated with a keiretsu if they are members of the six largest horizontal keiretsu groups, namely, DKB, Fuyo, Mitsubishi, Mitsui, Sanwa, and Sumitomo.
Constand, 2000, "Ownership Structure and Performance of Japanese Firms: Horizontal Keiretsu, Vertical Keiretsu, and Independents," Review of Pacific Basin Financial Markets and Policies 3, 535-556.

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