Keiretsu

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Keiretsu

A network of Japanese companies organized around a major bank. The term is also used outside of Japan to describe how a large corporation with many subsidiaries and associated firms can manipulate revenues. For example, firm A and B are controlled by firm C. Firm A is forced to buy its input from firm B at a high price. As a result, A is unprofitable and B is very profitable.

Keiretsu

In Japan, a number of independent but related companies centered on and financed by a single bank and/or a joint stock company. That is, the institution (and no other) provides financing for companies in the keiretsu. There are two main types of keiretsu. 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 vertical keiretsu, on the other hand, is more centrally controlled such that companies in the same keiretsu provide all steps on the supply chain. For example, a mining company may sell a metal to a refinery in the same keiretsu, who then sells it to an auto company, who then sells cars to consumers. In Japan, these consumers are often employees of the very same keiretsu. Critics of this system contend that they are inefficient; proponents, however, argue that they are sustainable and have helped Japan recover from the post-war period. See also: Japanese miracle, Zaibatsu, Chaebol.

keiretsu

a Japanese term relating to a network of customers and their suppliers working within a related industry, or with a single customer. Developed by the multinational organizations in Japan initially with the idea of exercising control over suppliers. Kereitsu has developed to mean closer links between customer and supplier and includes the sharing of technologies, of skilled employees and of product development. See SUPPLIER DEVELOPMENT, LEAN MANUFACTURING.
References in periodicals archive ?
As a secondary result, the increase in interfirm networks is leading to competition between networks and between networks and individual firms (Gimeno, 2004; Guidice, Vasudevan, & Duysters, 2003).
In order to survive, interfirm networks must create and maintain stable relationships among member firms (Madhavan, Koka & Prescott, 1998; Simsek, Lubatkin, & Floyd, 2003).
Trust alone may be a sufficient governance mechanism for interfirm networks that do not aspire to long-term network competitive advantage.
This study contributes to the literature on interfirm networks by moving beyond the focus on dyadic alliances and examining conditions in which alliance networks (informal webs of bilateral entanglements between firms) may or may not evolve into multilateral alliances (broad, formal multiple-firm arrangements).
This is a simplifying assumption to facilitate the generation and test of initial hypotheses on the formation of multilateral alliances based on existing interfirm networks.
Research scholars have conducted interfirm network research for a few decades.
Unlike a meta-analysis, this paper does not provide a systematic statistical analysis of the interfirm network research findings.
This means firms are more likely to rely on interfirm networks to obtain resources and knowledge while in more technically uncertain environments.
Prior research has suggested that interfirm networks facilitate the transmission of information and the access to unique resources and thus can be thought of as an inimitable and non-substitutable asset (Gulati, 1999; Palmer et al.
Interfirm networks in knowledge-intensive services.
Gilsing (Eindhoven University of Technology, The Netherlands) explains how sectoral dynamics can condition learning and innovation activities within interfirm networks.
35) captured the seminal thoughts on the development of the embeddedness concept by stating, "Polanyi (1944) used the concept of embeddedness to describe the social structure of modern markets, while Schumpeter (1950) and Granovetter (1985) revealed its robust effect on economic action, particularly in the context of interfirm networks.