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).
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).
Yet, most of research studies, to date, have primarily analyzed interfirm networks based upon one paradigm/ perspective.
The notion that actions are both enabled and constrained by the interfirm network within which allied firms are embedded is heralded as a concept that unifies the agency-structure dichotomy that has heretofore persisted in prior research (Weaver and Gioia 1994).
Among the implications for interorganizational network theory is that the optimal structure of interfirm networks depends on the objectives of the network members.
Each locus involves overlapping interfirm networks and helps us visualize how a nexus supplier can be embedded in the network.
Thus, the interlocks have been widely used in prior studies to measure interfirm networks (Grandori and Soda, 1995; Koenig and Gogel, 1981).
The contributions pertain to the broad themes of contractual networks (challenges to contract theory); a comparative framework; and a private international law perspective on interfirm networks across Europe.
674 (1996) (discussing "embeddedness" and concluding that firms organized into networks are more likely to survive); Brian Uzzi, Social Structure and Competition in Interfirm Networks: The Paradox of Embeddedness, 42 ADMIN.
Grandori (ed.), Interfirm Networks. Organizational and Industrial Competitiveness, Routledge, New York, pp.
It is clear that it increases with the growth of the number of partners because the potential of interfirm networks increases.