Alternative Component Sourcing Strategies within the Manufacturer-Supplier Network : Benefits of Quasi-Market Strategy in the Japanese Automobile Industry

This study examines the component sourcing strategy of six Japanese automobile manufacturers. One of the major findings is that firms with a low sourcing concentration and a high supplier sharing, which are the characteristics of quasi-market strategy, tend to perform better than the other firms. The Japanese cooperative inter-firm relationship has been considered to be beneficial to both suppliers and assemblers. It is commonly considered that a relatively exclusive keiretsu system facilitates these close inter-firm ties. However, the results in this study have implied that a few leading Japanese automobile manufacturers may have management capabilities in benefiting from both a relatively broad supplier base and cooperative relationship with individual suppliers.