4 - Exchange and Control: Explaining Corporate Ties: A Longitudinal Dyad Analysis

Summary

Whereas the conventional view has tended to regard keiretsu affiliations and the subcontracting relationship as remnants of feudalistic relations or derivatives of the cultural peculiarities of the Japanese, the most important explanatory variable should be the kind and nature of the transaction of goods or services conducted beneath each of these relations. …[T]he fundamental link between a pair of firms should be located in … the resource flow … between them. To regulate this flow, a control apparatus is formed between the firms, the possible mode of which ranges from simple contract to a very complex and developed structure. The elaborateness of the control apparatus depends on the composition and the nature of the flow; the most developed type along this spectrum may have shareholding as its superstructure.

Asanuma (1985)

Introduction

A criticism that might fairly be made of our network analysis in the last chapter is that it ignores the causality between lending and trade on the one hand and equity and director ties on the other. An alternative approach is to draw on organizational theory to model the cause-and-effect relationships between exchange and control and between them and attributes of firms such as industry, size, and location. Such an analysis, as the quote from Asanuma suggests, might well reveal that the concept of “keiretsu” adds little to an understanding of how firms vary in their involvement in business networks.