The Dynamics of Interfirm Relationships
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The Dynamics of Interfirm Relationships

Markets and Organization in Japan

Yongdo Kim

The goal of this pathbreaking volume is to relativize the experience of Japanese industries in terms of both location and time, exploring its similarities and differences with other countries and its unique relationship with the “global standard” of company performance set by US firms. By examining the intertwining of the organizational and market principles in interfirm relationships, this book tries to overcome the weaknesses of existing studies by looking beyond organizational principles, overturning stereotypes, and covering a wide range of industries.
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Chapter 2: Interfirm relationships in the Japanese machine tool industry

Yongdo Kim


The purpose of this chapter is to analyze interfirm relationships within the context of the history of the Japanese machine tool industry. There is a lot in common between the Japanese machine tool industry and steel industry. To begin with, like the Japanese steel industry, the Japanese machine tool industry succeeded in attaining top rank within the world market. Indeed, the Japanese machine tool industry achieved its world rank based on its high production output between 1982 and 2009. Although China overtook Japan in the world market in 2009, even since then, Japanese machine tools have maintained a high level of quality and technological capability. Again, in terms of interfirm relationships, we can also find many common points between the two industries. As in the case of the Japanese steel industry, by interfirm relationships between machine tool firms and their customers, machine tools supported a wide range of manufacturing industries. Because machine tools were used by various industries, as will be described later, they supported a wide range of manufacturing industries. More importantly, in interfirm relationships, the market principle and the organizational principle are intertwined in various ways, not only in relation to the steel industry but in the machine tool industry as well, which will be analyzed later. In addition, merchants intervened actively with the transaction of machine tools as well as with steel. In the initial phase of both industries, imports were a significant threat to Japanese suppliers and worked as a strong source of competitive pressure.

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