Edited by Laura Anna Costanzo and Robert Bradley MacKay
Chapter 22: Organizational Innovation of the Toyota Group
Faith Hatani Introduction For the past few decades, the global economy has witnessed massive industrial restructuring. Many ﬁrms have made dramatic changes by redesigning their organizational structures to improve performance. Making changes in a large interﬁrm network, however, is a challenging task. This chapter presents a case study of organizational innovation at the network level. In this study, I deﬁne organizational innovation of an interﬁrm network as the creation of new structural, managerial, and relational forms which enhance learning activities and the competitiveness of the network as a whole. In the light of the adaptively rational model, this chapter suggests that the design of an interﬁrm network requires ﬂexible, coherent, and progressive coordination through strong leadership from the core ﬁrm. This chapter shows that the creation of innovative network formation is achievable by making full use of existing resources through new arrangements and recombinations. By reporting on the reorganization of the Toyota Group1 which its core ﬁrm, Toyota Motor Corporation, conducted between 1994 and 2004, the case highlights Toyota’s orchestration of structural changes and knowledge-sharing processes in its supply network. The case shows that the core ﬁrm’s large-scale merger and acquisition (M&A) is not the only way to advance the performance of a business network. The study employed the case study method to provide useful descriptions of variations in organizational structure and the process of change (Simon, 1947) in order to draw the causal relationships of organizational phenomena (Glaser and Strauss, 1967; Yin, 1989). This...
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