Following the 1994 downturn in the Japanese economy, the Japanese kereitsu are facing hard times. However, those economic analysts and members of the news media who are tempted to write them off as "dinosaurs" are making a mistake. There are many observers who feel that the keiretsu are more viable than ever, and there is much research that confirms this point. This article looks at some of the current research concerning the management success of kereitsu as well as some of the modern industries that this uniquely Japanese system of business organization is being applied to. Rather than dealing exclusively with the auto industry, this report looks at a number of concepts all based on the thinking of the relatively new discipline of Economic Sociology. A summary of challenges for the future of Japan's growth concludes the report.
Much has been written in the news media that Japan's companies are facing hard times and are being forced to throw away old concepts of organization in favor of newer, more open business theories. Some of this negativism is directed toward the keiretsu, the system of linked companies that have made Japan a great economic nation. But writing off these keiretsu as outdated or outmoded is the wrong approach, since there is a great deal of global competitive advantage to be gained by doing business within this structure.
The truth of the matter is that only a handful of western manufacturing firms can truly claim to match the best Japanese firms in manufacturing. Meanwhile, Japanese firms have proved uniquely successful at transferring their own expertise and know-how across international borders from northeast England to the American South. In all of these regions, local workers with less and less guidance by Japanese managers are using Japanese keiretsu methods to produce Toyotas and Nissans for their domestic markets.
One of the main reasons that the keiretsu way of doing business has mai...