Subcontracting and the Performance of Small and Medium Firms in Japan

This paper provides an empirical analysis of the choices made by Japanese firms with respect to subcontracting status, that is, whether to take in work as subcontractor, to outsource work to subcontractors, to do both or to do neither. It shows that the probability of working as a subcontractor, a choice made by many small firms in Japan, is negatively related to size, foreign sales and technological capability. Furthermore, profits do not appear to be higher for subcontracting firms; indeed, they are highest for the group that does not get involved in any type of subcontracting, whether as a supplier or as an outsourcer.

[1]  Eric H. van Kooij.  Japanese subcontracting at a crossroads , 1991 .

[2]  Yishay Yafeh,et al.  A microeconometric analysis of technology transfer: The case of licensing agreements of Japanese firms , 1994 .

[3]  B. Lyons,et al.  Empirical relevance of efficient contract theory: inter-firm contracts , 1996 .

[4]  John McMillan,et al.  The design of contracts: Evidence from Japanese subcontracting , 1987 .

[5]  Tatsuya Kikutani,et al.  Risk absorption in Japanese subcontracting: A microeconometric study of the automobile industry , 1992 .

[6]  W. Dugger.  The Economic Institutions of Capitalism , 1987 .

[7]  J. Barney.  How a Firm's Capabilities Affect Boundary Decisions , 1999 .

[8]  Robert K. Paus,et al.  Small business in Japan , 1960 .

[9]  Yoshio Satō.  Small business in Japan: A historical perspective , 1989 .

[10]  Hugh T. Patrick,et al.  The political economy of Japan , 1987 .

[11]  Banri Asanuma.  Manufacturer-supplier relationships in Japan and the concept of relation-specific skill , 1989 .

[12]  R. Baldwin,et al.  Front matter to "Geography and Ownership as Bases for Economic Accounting" , 1998 .

[13]  Kazuyuki Suzuki,et al.  R&D spillovers and technology transfer among and within vertical keiretsu groups: Evidence from the Japanese electrical machinery industry , 1993 .

[14]  Kirk Monteverde,et al.  You have printed the following article : Supplier Switching Costs and Vertical Integration in the Automobile Industry , 2007 .

[15]  O. Williamson.  Transaction-Cost Economics: The Governance of Contractual Relations , 1979, The Journal of Law and Economics.

[16]  O. Williamson,et al.  The Economic Institutions of Capitalism: Firms, Markets, Relational Contracting. , 1987 .

[17]  Mark Doms,et al.  Comparing Wages, Skills, and Productivity between Domestically and Foreign-Owned Manufacturing Establishments in the United States , 1998 .

[18]  Curtis R. Taylor,et al.  Competition or Compensation: Supplier Incentives Under the American and Japanese Subcontracting Systems , 1997 .

[19]  J. Nugent,et al.  Development of financial markets and the size distribution of manufacturing establishments: International comparisons , 1992 .