The Japanese Corporate Network: A Blockmodel Analysis

Michael L. Gerlach University of California at Berkeley Japanese intercorporate relationships are considered in terms of three different structures of interaction: corporate groupings, financial centrality, and industrial interdependency. The significance of each of these structures is tested with a sample of the forty largest industrial firms and twenty largest financial firms in Japan across networks of equity ownership, interlocking directorships, and banking borrowing. Macro-network blockmodeling analysis demonstrates that financial hierarchy is a pervasive pattern for all sets of relationships, and the position of industrial firms in the network is largely determined by corporate group membership (i.e., keiretsu). However, in contrast to predictions that financial centrality and corporate groupings will be used to manage industrial interdependencies among closely related firms, the results suggest that industrial firms with similar network positions represent highly diversified market sectors. These findings together provide a relatively finely detailed picture of the sources of network structure in Japan, variations that exist among different intercorporate network variables, the role of financial institutions in the Japanese economy, and the hierarchical nature of Japanese corporate groupings.'