JAPANESE-STYLE PARTNERSHIPS -- GIVING COMPANIES A COMPETITIVE EDGE.

Jeffrey H. Dyer · William G. Ouchi

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Business Strategy and Innovation International Business and FDI Quality and Supply Management

Abstract

Was Japan’s powerful Ministry of International Trade and Industry (MITI) serious when it made this statement? Is it possible that much of Japan’s competitive advantage can be attributed simply to its subcontracting structure? Indeed, evidence from an increasing number of industries and sources suggests that much of the Japanese success can be attributed to Japanese-style business partnerships. Consider the auto industry, for example. From 1965 to 1989, the combined Japanese market share of worldwide passenger car production jumped from 3.6 percent to 25.5 percent. In striking contrast, the market share of U.S. firms dropped from 48.6 percent to 19.2 percent.2 Moreover, by the early 1980s, Japanese firms had achieved a 20 percent to 25 percent cost advantage, per car, versus U.S. automakers, while receiving customer satisfaction scores 50 percent higher than those of competing U.S. cars.

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