Is keiretsu really a source of competitive advantage for Japanese automotive suppliers?

The purpose of this paper is to examine how firms create and sustain competitive advantage in the inter-firm business relationships from a supplier’s perspective. It also investigates what factors affect their competitiveness and relationship between buyers and suppliers.

This is an exploratory study on keiretsu partnerships composed of four main phases: analysis of theoretical perspectives, construction of a conceptual framework, interview of a CEO, and finally, a survey questionnaire with Japanese automotive suppliers.

As a result, this paper classified these 11 companies into four supplier groups (affiliated or independent Tier 1 suppliers; affiliated or independent Tier 2 suppliers) and analysed their competitiveness developing the research propositions further. The benefits of affiliation under a keiretsu partnership are discussed, showing that there may be little benefit in being an affiliated Tier 1 supplier. Even more critical, the results show that independent Tier 2 supplier may be more competitive than affiliated tier ones.

These intriguing results reveal an urgent need of investigating Japanese automotive supply chains from the suppliers’ perspectives in the future research. This paper extended the literatures on competitive advantage and business relationships at both theory and managerial practice.