Comparative Supplier Relations in the U.S. and Japanese Auto Industries: An Exit/Voice Approach

Abstract

In 1980 Japan surpassed United States as world's leading producer of automobiles. Not only does Japan now produce greatest number of cars of any country in world [9], it introduces new models with greatest frequency [7], makes them in factories with highest productivity [19], and dominates surveys of customer satisfaction and frequency of repair [8, 19]. Observers have attributed much of this performance to Japanese automakers' subcontracting system, an arrangement based on long-term relationships with suppliers, a great deal of information exchange, joint problem solving, and governance by [7, 10, 30], While cultural predispositions are undoubtedly important in explaining structure of Japanese subcontracting, in this paper I will try to explain differences in supplier relations systems based on economic factors and historical events. This is not to imply that culture and are entirely distinct categories. For example, if historical events have shown people efficacy of trust, they are more likely to be trusting in future. Hence, cultural norms such as trust can be the precipitate of history [11, p. 91]. The first section of paper outlines a conceptual framework based on Albert Hirschman's distinction between exit and voice [16]. The second section uses this framework to analyze briefly evolution of supplier relationships in U.S. auto industry and third section examines (even more briefly) Japanese auto industry.