Japanese subcontracting is complex and evolutionary, a result of the interplay of historical events and human agents. Consequently, no single theory —whether dualism, flexible specialization, transaction cost economics, or cultural specificity (which we discuss later) — is sufficient to explain it. In this paper, we detail the evolution of Japanese industrial sourcing and view subcontracting as a movement toward collaborative manufacturing based on problem-solving principles.1 We argue that the evolution is best explained by political, economic, technological, and strategic factors, not by a single theory. Today, the major advantages of Japanese subcontracting are the economic benefits of interfirm problem solving that ensures the continuous production of high-quality, low-cost products.
Evolutionary Development
Japanese subcontracting after the Meiji Restoration can be divided into four periods: early, wartime, post-war, and modern. Each period is distinct, which makes generalizing hazardous. Taken together, however, they are evidence of the importance of political, economic, technological, and strategic factors in the evolutionary development of subcontracting.
Dualist System Emerges
In the nineteenth century, labor immobility in Japan resulted in substantial regional wage differences. By the turn of the twentieth century, however, such differences had narrowed, and workers frequently moved from one employer to another seeking better working conditions. There is little evidence of company commitments to lifetime employment at this time.
We can trace the emergence of segmented labor markets in Japan to a... To read the complete article, login or sign-up using the form below.
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