Abstract
This chapter focuses on interfirm networks in Japan’s major manufacturing agglomerations and conducts fact-finding analyses on the following three issues: (1) the nature of interfirm transaction relationships, including developments in such relationships over time; (2) firms’ participation in network activities other than supplier-customer transactions; and (3) interactions between interfirm transaction relationships and relationships of other types. Based on the results of a unique firm-level survey completed by more than 1800 firms in December 2009, it is found, first, that the number of interfirm transaction relationships, especially those involving smaller firms, has declined over the past ten years. Second, the survey indicates that, apart from transaction relationships, many firms participated in group activities in individual industry associations and local chambers of commerce, indicating that firms tend to maintain relationships with firms similar to themselves. Third, it is found that bank lending attitudes are positively associated with the extent to which a firm is interconnected with other local firms, indicating that interfirm and firm-bank relationships are complementary.
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Notes
- 1.
A comprehensive summary of the survey, including the results regarding firm relocation choices and information exchange within interfirm networks, can be found in Uesugi et al. (2010; in Japanese).
- 2.
According to the 2006 Establishment and Enterprise Census published by the Japanese government, Higashi-Osaka, Ota, and Hamamatsu had 7388, 5953 and 5405 establishments, respectively, representing the top three among cities, special districts, and administrative districts in 2006.
- 3.
The following analysis uses firm-level survey data rather than establishment-level data. According to the 2006 Establishment and Enterprise Census, Keihin, Higashi-Osaka and Hamamatsu had 14,973, 2788, and 3220 manufacturing firms, respectively.
- 4.
Note that whereas the Higashi-Osaka and Hamamatsu agglomerations correspond to the cities of the same names, the Keihin agglomeration consists of the seven cities listed in Section 4.2. The survey questionnaire asked about customers/suppliers in the same city (rather than agglomeration), which may somewhat distort the results for Keihin using this question, given that firms in different but adjacent cities may be located very close to each other.
- 5.
The aggregated number of new customer relationships and the number of new supplier relationships within a closed network should be the same if both suppliers and customers report the establishment of the same transaction relationships simultaneously. Therefore, the result that the number of new customer relationships is larger than that of new supplier relationships for firms in each of the agglomerations indicates that the transaction network is not closed in each of the agglomerations and that firms in these agglomerations are more likely to attract customers than they attract suppliers.
- 6.
That being said, it is possible that responding firms had established direct customer relationships with the affiliates of foreign firms in Japan, or with Japanese firms that had direct foreign customer relationships, but the survey did not explicitly ask about this.
- 7.
There are several trust banks among the major banks, whose fiduciary businesses are regulated by different legal codes from the Banking Act. These banks are regarded as distinct from other major banks. However, only very few firms in the sample had a trust bank as their primary financial institution.
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Uesugi, I. (2015). Interfirm Networks in Manufacturing Industry Agglomerations in Japan: Evidence from Survey Data. In: Watanabe, T., Uesugi, I., Ono, A. (eds) The Economics of Interfirm Networks. Advances in Japanese Business and Economics, vol 4. Springer, Tokyo. https://doi.org/10.1007/978-4-431-55390-8_4
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