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Industrial and Corporate Change, Volume 8, Number 3, pp. 487-517
© 1999 Oxford University Press

'Intermediate organization' revisited: a framework for the vertical division of labor in manufacturing and the case of the Japanese assembly industries

M Hemmert

Institute for Production and Information Management, University of Essen, FB 5, Universitätsstraße 9, D-45141 Essen, Germany
E-mail: martin.hemmert@pim.uni-essen.de

Abstract

This paper develops a framework that distinguishes five types of organization for the vertical division of labor between manufacturing firms: market transactions, recurrent transactions, interdependent transactions, quasi-integration and formal integration. The application of this framework to the Japanese assembly industries shows that (i) components suppliers are quasi-integrated in Japan, in contrast to formal integration in the West; and (ii) transactions with parts makers are mostly interdependent in Japan, compared with recurrent transactions in Western countries. These findings are explained by differences in the institutional setting and have resulted in a competitive advantage for the Japanese assembly industries throughout several decades. Recently, however, the structural difference relative to Western countries seems to be diminishing gradually due to the globalization of manufacturing firms in these industries.


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