The findings provide interesting insights into the drivers of changes undertaken by Japanese firms in the 1990s and also into the role played by the keiretsu system
in the change process.
Nissan and other Japanese companies used the keiretsu system
of supplier management, but with the Nissan Revival Plan, our CEO announced to all suppliers at one big gathering that we were no longer going to maintain a keiretsu system
," says Emil Hassan, Senior Vice President of North American Manufacturing, Purchasing, Quality and Logistics for Nissan North America, in a recent report.
The keiretsu system
has been one of the key ingredients for the Japanese economic miracle.
While the keiretsu system
helped Japan to rebuild and industrialize its economy after the war, many of the problems of corporate governance and unsound banks that now plague Japan are rooted in this structure," said Lee, who is also chairman of the Monetary Authority of Singapore (MAS).
Ghosn said that while the keiretsu system
may be effective for a niche player, it is unsuitable for a major carmaker like Nissan, saying it is less competitive for a global car manufacturer.
Although the keiretsu system
has been widely used in Japan by firms of different sizes, this study focuses only on large firms and their keiretsu-affiliated members.
Describing the Japanese banking sector as "an example of predominantly bank-based financial intermediation," Greenspan proposed a system be established in Japan to make it easier for business corporations to raise funds through securities issuance rather than depending on borrowing from so-called "main banks" under the keiretsu system
of interlocking businesses.
Under Japan's keiretsu system
, for instance, banks, trading companies, and industrial firms share common stock holdings, an arrangement that lends itself to preferential -- and often unwise -- financial dealings.
This point will be discussed in the Conclusions section in relationship to the Japanese Keiretsu system
Fourth, the keiretsu system
or huge conglomerates with extraordinarily effective methods of management provides relationships between financial institutions and manufacturing industries, resulting in higher levels of investment.
Unlike the US government, the Japanese government loosely enforced its anti-trust laws, and consequently a number of Japanese firms such as Mitsubishi, Mitsui, Sumitomo, Sanwa, Dai-chi Kangyo, and Fuji, have successfully used the horizontal keiretsu system
It means that, although the keiretsu system
is waning (at least in its traditional sense), tenders are still often rejected if they threaten core group interests.