Japanese corporate groupings (keiretsu): A reconnaissance of implications for the future

Four trends presage a possibly somber scenario for the United States at the dawn of the 21st century. American business managers face growing shares of global markets held by foreign business, diminishing U.S. industrial capabilities, and pressure to compete in Japan for Japanese markets. And U.S. policymakers are experiencing operational difficulties, simultaneously influencing and influenced by U.S. industry performance. Thus, the U.S. political business system appears out of alignment with the emerging global competitive environment.

Many explanations and antidotes have been offered, each with its element of truth. The aim is not to deny them, rather it is to explore the significance of corporate grouping structures for Japanese and by implication world business. Long practiced habits of cooperation, mutually sustained competitive advantage, and interlocking ownership appear to be the major ingredients in the glue holding corporate groupings together.

If corporate groupings are as important as some Japanese scholars suggest then a new paradigm may be necessary for understanding their implications for the global political business environment. Thus, significant changes --in philosophies, perspectives, approaches and strategies-- may loom ahead for U.S. managers and policy makers who want to compete successfully in the 21st century.

Arguably, the most competitively potent and successful enterprises in the world are Japanese. Less visible, but of critical importance to this success, are inter-organizational support networks -- Japanese corporate groupings -- which bolster group members with capital, expertise and markets. This article is a reconnaissance for managers, scholars and policy makers detailing future implications of Japanese corporate grouping structures. The first and second sections establish four important trends and summarize popular and scholarly understandings of the corporate grouping phenomenon. If corporate groupings are as important as some Japanese scholars maintain, then perhaps we need a new paradigm which clearly identifies "strategic coupling" as a critical success factor in the new global political business environment. The third and final sections develop a framework for understanding some of the economic, institutional, organizational and strategic implications of Japanese corporate groupings.