Firms, Organizations and Contracts: A Reader in Industrial Organization

By Peter J. Buckley; Jonathan Michie | Go to book overview

10 Interpenetration of Organization and Market: Japan's Firm and Market in Comparison with the US

Ken-ichi Imai and Hiroyuki Itami


1. Introduction

We have two purposes in this paper. One is to present a general conceptual framework of resource allocation mechanisms which will enable us to analyse resource allocation both in the market and in the organization (i.e., the firm here) from a common vantage point. Our emphasis is on the mixture of market principles and organization principles in allocating resources either in the market or in the organization. Market principles penetrate resource allocation in the organization and organization principles creep into resource allocation in the market. This mixing phenomenon which we call interpenetration is essential to understanding various resource allocation patterns in the real world.

The second purpose of this paper is to apply this conceptual framework to the analysis of the differences of resource allocation patterns between Japan and the US. Our major conclusion is that the patterns of interpenetration are different between the two countries and we will try to explain why such differences emerge. We will also analyse the effects of these different interpenetration patterns on corporate behavior.

Section 2 below presents the basic conceptual framework and section 3

We are indebted to many executives of Japanese corporations whom we interviewed in our project on 'Empirical Study and International Comparison of Firm's Behavior and Organization', at the Department of Commerce. Hitotsubashi University. The project was founded by grants from the Ministry of Education.

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Firms, Organizations and Contracts: A Reader in Industrial Organization
Table of contents

Table of contents

  • Title Page iii
  • Preface and Acknowledgements v
  • Acknowledgements vi
  • Contents viii
  • List of Contributors xi
  • Foreword xiii
  • Introduction and Overview 1
  • Notes 18
  • References 20
  • I. THEORY OF THE FIRM 21
  • 1: The Equilibrium of the Firm 23
  • 2: The Nature of the Firm 40
  • 3: The Organization of Industry 59
  • 4: Production, Information Costs, and Economic Organization 75
  • Summary 95
  • Notes 96
  • References 102
  • 5: Theory of the Firm: Managerial Behavior, Agency Costs, and Ownership Structure 103
  • Conclusions 151
  • Notes 151
  • References 163
  • 6: Transaction-Cost Economics: The Governance of Contractual Relations 168
  • Conclusion 192
  • 7: An Economist's Perspective on the Theory of the Firm 199
  • Conclusion 212
  • Notes 212
  • II. MARKETS AND INDUSTRIAL ORGANIZATION 219
  • 8: Corporate Culture and Economic Theory 221
  • Introduction 221
  • Conclusion 261
  • Appendix 262
  • Appendix 271
  • Appendix 273
  • References 274
  • 9: Co-operative Agreements and the Organization of Industry 276
  • References 292
  • 10: Interpenetration of Organization and Market: Japan's Firm and Market in Comparison with the US 293
  • Conclusion 317
  • References 319
  • 11: Vertical Quasi-Integration 320
  • Conclusions 336
  • Notes 337
  • 12: Non-Contractual Relations In Business: A Preliminary Study 339
  • 13: Goodwill and the Spirit of Market Capitalism 359
  • III. JOINT VENTURES, NETWORKS, AND] CLANS 383
  • III. JOINT VENTURES, NETWORKS, AND] CLANS 385
  • References 407
  • 15: Joint Ventures 410
  • Conclusion 427
  • References 428
  • 16: Organizations: New Concepts for New Forms 429
  • Conclusion 440
  • Notes 441
  • 17: Markets, Bureaucracies, and Clans 442
  • References 456
  • Notes 459
  • References 473
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