activities in the two countries. To some extent these reasons also explain why many venture activities in Japan are either part of or under the control of large established firms.
We hope that the foregoing analysis has been able to convince the readers that our basic framework (especially that of interpenetration) is a worthwhile vehicle to enhance our conceptual understanding of how real-life resource allocations are conducted both in the markets and in the organizations. By having a single common framework to view resource allocation in these two arenas, the hope is to understand two allocation mechanisms and their interpenetration in a better perspective.
Commonality of the conceptual framework is also evident in our discussions of American and Japanese resource allocation. We have analysed several examples using the same framework presented in Section 2. Any meaningful international comparison has to analyse the different behavior patterns from the same, common perspective. We hope that we can now understand corporate behavior in the two countries better and that seemingly 'mystical or irrational' behavior of Japanese firms and other economic agents is no longer so mystical nor irrational.
This paper is only a beginning. There is a lot more to be done. On the conceptual level, for example, the question of "optimal mixture' or 'optimal penetration' of various resource allocation principles is intriguing. For example, a firm can choose which mechanism to use for its internal resource allocation and can also select among various alternative transaction modes with the external markets. The firm should make these internal and external transaction decisions simultaneously. This is a decision on the design of the total transaction system of the firm. What would the optimal transaction system design be? What kind of variables will effect the choice of system design? These are but a few examples of questions we can begin to ask using our interpenetration framework.
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