Internet and its impact on subcontracting relationships

Internet and its impact on subcontracting relationships

Production networks, seisan keiretsu, are widely acknowledged to be one of the core elements of Japan’s industrial structure. These networks, based on long-term commitment and a hierarchical balance of power, are said to be one reason behind Japan’s economic success. However, during the 1990s these relationships weakened considerably, due to the long-lasting recession as well as increasing global competition. If the success factor seisan keiretsu is disappearing, what will develop instead?

A second global trend is the IT-revolution, on which the Japanese government pins its hope for the revitalization of the Japanese economy. Whether the Internet can provide new opportunities for the subcontracting relationships as well, is the leading question of this presentation. Since the talk’s main focus is on the suppliers’ side, it will also be discussed whether the Internet could be an instrument to rectify the traditional (in-)balance of power.

In this talk, I will present several scenarios concerning the future development of production networks in Japan and discuss the probability that the Internet / IT-technology will lead to a quote;democratizationquote; of the subcontracting relationships.