Comparative Supplier Relations in the U.S. and Japanese Auto Industries: An Exit/Voice Approach

In 1980 Japan surpassed the United States as the world's leading producer of automobiles. Not only does Japan now produce the greatest number of cars of any country in the world [9], it introduces new models with the greatest frequency [7], makes them in factories with the highest productivity [19], and dominates surveys of customer satisfaction and frequency of repair [8, 19]. Observers have attributed much of this performance to Japanese automakers' ubcontracting system, an arrangement based on long-term relationships with suppliers, a great deal of information exchange, joint problem solving, and "governance by trust" [7, 10, 30]. While cultural predispositions are undoubtedly important in explaining the structure of Japanese subcontracting, in this paper I will try to explain differences in supplier relations systems based on economic factors and historical events. This is not to imply that culture and history are entirely distinct categories. For example, if historical events have shown people the efficacy of trust, they are more likely to be trusting in the future. Hence, cultural norms such as trust can be "the precipitate of history" [11, p. 91]. The first section of the paper outlines a conceptual framework based on Albert Hirschman's distinction between exit and voice [16]. The second section uses this framework to analyze briefly the evolution of supplier relationships in the U.S. auto industry and the third section examines (even more briefly) the Japanese auto industry.