Abstract
The formation of supply chains in the extant literature has been based on the presupposition that individual companies in the network accumulate added value only on those products for which they are responsible, and they complete each sequential transaction with in-house quality assurance. This paper discusses a unique type of inter-firm relationship, which is based on a traditional business practice known as “Performance Guarantee,” in the Japanese automotive and steel industry. Such formations have not been discussed in the scholarly literature of supply chain management. In this system, multiple suppliers jointly bear the responsibility for product quality. It seems that this cooperation was built by a historical development between two industries, by a chain reaction of joint product development and quality assurance, as well as by specific manufacturing management systems in the supply chain. Exploring the background of this inter-firm cooperation, observed in major Japanese industries, is meaningful because it adds a new perspective to conventional research regarding firm boundaries and its supply chain management.
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