Kigyo Shudan: The Formation and Functions of Enterprise Groups

Abstract

The enterprise groups, formed after the Second World War, and horizontally linking a number of associated companies, are widely accepted as a notable characteristic of the ‘Japanese Industrial Management System’. The purpose of these groups, and therefore their particular contribution to industrial organisational capability, is rooted in the period of their development, the 1950s. Interlocking share ownership within the groups brought a sense of security, allowed managers to exercise control over their companies, and encouraged firms to plan in terms of long-term growth rather than short-term profits. Nevertheless, the objectives and advantages of inter-firm groupings altered over time, and these changes reflected developments in the Japanese economy and in the commercial and organisational needs of companies. This institutional arrangement has been a notable aspect of the Japanese industrial system, characteristically distinct from the Anglo-American economies and a contributor to competitive advantage a...