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Jeffrey H. Dyer - One of the best experts on this subject based on the ideXlab platform.
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The determinants of trust in supplier–Automaker relationships in the US, Japan, and Korea
Journal of International Business Studies, 2011Co-Authors: Jeffrey H. DyerAbstract:We examine the determinants of trust in 453 supplier–Automaker relationships in the US, Japan, and Korea. We define trust and derive a model of its determinants drawing upon (1) an embeddedness (relationship-based) perspective, (2) a process-based perspective, and (3) an economic (hostage-based) perspective. Our findings indicate strong support for the process-based perspective in all countries; embeddedness was only important in Japan, and the economic hostage-based variable (stock ownership) was not important in any country.
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The Role of Trustworthiness in Reducing Transaction Costs and Improving Performance: Empirical Evidence from the United States, Japan, and Korea
Organization Science, 2003Co-Authors: Jeffrey H. Dyer, Wujin ChuAbstract:In this paper we investigate the relationship between supplier trust in the buyer and transaction costs and information sharing in a sample of 344 supplier-Automaker exchange relationships in the United States, Japan, and Korea. Our findings indicate that perceived trustworthiness reduces transaction costs and is correlated with greater information sharing in supplier-buyer relationships. Moreover, the findings suggest that the value created for transactors, in terms of lower transaction costs, may be substantial. In particular, we found that the least-trusted Automaker spent significantly more of its face-to-face interaction time with suppliers on contracting and haggling when compared to the most trusted Automaker. This translated into procurement (transaction) costs that were five times higher for the least trusted Automaker. Finally, we argue that trust is unique as a governance mechanism because it not only minimizes transaction costs, but also has a mutually causal relationship with information sharing, which also creates value in the exchange relationship. Other governance mechanisms (e.g., contracts, financial hostages) are necessary costs incurred to prevent opportunistic behavior, but do not create value beyond transaction cost minimization. Our findings provide empirical evidence that trustworthiness lowers transaction costs and may be an important source of competitive advantage.
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the determinants of trust in supplier Automaker relationships in the us japan and korea
Journal of International Business Studies, 2000Co-Authors: Jeffrey H. DyerAbstract:We examine the determinants of trust in 453 supplier–Automaker relationships in the US, Japan, and Korea. We define trust and derive a model of its determinants drawing upon (1) an embeddedness (relationship-based) perspective, (2) a process-based perspective, and (3) an economic (hostage-based) perspective. Our findings indicate strong support for the process-based perspective in all countries; embeddedness was only important in Japan, and the economic hostage-based variable (stock ownership) was not important in any country.
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strategic supplier segmentation the next best practice in supply chain management
California Management Review, 1998Co-Authors: Jeffrey H. Dyer, Dongsung Cho, Wujin ChuAbstract:This study of 453 supplier-Automaker relationships in the U. S., Japan, and Korea examines the extent to which Automakers manage their "arm's-length" and "partner" suppliers differently. The findings indicate that U. S. Automakers have historically managed the majority of their suppliers using an arm's-length model, Korean Automakers have managed suppliers primarily as partners, and Japanese Automakers have somewhat different relationships with suppliers depending on the nature (i. e., degree of asset specificity and value) of the component. Only Japanese Automakers have strategically segmented suppliers in such a way as to realize many of the benefits of both the arm's-length as well as the partner models. Firms should think strategically about supplier management and should not have a "one-size-fits-all" strategy for supplier management.
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Strategic Supplier Segmentation: A model for managing suppliers in the 21st Century
1996Co-Authors: Dongsung Cho, Wujin Chu, Jeffrey H. DyerAbstract:This study of 453 supplier-Automaker relationships in the U. S., Japan, and Korea examines the extent to which Automakers manage their “arms-length” and “partner” suppliers differently. The findings indicate that U.S. Automakers have historically managed all of their suppliers in an arms-length fhshion, Korean Automakers have managed all suppliers as partners, and Japanese Automakers have segmented their suppliers and have somewhat different relationships depending on the nature of the component. Only Japanese Automakers (Toyota and Nissan) have strategically segmented suppliers in such a way as to realize the benefits of both the arms-length and partner models of supplier management. We argue that firms should think strategically about supplier management, and perhaps should not have a “one size fits all” strategy for supplier management. During the past decade we have seen an increased emphasis on alliances, networks, and supply chain management as vehicles through which firms can achieve competitive advantage. Indeed, the typical industrial firm spends more than one half of every sales dollar on purchased products--and this percentage has been increasing with recent moves towards downsizing and outsourcing (U.S. Bureau of Census, 1985; Bresnan & Fowler, chain management and purchasing performance is increasingly 1994). Consequently, supply recognized as an important determinant of a firm’s competitiveness. Two widely differing supplier management models have emerged from both practice as well as academic research on the issue of how to optimally manage suppliers. The traditional view, or the arms-length model of supplier management, advocates minimizing dependence on suppliers and maximizing bargaining power. Michael Porter (1980: 123) describes this view of supplier management as follows: In purchasing, then, the goal is to find mechanisms to offset or surmount these sources of suppliers’ power. . . Purchases of an item can be spread among alternate suppliers in such a way as to improve the firm’s bargaining power. The key implication of this model for purchasing strategy is for buyers to deliberately keep suppliers at “arm’s-length” and to avoid any form of commitment. The arms-length model was widely accepted as the most effective way to manage supplier relationships in the United States until the success of Japanese f-, who did not use this model, forced a reevaluation of the model’s basic tenants. In contrast to the arms-length model, the success of Japanese firms has oflen been attributed to close supplier relationships, or a parfner modef of supplier management (Cusumano, 1985; Womack et al 1990; Dyer& Ouchi, 1993; Nishiguchi, 1994). Various studies suggest that, compared to arms-length relationships, Japanese-style partnerships result in superior performance because partnering firms: (1) share more information and are better at coordinating interdependent tasks (Fruin, 1992; Clark& Fuj irnoto, 199 l; Womack et al, 1990; Nishiguchi, 1994), and (2) invest in relation-specific assets which [ower costs, improve quality, and speed product development (Asanuma. 1989; Dyer, 1996a. Ho\vever. \vhile Japanese-style partnerships have economic benefits, some researchers hale found that these types of relationships are costly to set up and maintain, and may reduce a customer’s ability to switch away from inefficient suppliers (Helper, 199 1; Sake, 1992). The practical application of these two models can be found in the automotive industry. where General Motors has historically used an arms-length model while Toyota has emplo}-ed a partner model. It has been well documented that particularly during the much publicized reign of Jose Ignacio Lopez de Arriortua, General Motors attempted to generate cost savings by fostering vigorous supplier competition and maintaining arms-length relationships. Dr. Lopez pushed suppliers to reduce prices by renegotiating contracts and opening up parts to competitive bidding--sometimes going through more than 5 rounds of bidding. Although critics argue that the long term negative effects of this strategy are yet to be felt, Lopez is credited with sa~ing G>l roughly $3.0-4.0 biiiion as a result of these tough supplier management practices (Business Week, August 8, 1994). In contrast, Toyota (and more recently Chrysler in the United States) has developed long term partnerships with suppliers who are given implicit guarantees on future business. Tnreturn, suppliers make relation-specific investments to enhance their productivity in the Toyota relationship. 1 Past studies indicate that these relation-specific site, physical, and human asset ‘ Transaction or relation-specific investments are assets that are uniquely tailored to a particular exchange relationship and which have low salvage value outside of the relationship. Williamson (1985) identified site, physical, human, and dedicated assets as four distinct types of transaction-specific investments. investments reduce inventories, improve quality, and speed product development (Asanuma, 1989; Dyer, 1996a). Of course, the key question facing purchasing executives is: which model of supplier management is superior? Many firms in considering a model for supplier management tend to dichotomize this issue--choosing either the arms-length model or the partnership model. For example, U.S. Automakers have historical y relied primarily on the arms-length model of supplier management, whereas Japanese Automakers are believed to have exclusively relied on a partner model (though as we will show, this is not an entirely accurate perception). Our research on -!53 supplier-Automaker relationships in the U. S., Japan, and Korea suggests that firms should think more strategically about supplier management, and perhaps should not have a “one size fits all” strategy for supplier management (see the appendix for a brief description of the study). Instead, each supplier should be analyzed strategically to determine the extent to which the supplier’s product contributes to the core competence and competitive advantage of the buying firm. .% we shall show, a company’s ability to strategically segment suppliers in such a way as to realize the benefits of both the arms-length as well as the partner models maybe the key to fbture competitive advantage in supply chain management. In this article we lay out a framework to assist firms in deciding whether to manage a particular supplier in an arms-length or partnership fashion. To illustrate the advantages of supplier segmentation, it is useful to examine the supplier management practices of U. S., Japanese, and Korean Automakers. Supplier-Automaker Relationships in the United States Previous studies suggest that arms-length supplier relationships differ from supplier
Wujin Chu - One of the best experts on this subject based on the ideXlab platform.
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The Role of Trustworthiness in Reducing Transaction Costs and Improving Performance: Empirical Evidence from the United States, Japan, and Korea
Organization Science, 2003Co-Authors: Jeffrey H. Dyer, Wujin ChuAbstract:In this paper we investigate the relationship between supplier trust in the buyer and transaction costs and information sharing in a sample of 344 supplier-Automaker exchange relationships in the United States, Japan, and Korea. Our findings indicate that perceived trustworthiness reduces transaction costs and is correlated with greater information sharing in supplier-buyer relationships. Moreover, the findings suggest that the value created for transactors, in terms of lower transaction costs, may be substantial. In particular, we found that the least-trusted Automaker spent significantly more of its face-to-face interaction time with suppliers on contracting and haggling when compared to the most trusted Automaker. This translated into procurement (transaction) costs that were five times higher for the least trusted Automaker. Finally, we argue that trust is unique as a governance mechanism because it not only minimizes transaction costs, but also has a mutually causal relationship with information sharing, which also creates value in the exchange relationship. Other governance mechanisms (e.g., contracts, financial hostages) are necessary costs incurred to prevent opportunistic behavior, but do not create value beyond transaction cost minimization. Our findings provide empirical evidence that trustworthiness lowers transaction costs and may be an important source of competitive advantage.
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strategic supplier segmentation the next best practice in supply chain management
California Management Review, 1998Co-Authors: Jeffrey H. Dyer, Dongsung Cho, Wujin ChuAbstract:This study of 453 supplier-Automaker relationships in the U. S., Japan, and Korea examines the extent to which Automakers manage their "arm's-length" and "partner" suppliers differently. The findings indicate that U. S. Automakers have historically managed the majority of their suppliers using an arm's-length model, Korean Automakers have managed suppliers primarily as partners, and Japanese Automakers have somewhat different relationships with suppliers depending on the nature (i. e., degree of asset specificity and value) of the component. Only Japanese Automakers have strategically segmented suppliers in such a way as to realize many of the benefits of both the arm's-length as well as the partner models. Firms should think strategically about supplier management and should not have a "one-size-fits-all" strategy for supplier management.
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Strategic Supplier Segmentation: A model for managing suppliers in the 21st Century
1996Co-Authors: Dongsung Cho, Wujin Chu, Jeffrey H. DyerAbstract:This study of 453 supplier-Automaker relationships in the U. S., Japan, and Korea examines the extent to which Automakers manage their “arms-length” and “partner” suppliers differently. The findings indicate that U.S. Automakers have historically managed all of their suppliers in an arms-length fhshion, Korean Automakers have managed all suppliers as partners, and Japanese Automakers have segmented their suppliers and have somewhat different relationships depending on the nature of the component. Only Japanese Automakers (Toyota and Nissan) have strategically segmented suppliers in such a way as to realize the benefits of both the arms-length and partner models of supplier management. We argue that firms should think strategically about supplier management, and perhaps should not have a “one size fits all” strategy for supplier management. During the past decade we have seen an increased emphasis on alliances, networks, and supply chain management as vehicles through which firms can achieve competitive advantage. Indeed, the typical industrial firm spends more than one half of every sales dollar on purchased products--and this percentage has been increasing with recent moves towards downsizing and outsourcing (U.S. Bureau of Census, 1985; Bresnan & Fowler, chain management and purchasing performance is increasingly 1994). Consequently, supply recognized as an important determinant of a firm’s competitiveness. Two widely differing supplier management models have emerged from both practice as well as academic research on the issue of how to optimally manage suppliers. The traditional view, or the arms-length model of supplier management, advocates minimizing dependence on suppliers and maximizing bargaining power. Michael Porter (1980: 123) describes this view of supplier management as follows: In purchasing, then, the goal is to find mechanisms to offset or surmount these sources of suppliers’ power. . . Purchases of an item can be spread among alternate suppliers in such a way as to improve the firm’s bargaining power. The key implication of this model for purchasing strategy is for buyers to deliberately keep suppliers at “arm’s-length” and to avoid any form of commitment. The arms-length model was widely accepted as the most effective way to manage supplier relationships in the United States until the success of Japanese f-, who did not use this model, forced a reevaluation of the model’s basic tenants. In contrast to the arms-length model, the success of Japanese firms has oflen been attributed to close supplier relationships, or a parfner modef of supplier management (Cusumano, 1985; Womack et al 1990; Dyer& Ouchi, 1993; Nishiguchi, 1994). Various studies suggest that, compared to arms-length relationships, Japanese-style partnerships result in superior performance because partnering firms: (1) share more information and are better at coordinating interdependent tasks (Fruin, 1992; Clark& Fuj irnoto, 199 l; Womack et al, 1990; Nishiguchi, 1994), and (2) invest in relation-specific assets which [ower costs, improve quality, and speed product development (Asanuma. 1989; Dyer, 1996a. Ho\vever. \vhile Japanese-style partnerships have economic benefits, some researchers hale found that these types of relationships are costly to set up and maintain, and may reduce a customer’s ability to switch away from inefficient suppliers (Helper, 199 1; Sake, 1992). The practical application of these two models can be found in the automotive industry. where General Motors has historically used an arms-length model while Toyota has emplo}-ed a partner model. It has been well documented that particularly during the much publicized reign of Jose Ignacio Lopez de Arriortua, General Motors attempted to generate cost savings by fostering vigorous supplier competition and maintaining arms-length relationships. Dr. Lopez pushed suppliers to reduce prices by renegotiating contracts and opening up parts to competitive bidding--sometimes going through more than 5 rounds of bidding. Although critics argue that the long term negative effects of this strategy are yet to be felt, Lopez is credited with sa~ing G>l roughly $3.0-4.0 biiiion as a result of these tough supplier management practices (Business Week, August 8, 1994). In contrast, Toyota (and more recently Chrysler in the United States) has developed long term partnerships with suppliers who are given implicit guarantees on future business. Tnreturn, suppliers make relation-specific investments to enhance their productivity in the Toyota relationship. 1 Past studies indicate that these relation-specific site, physical, and human asset ‘ Transaction or relation-specific investments are assets that are uniquely tailored to a particular exchange relationship and which have low salvage value outside of the relationship. Williamson (1985) identified site, physical, human, and dedicated assets as four distinct types of transaction-specific investments. investments reduce inventories, improve quality, and speed product development (Asanuma, 1989; Dyer, 1996a). Of course, the key question facing purchasing executives is: which model of supplier management is superior? Many firms in considering a model for supplier management tend to dichotomize this issue--choosing either the arms-length model or the partnership model. For example, U.S. Automakers have historical y relied primarily on the arms-length model of supplier management, whereas Japanese Automakers are believed to have exclusively relied on a partner model (though as we will show, this is not an entirely accurate perception). Our research on -!53 supplier-Automaker relationships in the U. S., Japan, and Korea suggests that firms should think more strategically about supplier management, and perhaps should not have a “one size fits all” strategy for supplier management (see the appendix for a brief description of the study). Instead, each supplier should be analyzed strategically to determine the extent to which the supplier’s product contributes to the core competence and competitive advantage of the buying firm. .% we shall show, a company’s ability to strategically segment suppliers in such a way as to realize the benefits of both the arms-length as well as the partner models maybe the key to fbture competitive advantage in supply chain management. In this article we lay out a framework to assist firms in deciding whether to manage a particular supplier in an arms-length or partnership fashion. To illustrate the advantages of supplier segmentation, it is useful to examine the supplier management practices of U. S., Japanese, and Korean Automakers. Supplier-Automaker Relationships in the United States Previous studies suggest that arms-length supplier relationships differ from supplier
Young K Ro - One of the best experts on this subject based on the ideXlab platform.
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the co evolution of supplier relationship quality and product quality in the u s auto industry a cultural perspective
International Journal of Production Economics, 2017Co-Authors: Yi Su Chen, Hungchung Su, Young K RoAbstract:Strategic buyer-supplier relationships have been credited with vital outcomes such as lower costs, faster lead times, and better product quality. As such, by the 1990s, U.S. Automakers have been moving away from traditional arm's length relationships—and towards strategic relationships—with their suppliers. Despite such shifts, perceptions persist that U.S. Automakers consistently produce lower quality vehicles than their Japanese counterparts. Thus, an unanswered question is the extent to which better supplier relationships lead to better product performance. Using a longitudinal approach with secondary data, we explore the co-evolution of relationship quality and product quality among six major Automakers (the U.S. and Japanese Big Three). Our results point to previously unidentified boundary conditions on the association between strategic supplier relationships and product quality. For example, strategic supplier relations precede product quality only when relationship quality meets or exceeds a given threshold. Moreover, for Japanese Automakers, high relationship quality tends to precede high product quality whereas for U.S. Automakers, only those who improve supplier relationships faster than competitors appear to benefit from strategic supplier relationships. Implications and suggestions for future research are discussed.
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Product Development and Failures in Learning from Best Practices in U.S. Auto: A Supplier Perspective
IEEE Transactions on Engineering Management, 2014Co-Authors: Ryan Pereira, Young K Ro, Jeffrey K LikerAbstract:Despite decades of imitation and apparent convergence, there are still major differences in product development practices between Japanese Automakers and their North American counterparts. Through an in-depth investigation of product development practices at the project level, we study two firms-Toyota and a major North American Automaker-that possess very different approaches to product development. We take the perspective of a major supplier to both Automakers. Adopting a grounded theory approach and by selecting similar projects performed by the same supplier for different original equipment manufacturer (OEM) customers, we hold constant variables such as product, supplier, and period of observation. We find that the lack of best practice proliferation in product development can be explained by a lack of organizational culture that sustains and facilitates best practices. We view our results through the lens of cultural frameworks offered in the literature and derive a model linking organizational culture to product development effectiveness.
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Evolving Models of Supplier Involvement in Design: The Deterioration of the Japanese Model in U.S. Auto
IEEE Transactions on Engineering Management, 2008Co-Authors: Young K Ro, Jeffrey K Liker, Sebastian K. FixsonAbstract:The U.S. auto industry in the 1990s was in a state of transition, driven by a rapidly changing environment and attempts to adopt best practices from other Automakers. The Japanese supplier management system is regarded as extremely effective in delivering high-quality component systems integrated into the vehicle with short design lead times. American Automakers dedicated themselves to reengineering their product development systems, benchmarking the Japanese model, and outsourcing increasing levels of vehicle content and design responsibility. This paper analyzes how these attempts at institutional imitation evolved new approaches to supplier involvement in design in the U.S. auto industry based on interviews conducted during 1998-2001. Although once copying the Japanese model, the United States has chosen a modified approach and developed models distinctively different from the original. The authors identify two dominant supplier management models emerging during this time and a newly emerging hybrid original equipment manufacturer/supplier relationship style. Concepts from organizational design and behavioral economic theories are used to explain observations across industries overtime. Evidence suggests that American Automaker practices have not evolved to support the great responsibility being outsourced to suppliers. There are still barriers that create adversarial relationships when a partnership model is required for true integration of design efforts.
Jeff Dyer - One of the best experts on this subject based on the ideXlab platform.
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the determinants of trust in supplier Automaker relations in the us japan and korea a retrospective
Journal of International Business Studies, 2011Co-Authors: Jeff DyerAbstract:This retrospective on the Dyer and Chu (2000) article “The determinants of trust in supplier–Automaker relationships in the US, Japan, and Korea” attempts to accomplish a number of objectives. First, the paper examines the key findings and impact of the original paper, and provides additional insights behind the original research. Notably, we further clarify why interpersonal trust between organizational boundary spanners does not translate into inter-organizational trust – and why inter-organizational trust is often based upon processes. Second, the paper briefly discusses relevant research on inter-firm trust since 2000, noting that research has shown the contingent value of trust, and notably that it is more important when asset specificity and uncertainty are high. Third, we discuss what has happened in the automotive industry over the past 15 years with regard to trust in supplier–buyer relationships. We show a correlation between Automaker trustworthiness and Automaker market-share performance and suggest a causal link, since some Automakers (e.g., Hyundai, Kia) have been increasing trust with suppliers and then improving market performance. Finally, the retrospective discusses opportunities for future research on the topic of trust in inter-organizational relationships.
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The Determinants of Trust in Supplier–Automaker Relations in the US, Japan, and Korea: A Retrospective
Journal of International Business Studies, 2010Co-Authors: Jeff DyerAbstract:This retrospective on the Dyer and Chu (2000) article “The determinants of trust in supplier–Automaker relationships in the US, Japan, and Korea” attempts to accomplish a number of objectives. First, the paper examines the key findings and impact of the original paper, and provides additional insights behind the original research. Notably, we further clarify why interpersonal trust between organizational boundary spanners does not translate into inter-organizational trust – and why inter-organizational trust is often based upon processes. Second, the paper briefly discusses relevant research on inter-firm trust since 2000, noting that research has shown the contingent value of trust, and notably that it is more important when asset specificity and uncertainty are high. Third, we discuss what has happened in the automotive industry over the past 15 years with regard to trust in supplier–buyer relationships. We show a correlation between Automaker trustworthiness and Automaker market-share performance and suggest a causal link, since some Automakers (e.g., Hyundai, Kia) have been increasing trust with suppliers and then improving market performance. Finally, the retrospective discusses opportunities for future research on the topic of trust in inter-organizational relationships.
Mariana De Souza Fortes - One of the best experts on this subject based on the ideXlab platform.
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Automaker s supply chain fragility case study of global crash of pa 12
Revista de Gestão & Tecnologia, 2016Co-Authors: Anderson Elias Furtado, Erik Telles Pascoal, Mariana De Souza FortesAbstract:The stop of production in an Automaker due to lack of parts is highly undesirable and its financial impacts are huge. Many reasons may contribute to parts shortage in assembly line, such as: fails in the production schedule of the automobile industry or its suppliers, delays in transport just-in-time, reception of defective parts lots, strikes, etc. Anticipating a potential failure to provide with sufficient time to act, it is desirable?No doubt, because it would allow in most cases the creation of a logistic action plan in order to eliminate or to minimize its possible impacts. However, when the situation is the rupture by lack of productive capacity of a specific raw material used by almost all Automakers around the world, which has been the case with PA-12 in first years of this decade, actions must go beyond of logistic solutions. This kind of situation implies engineering strategies to develop and validate technical solutions of alternative materials in a very restricted time. PA-12 is used in several parts, such as fuel systems (pipes and tank) and brake, clutch or blow-by pipes, for example.This article goal is to present, through a case study in an Automaker, the strategies adopted by the engineering team to replace the use of raw material PA-12 wherever it was possible to ensure its using when it was strictly necessary.
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Automaker’S SUPPLY CHAIN FRAGILITY: CASE STUDY OF GLOBAL CRASH OF PA-12
2016Co-Authors: Anderson Elias Furtado, Erik Telles Pascoal, Mariana De Souza FortesAbstract:The stop of production in an Automaker due to lack of parts is highly undesirable and its financial impacts are huge. Many reasons may contribute to parts shortage in assembly line, such as: fails in the production schedule of the automobile industry or its suppliers, delays in transport just-in-time, reception of defective parts lots, strikes, etc. Anticipating a potential failure to provide with sufficient time to act, it is desirable?No doubt, because it would allow in most cases the creation of a logistic action plan in order to eliminate or to minimize its possible impacts. However, when the situation is the rupture by lack of productive capacity of a specific raw material used by almost all Automakers around the world, which has been the case with PA-12 in first years of this decade, actions must go beyond of logistic solutions. This kind of situation implies engineering strategies to develop and validate technical solutions of alternative materials in a very restricted time. PA-12 is used in several parts, such as fuel systems (pipes and tank) and brake, clutch or blow-by pipes, for example.This article goal is to present, through a case study in an Automaker, the strategies adopted by the engineering team to replace the use of raw material PA-12 wherever it was possible to ensure its using when it was strictly necessary.
