SOCI 235 Lecture Notes - Lecture 26: Keiretsu, Perfect Competition, Ministry Of International Trade And Industry
10 Dec 2014
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Keiretsu: the keiretsu are large groupings of firms that to some degree coordinate their policies. These were formally dissolved by the occupying authorities after wwii. The ties with banks and financial institutions are long-lived. Consequently, the non-financial firms in the keiretsu have access to patient and informed capital. Compare this with north america where law requires arms length relations between financial and non-financial corporations. The members of the keiretsu hold equity in each other"s firms. This creates a network of mutual obligation and cooperation within the group. There is also preferential trade within the group: the existence of keiretsu influences the access of foreign firms to the japanese market. The ties with banks means that financing is available from within the group. There is no need to accept loans from a foreign bank. The mutual shareholdings within the intermarket keiretsu create a hurdle for foreign firms if they wish to buy into member companies.
