Leveraging Torihiki-Jisseki through Japanese Small- and Medium-Sized Enterprises' Overseas Businesses

Abstract

In response to arguments on the hollowing out of industries whereby an expansion in overseas production causes decreased domestic production, recent studies, primarily in the field of international economics, have pointed out the increase in domestic production due to an expansion in overseas production. Regarding specific mechanisms, Amano (2000) emphasized that when large companies with abundant management resources expand their overseas production, their spontaneous and induced conversion behaviors cause an increase in domestic production. Responding to this assertion, on the basis of case studies on small- and medium-sized enterprises (SMEs) with few management resources, this paper discovered a mechanism in which abundant management resources are not assumed. This mechanism was observed in the automotive parts industry in Japan, which faces difficulties in acquiring new customers because of fixed relationships. In this industry, it is possible to acquire new customers domestically through torihiki-jisseki ("track record of transactions" in Japanese) when overseas manufacturing sites conduct business with new customers. However, this strategy is a paradox for SMEs in Japan that wish to grow and survive domestically since it advocates overseas expansion rather than domestic expansion. [ABSTRACT FROM AUTHOR]