Annals of Business Administrative Science
Online ISSN : 1347-4456
Print ISSN : 1347-4464
ISSN-L : 1347-4456
Customer Scope and Supplier Performance
The Japanese Automotive Industry
Seungkee MINWonwook SONG
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JOURNAL OPEN ACCESS

2017 Volume 16 Issue 4 Pages 165-176

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Abstract

Nobeoka, Dyer, and Madhok (2002) statistically demonstrated the relationship between suppliers’ performance and suppliers’ customer scope; the latter was measured by (1) the number of automakers to whom components were supplied and (2) the concentration ratio of automakers (Herfindahl index) for seven Japanese automotive assemblers (automakers), using the data for 1995 on Japanese automotive parts industry. They concluded that the greater the number of customers (automakers) and the lower the concentration ratio, the higher the supplier’s performance (profit–sales ratio). We have gathered additional data for 1985 and 2005 and re-examined the relationship, following the analytical model of Nobeoka et al. (2002). The findings here for 1985 and 1995 are similar to those presented by Nobeoka et al. (2002); however, no significant correlation was observed for 2005. Moreover, we have conducted an additional test to compare their performance after dividing the suppliers into two groups: (A) suppliers with three or more automaker customers and (B) suppliers with less than three automaker customers. The results show that (A) the suppliers with more customers have significantly higher performances in 1985 and 1995; however, in 2005, (B) the suppliers with less customers have a higher profit–sales ratio, although it is not significant. It is highly likely that the correlation between supplier performance and the number or the concentration ratio of automaker clients might result from a spurious correlation caused by other antecedent variables.

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© 2017 Seungkee Min and Wonwook Song. This is an Open Access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted reuse, distribution, and reproduction in any medium, provided the original work is properly cited.

This article is licensed under a Creative Commons [Attribution 4.0 International] license.
https://creativecommons.org/licenses/by/4.0/
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