The Causality of Supply Relationships

This study examines the 'logic' or underlying causality of supply relationships. It develops and tests hypotheses, in a LISREL model, on detailed data for 553, 450 and 226 supply relationships in the US, Japanese and European automobile industries. The differences found between the three regions seem small, given the received view that there are fundamental differences between 'Japanese' and 'Western' contracting. However, the differences that remain suggest that in the US perhaps the 'Japanese system' has been surpassed, in a 'third way' that combines the advantages of sufficiently durable relations with the advantages of an open system with great variety.