Why can Toyota’s keiretsu recover from earthquakes quickly?

• Main Authors: Shumpei Iwao, Yumi Kato
• Format: Article
• Language: English
• Published: Global Business Research Center 2019-12-01
• Series: Annals of Business Administrative Science
• Subjects: disaster management; dynamic capabilities; great east japan earthquake; kumamoto earthquake
• Online Access: https://www.jstage.jst.go.jp/article/abas/18/6/18_0191022a/_pdf/-char/en

The keiretsu, or long-term stable business network that exists between Toyota and its suppliers, seems to demonstrate exceptional resilience in the face of natural disasters. Toyota shares production knowledge among the firms in its keiretsu through long-term kaizen-based inter-company learning activities (jishuken). In this regard, we have confirmed that (A) in times of normal operations, jishuken adopt a flat structure of interpersonal connections among firms that facilitates mutual trust. From case studies, we also found that (B) in times of disaster response, the structure “switches” to a hierarchical one with a clearly delineated leadership to bring knowledge and human resources into play.