The empirical analysis in this study is focused on three customer companies and 36 supplier companies in the electronics industry in Britain and Japan. Before zooming in on these specific cases, this chapter provides an aerial view of buyer—supplier relationships in the two countries. The first section provides some definitions to enable explicit international comparisons, and discusses some country-specific notions concerning buyer—supplier relationships. The second section surveys official and other statistics on buyer—supplier and sub-contracting structures, noting differences between sectors as well as between Britain and Japan. Against this broad background, the last section describes the nature of the companies chosen for detailed investigation.

Definitions and metaphors

As the purpose of this study is to make explicit comparisons between Britain and Japan, it would be wise to (a) provide universal definitions and (b) clarify country-specific peculiarities. This should help to avoid any misunderstandings over terminology, and to confront the potential problem in international comparisons that one may be comparing apples and pears.

Definitions

Inter-firm relations may be classified into relationships between competitors and between a buyer firm and a supplier firm. In the latter case, a buyer—supplier relation is established whenever there is an exchange of goods or services which are produced by one party and which are of value to the other.

As stated at the beginning of this book, one major task of this study was to examine various factors which explain why ACR-type or OCR-type transactions occur between an industrial buyer and a supplier. This was done and results systematically presented in chapters 6–10.

This chapter turns to the second major task, which involves examining the consequences of the ACR—OCR choice for the performance of enterprises, industries and national economies. It is tempting to conclude from a cursory look at the relative industrial competitiveness of Britain and Japan that there is some direct linkage between ACR—OCR patterns and industrial performance. OCR-type relations and superior performance coexist in Japan.

But that loose correlation could only be accepted as having some causal significance if one can hypothesise, and find empirical evidence for, the micro-mechanisms which can account for that significance. Theoretically, there are no conclusive causal links between ACR—OCR patterns and organisational efficiency (as defined in chapter 2). One may argue, for instance, that ACR traders achieve allocative efficiency by reserving the right to switch their partners as prices dictate. But there are not sufficient grounds for thinking that ACR-type relations lead to X-efficiency also. Similarly there is no theoretical basis for asserting that the existence of ‘goodwill trust’ in OCR-type relations constitutes a sufficient condition for generating incentives to maintain efficient practices over time.