Is there an Asian way of managing supplier relations? A comparison between Toyota and Hyundai”

Publication Type:

Conference Paper


Sven Horak


Gerpisa colloquium, Paris (2013)


A vast literature in the 1990ies has contrasted “Japanese Style Partnerships” (Dyer & Ouchi, 1993) in managing supplier relations with a Western approach, typically represented by US carmakers (Dyer 1997; Sako & Helper, 1998). Whereas the Japanese approach was often described as cooperative, relational and long-term oriented, the U.S. approach was “hard-nosed” and generally more oriented towards traditional market competition. Although later studies have demonstrated that there was a general convergence between the two approaches (Helper & Sako, 1995) and the former hard-cut distinction, thus, does not hold true anymore, substantial differences between Japanese companies like Toyota and Honda and the U.S. big Three are still present in recent supplier satisfaction rankings.
With the unprecedented rise of carmakers from other Asian countries such as China and Korea the interesting question now arises which governance models these new competitors make use of when they manage their suppliers. At first glance, a close resemblance seems to exist to the Japanese model as supplier networks are tightly structured through financial and personal ties and Confucian value seem to predominate.
In order to explore this question we conduct an in-depth case study and compare Toyota and Hyundai’s supplier management strategies. We analyze the structure and practices that determine the governance modes in these two networks. Our findings reveal that the two highly successful carmakers follow very different approaches in managing supplier relations. Whereas Hyundai’s supplier network does indeed bear a higher resemblance in its supplier network structure with Japanese rather than Western carmakers, practices are quite distinct and paternalistic and protective for its core suppliers and more geared towards market-competition for other suppliers. Based on our finding we thus conclude that there is no such thing as an Asian way of managing suppliers. We furthermore point at the importance of taking a practice rather than institutional perspective (Dyer & Chu 2000; Dyer & Chu, 2012) when analyzing governance modes.

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