Japanese horizontal keiretsu and the performance implications of membership

Takehiko Isobe, Shige Makino, Anthony Goerzen

Research output: Contribution to journalArticle

21 Citations (Scopus)

Abstract

Our study investigates the effect of Japanese horizontal keiretsu group membership on firm risk and return. Like prior studies, our results show that horizontal keiretsu membership has a negative effect on firm profitability. However, we find that horizontal keiretsu networks are likely to increase the gap between targeted and realized returns, which we call the outcome-aspiration gap. Moreover, in contrast to prior studies, our results indicate that keiretsu membership does not enable member firms to reduce risks by smoothing profitability. Instead, our findings provide evidence that is counter to the conventional notion that Japanese horizontal keiretsu allows their member firms to trade off profits for reduced risk.

Original languageEnglish
Pages (from-to)453-466
Number of pages14
JournalAsia Pacific Journal of Management
Volume23
Issue number4
DOIs
Publication statusPublished - 2006 Dec 1
Externally publishedYes

Keywords

  • Horizontal keiretsu
  • Performance
  • Risk sharing

ASJC Scopus subject areas

  • Business and International Management
  • Economics, Econometrics and Finance (miscellaneous)
  • Strategy and Management

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