Networks, Keiretsu, and Locations of the Japanese Electronics Industry in Asia

Abstract

It has been assumed that industrial networks, particularly of keiretsu-based organizations, play the major role in dictating the formation of industrial agglomerations for Japanese investment in overseas locations. In this paper, I examine whether currently available establishment data on Japanese firms in Asia confirm this tendency for the electronics industry. The data show that actual reliance on keiretsu networks in Asia is relatively low, and keiretsu relationships are more likely to reflect a strong relationship at the global level, rather than relationships with suppliers within host countries. This result poses questions on the assumptions of network-based industrialization affecting locations of foreign direct investment.