2016 Volume 15 Issue 2 Pages 41-98
The purpose of this paper is to consider the mechanism of exclusive contractor firm’s formation and existence in terms of history, firms conduct, strategy and corporate governance through the case of Toyota Kyushu in the automotive industry. It is observed that the core company’s management resources shortage was the main cause of the establishment of the contract manufacturing firms. After that, the exclusive contract manufacturing company was forced to build their capability and achieved competitive advantage. As a result, the contract manufacturing relationship was rationalized. It is concluded that Toyota Kyushu became a Toyota’s intended subsidiary through corporate governance, while Toyota Kyushu built emergent capability to respond appropriately to the core company’s highly developed management resources in accordance with the rapid changes in the market.
