Predicting the State of Interfirm Relationships: An Empirical Investigation Using Integrative Forecasting Techniques

Abstract

The formation of successful corporate strategy among vertically integrated organizations is predicated upon a plethora of dynamic relationships among buyer-seller firms. Albeit growing in interest, there is a paucity of research that focuses on predicting the nature of interfirm relationships among Japanese keiretsu members. Discerning this knowledge can help formulate successful strategic decisions, such as whether to continue procuring parts or increasing future investments in partner firms. As studies on predicting interfirm relationships among keiretsu member firms has been scant, this research offers insights by illustrating a newer approach for making decisions regarding corporate strategy. Using data collected on transaction from Yokokai—parts suppliers of Mazda—in this study a new model is developed to predict the nature of interfirm relationships using the degree index and DEA model. The primary contribution of this research is that interfirm relationships not only depend on future trends, but are also determined by the interactions among member firms of a keiretsu.