The aim of this paper is to consider the change of transactional relations between manufacturer and supplier in Japanese machinery industries, and its spatial implication.
A transaction costs perspective defined by Scott (1988) has been much discussed in the literature on industrial geography. This perspective states that vertical disintegration promotes locational agglomeration because external transaction costs increase with geographical distance. But transaction costs do not depend only upon geographical distance. Trust between both parties can also reduce transaction costs. Sako (1992) classified trust into three types: contractual trust, competence trust, and goodwill trust. She defined contractual trust as the adherence to specific written or oral agreements and competence trust as the expectation of a trading partner performing its role completely. Goodwill trust refers to mutual expectations of open commitment, defined as the willingness to do more than is formally expected. She also argued that the manufacturer-supplier relations in typical Japanese machinery industries relied on goodwill trust. Since the proximity of cultural distance (e. g., commonality of social norms, transactional practices, codes of communication) facilitates the creation of goodwill trust, such transactional relations need the proximity of cultural distance.
However, external shocks in the 1990's, (e. g., a rapidly changing exchange rate and trade friction) made manufacturers increase international procurement. The increase in international procurement will be accompanied by a change in the nature of transactional relations, as described above.
The first question in this paper is whether a hypotheses (Table 1) advocated by Mizuno (1997), which states that a manufacturer tends to procure design-supplied parts on a regional scale, design-approved parts on a national scale and marketed goods globally, is applicable to machinery industries other than the automobile industry.
The second question is how important mutual trust is in manufacturer-supplier transactional relations in Japanese machinery industries, and how cultural distance undermines the advantages of international procurement of parts.
The third question is how Japanese machinery manufacturers in the 1990's are changing transactional relations with their suppliers with increasing international procurement.
In order to examine these questions, the author conducted interviews with purchase managers of four machinery manufacturing firms from October 1996 to April 1997. The firms interviewed were Nisshin Electric, Omron, Daikin Industries and Kubota. The findings are summarized by the following three points.
First, these four companies procure subcontracting parts or design-supplied parts mainly on a regional scale. The frequent face-to-face contact between the companies and their suppliers enhances technology transfer in the transaction process of these parts. The physical proximity between both parties reduces leadtimes of distribution. In the meanwhile, the procurement process of design-approved parts and marketed goods requires less frequent contact. Particularly, since marketed goods suppliers do not need the involvement of their customs in the development process, the face-to-face communication between a manufacturer and its supplier does not necessarily matter in this situation. These findings show that the hypotheses can apply to these companies.
Second, the interviewed companies have somewhat increased international procurement of marketed goods and design-supplied parts in the 1990's. While these companies purchase marketed goods (e. g., electronic components) from foreign suppliers, design-supplied parts are mostly procured from Japanese affiliated suppliers and Japanese wholesalers. This is because the procurement process of design-supplied parts requires cultural proximity more than that of marketed goods.

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The purpose of this paper is to re-examine the history of the mountain area in Japan with special reference to differing viewpoints expressed by historians and other scholars such as folklorists, geographers or ethnologists. This difference of viewpoint between historians and other disciplines is notable. The former has mainly concentrated on economic development and the formation of political systems, while the latter have been concerned with systems and the processes of cultural decline. These two approaches are in contrast with each other, but have the potential to complement each other. Consequently, the author surveyed researches on cultural, political and economic points of view to explore more comprehensive schema.
A good place to start is to inquire into the genetical approach to mountainous area culture by folklorists, ethnologists and cultural geographers. Some have advanced the hypothesis that subsistence economies such as shifting cultivation, hunting and gathering, which still remain in modern mountain villages, date back to the Jomon period, that is to say, before the time when paddy cultivation developed in Japan. Assuming this hypothesis to be true, it can be said that the mountain people are successors of the Jomon culture, which is supposed to be the base of all Japanese culture.
This opinion begs the question how and when the non-paddy cultural system has been carried into modern mountain villages. It is necessary to discuss this on two points. Is the modern inhabitant of the mountain area, who is isolated from the alluvial plain, a descendant of Jomon people? Has the non-paddy cultural system survived only in mountain areas since ancient times?
First, some folklorists emphasize that medieval warriors retreated into the mountain area afther defeat. Some historians have studied the governmental forestry system in ancient times, and reclamations expanding toward mountain areas in medieval times. Results of these researches suggest that we must pay more careful attention to the dynamic process of the immigration from low lands to the mountain area and to their relation with the political and economic context.
Secondly, recent historical and historico-geographical studies have recognized the importance of dry field and shifting cultivation in the alluvial plain from ancient to medieval times. We can, consequently, presume that the subsistence economies without paddy had developed both in the mountain area and in the plain, but that in early modern times the cultural characteristics in the mountain area presented a clear contrast with the culture concentrating on rice cultivation in the plain.
These points lead us to the question how did non-paddy cultures survive at a time when the strong tendency was to concentrate on rice cultivation in Japan? In other words, what was the relationship between the Japanese political and economic system and the people in the mountain area prior to early modern times?
This paper also re-examines the works focusing on the peasant revolts in mountain areas in early seventeenth century. Some folklorists and cultural geographers have suggested that these uprisings happened in the process of mountain people being ruled by the unifying political powers based on paddy cultivation in the plains. However, these revolts were not the first contact between them. Other folklorists pointed out that the mountain people were already ruled by a centralized government in ancient times. Some historians have argued about the medieval territory as a manor or a legal unit in western Japan, and pointed out that the medieval political power had a reason to keep estates in the mountain area to supplement rice production with various products of dry field cultivation, shifting cultivation, hunting and gathering. This way of control contrasts with the early modern political system which demanded timber and charcoal from mountain villages.

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