Annals of Business Administrative Science 6 (2007) 15–34
Available at www.gbrc.jp

Online ISSN 1347-4456 Print ISSN 1347-4464©2007 Global Business Research Center

Enhancement of the Advanced R&D Cooperation
Between Automakers and Suppliers in theJapanese Automobile Industry

Yoshinori KONNO
Hosei University
E-mail: ykonno@hosei.ac.jp

Abstract: Many studies have shown that Japanese automakers and their respective
suppliers cooperate closely even in product development processes. However, mostof these studies merely analyzed individual product development projects anddiscussed factors affecting it, such as development lead times, development
man-hours, and product quality, thereby failing to cover cooperation between them in
the advanced research and development processes. This paper is designed toanalyze the latter aspect as quantitatively as possible.
This paper concludes that cooperation between Japanese automakers and theirrespective suppliers has been expanding into the development of advanced
technologies, and suppliers that have the capability to participate in such advanced
research and development activities have had closer relations with automakers thanothers.
Keywords: advanced research and development process, Japanese auto parts
supplier system, long-term cooperative relationship

1. Introduction
In many industries, it is no longer realistic for acompany alone to cover all product development
processes; moreover, it is now essential for allcompanies to cooperate with each other in order tosurvive fierce competition (e.g., Henderson &Cockburn, 1994).
The Japanese auto sector is one of the industries
whereininterfirmcooperation

inproduct

15

Konnodevelopment processes plays a key role. The typicaldevelopment processes. This is the source of thepassenger car contains 20,000 to 30,000 components.

Japanese

As much as 70% of these components are provided bycompetitiveness.” Since vehicle development leadoutside suppliers. These outside suppliers are often

times have shortened, research and development

involved in design as well as manufacturing and may

cooperation between automakers and their respective

account for 50% or more of engineering costs.

suppliers have reportedly been further enhanced (e.g.,

In addition, a car is a typical product for integral
architecture.

Functional

and

auto

industry’s

international

Konno, 2002).

structural

However, vehicle development projects are notinterdependency is complicated between components

limited to improvements in existing technologies.

comprising a car. The interfaces between these

They may include the development of advanced

components are not standardized. It is difficult totechnologies

manufacture an excellent car without knowledge ofcomponents and new elemental technologies (e.g.,

the entire car or individual components (Takeishi,

materials). This type of technology development is2003). In the Japanese auto industry, automakers

known as advanced research and development (R&D).

accumulate knowledge on the entire vehicle, while

Advanced R&D of new technologies may precede orautomotive suppliers store knowledge on individual

be integrated with new vehicle development projects.

components. When new technologies or new-concept

Some studies have mentioned that automakers

components are developed, automakers and suppliers

and their respective suppliers cooperate closely evenmust make joint development arrangements in orderfor such advanced R&D activities (e.g., Ueda, 1995).

to integrate their knowledge.

However, most of the earlier studies analyzed

fornew-concept

automotive

In this respect, numerous studies at home andindividual

product

development

abroad since the mid-1980s have drawn a conclusion

discussed

factors

affecting(e.g., Clark & Fujimoto, 1991; Cusumano & Takeishi,development lead times, development man-hours,

1991; Dyer, 1996; Nishiguchi, 1994; Sako, 1996;

and product quality, thereby failing to cover

Sako & Helper, 1998; Wasti & Liker, 1999; Womack,

cooperation between automakers and their respective

Jones, & Ross 1990): “Japanese automakers havesuppliers

maintained their respective long-term cooperativetechnologies. Some studies that covered suchbusiness relations with a limited number of suppliers

cooperation were limited to qualitative analyses,

and are conducting close information exchanges andlacking quantitative analyses.

coordination with them, based on their strong mutual

This

in

the

paper

projectsthem,development

isdesigned

such

of

to

and
as

advancedanalyzeastrust. Very close cooperation between automakers andquantitatively as possible the reality of recent

their respective suppliers have covered even productcooperation between Japanese automakers and their
16Enhancement of the advanced R&D cooperation

respective suppliers in the development of advanced

Corp., Daihatsu Motor Co., Fuji Heavy Industries

technologies. This paper concludes that sinceLtd., and Isuzu Motors Ltd. Applicants (multiple

cooperation between automakers and their respective

applicants for one patent application are all counted

suppliers has been expanding into the development ofas applicants), publication numbers, application dates,

advanced technologies, suppliers that have thenames, international patent classification (firstcapability to participate in such development

invention information subclasses), inventors, andactivities have had closer relations with automakers

other patent application data were entered into athan others.

spreadsheet software. Then, we conducted a patent

Section 2 analyzes data concerning automakers’

map analysis of joint patents or patents for which

joint patent applications in order to specify

applications were filed jointly by automakers andcooperation in the development of advanced

their suppliers.

technologies. Section 3 analyzes the relationship

Joint patent applications are those for which

between such cooperation and business relations,both automakers and their respective suppliers are

based on questionnaire survey data. Section 4 covers

applicants in connection with the development of

the discussions and conclusion.

advanced technologies that can be identified as novel
or inventive. Thus, joint patents represent inventions
to which both automakers and their suppliers have

2. Analysis of automakers’ joint patentcontributed. 1 Therefore, joint patents may be utilized

applications
This

sectionas an indicator of successful cooperation in theexamines

cooperation

development of advanced technologies. 2

betweenautomakers and their respective suppliers in the1

Inventions subjected to patent applications may be
published in the official gazette one and a half years after
these applications are filed with the Patent Office.
Applications may enter an examination process only if
applicants pay examination fees and request examination.
If novelty or inventiveness is identified in inventions,patents may be awarded.
This means that patents are awarded for only a minor
portion of patent applications. Many applications are
filed for defensive purposes. Manufacturing know-how
and other technologies that may be difficult for rivals toimitate are not necessarily subject to patent applications.
Therefore, there are various constraints on patent data.
However, no alternative objective indicators exist forsuccessful advanced technology development. As longas patent applications are filed at some cost, technologies
subject to patent applications should have been screened
by applicants and can be expected to feature somenovelty or inventiveness. In this sense, patent datautilized as an indicator of successful advanced
technology development may be permitted.
2
Multiple applicants for a single patent may notdevelopment of advanced technologies through ananalysis of automakers’ joint patent applications.

2.1. Source
Nine Japanese automakers’ patent applications thatwere filed over 12 years between 1993 and 2004 andreleased on the official patent gazette issued by
Japan’s Patent Office were subject to the analysis.
The nine automakers included Toyota Motor Corp.,
Nissan Motor Co., Honda Motor Co., Mitsubishi
Motors Corp., Mazda Motor Corp., Suzuki Motor
17

KonnoFigure 1. Patent applications
16000

6000

Total
14000

5000

Toyota

4000

10000
8000

3000

6000

2000

4000
1000

NissanNumber of patent applications(total of nine automakers)

Number of patent applications(each automaker)

12000

2000

Honda
Mitsubishi
Matsuda
Mazda
SuzukiDaihatsu
Fiji
Fuji
Isuzu

0

0
93

95

97

99

01

03

Year

2.2.

Overviewofautomakers’

patentthe total. The three firms accounted for approximately

applications

60%–70% of the nine automakers’ total patentFirst, we would like to review the overall trend.

applications. In 2004, the three firms’ share rose to

Figure 1 indicates the total number of patent

80%. Patent applications from the others have been

applications for each of the nine automakers between

falling or leveling off. Thus, Toyota, Nissan, and1993 and 2004.

Honda have effectively been leading the development

The figure shows that the nine automakers’ totalof advanced technologies in the Japanese auto

patent applications began to increase circa 2002 andindustry.

scored a sharp increase in 2004. Breaking down thesepatent applications by automaker, we find that Toyota,

2.3. Overview of all automakers’ joint patent

Nissan, and Honda account for a dominant share ofapplications
Next, we would like to review the overall trend ofnecessarily have made the same contributions to aparticular invention. The applicants may assess theirrespective contributions to an invention subject to theirpatent application and agree on how to share gains fromthe patent. Such agreement may not be reflected in patentapplications, but all applicants should have made some
contribution to the invention. In this sense, there may be
no problem with the utilization of joint patentapplications as an indicator of cooperation in thedevelopment of advanced technologies.

patent applications filed jointly by automakers andtheir respective suppliers. Figure 2 indicates the total
number of joint patent applications for the nine
automakers and their share of total patent applications
between 1993 and 2004.
18

Enhancement of the advanced R&D cooperation

Figure 2. Joint patent applications of nine automakers and their share of the total
20.0

3000

18.0
2500

16.0

Number

12.0
1500

10.0

Share(%)

14.0

2000

8.0
1000

6.0

Number of joint
patent applications

4.0

500

Share of joint
2.00

patent applications

0.0
93

95

97

99

01

03

Year

Figure 3. Joint patent applications and the share of the total for each automaker
3000

40.0

number

35.0
30.0

2000

25.0
20.0

1500

15.0

1000

10.0
500

5.0

Honda's number
Share of joint patent applocations(%)
(%)

2500

Number of joint patent applications

Other's total

Nissan's number
Toyota's number
Other's total share
Honda's share
Nissan's share
Toyota's share

0

0.0
93

95

97

99

01

03

Year

Figure 2 shows that the total number of joint

patent applications of the nine firms began to rise inpatent applications and the nine firms’ share of the

2002. The joint patent applications’ share of the total

total patent applications have continued at a roughalso indicates a rough upward trend.

upward trend, although some fluctuations were

Figure 3 indicates the number of joint patent

observed for some years. Notably, joint patentapplications and the share of the total for the three

applications appear to have increased since the totallargest Japanese automakers—Toyota, Nissan, and19

KonnoFigure 4. Joint patent applications involving three or more applicants for each automaker
400

8.0

350

7.0

300

6.0

250

5.0

200

4.0

150

3.0

100

2.0

50

1.0

0

0.0

Other's total number

Share of joint patent applications

involving three or more applicants (％))

involving three or more applicants

Number of joint patent applications

Honda's number
Nissan's number
Toyota's number
Other's total share
Honda's share
Nissan's share
Toyota's share
93

95

97

99

01

03

Year

Honda—between 1993 and 2004. This figure

advanced R&D cooperation.

indicates that Toyota features a greater number ofThis figure shows that Toyota features a far

joint patent applications and a higher share of the total

higher number and percentage share than the others

patent applications than the other two. 3

for joint patent applications involving three or more

Figure 4 indicates the number and percentage

applicants. Joint patent applications for Toyota

share of patent applications that each of the threemainly involve Toyota-affiliated suppliers including

largest automakers filed jointly with two or more

Toyota Central R&D Labs. Inc., Denso Corp., andsuppliers. A patent application filed by three or more

Aisin Seiki Co. However, Toyota’s R&D cooperationcompanies may represent not only dyad cooperation

partners have not been limited to its affiliates. For

between an automaker and one of its suppliers but

example, Toyota filed a joint patent application foralso horizontal cooperation between suppliers. The

some telecommunications technologies in 1999 withnumber and percentage share of such patent

five others—Aisin AW Co., Denso Corp., Fujitsu

applications can be utilized as an indicator of

Ten Ltd., Pioneer Corp., and Matsushita Electric3

Industrial Co. We have found many large-scale R&D

Figures 3 and 4 do not make adjustments for Toyota’s
joint patent applications with Toyota Central R&D Labs.
Inc. and Honda’s joint applications with Honda R&D Co.,
although these R&D firms have personnel exchanges
with their respective parent companies and are positioned
as consolidated subsidiaries forming a component of
their respective parents’ R&D divisions. This means
there is some upward bias for these companies. However,even if such adjustments are made, the conclusion here
may remain unchanged.

projects that Toyota has arranged with a wider rangeof suppliers.
Japanese automakers have thus expanded
cooperation with their respective suppliers into thedevelopment of advanced technologies. Amid this20

Enhancement of the advanced R&D cooperation

general trend, Toyota has also made aggressive

suppliers were first requested to select their mostefforts to coordinate the joint style advanced

important product (component). Then, they were

technology development projects that include two or

asked about their business relations with their main

more suppliers and horizontal cooperation between

customer automaker regarding their most important

suppliers. In terms of quantitative achievements

product (component).

through such cooperation, Toyota has progressed far

Note that the following are the components

ahead of other Japanese automakers.

chosen as the most important, spread over sevencategories:

subassembly

electronic/electrical

3. Analyzing suppliers’ questionnaire

components,

components,
machiningprocessing components, press components, plastic

surveyscomponents, metals (molding/casting) components,

As indicated in the previous section, cooperationand others. Of the total, subassembly components

between automakers and their respective suppliers inaccounted for 19%; press components, 17%; andthe development of advanced technologies has been

electronic and electrical components, 14%. The main

expanding in the Japanese auto industry. In a bid tocustomer automaker mentioned by the questionnaire

examine how business relations between automakers

respondents were Toyota (40%), Nissan (15%),

and their respective suppliers have changed in line

Honda (14%), Mitsubishi (7%), and Mazda (7%).

with such expanding cooperation, we would like to

These percentages roughly represent their respective

analyze

domestic auto production shares.

aautomotive

questionnaire

surveysuppliers

was

that

of

first-tierconductedinOf the suppliers, 58% stated that they

November 2003 with Mr. Takahiro Fujimoto,“undertook more than half of the development

professor at the University of Tokyo, and Mr. Ku

workload” themselves. When queried on the change

Seunghwan, then assistant professor at Kyoto Sangyo

in the percentage over the past 4 years, 56%

University.

responded that they observed an upward trend. These
results reveal that many suppliers are responsible for3.1. Survey data sources and outline

a rather high ratio of the component development.

In the above questionnaire survey, we sent

With regard to the suppliers’ transactions withquestionnaires to 340 first-tier automotive suppliers

automakers, 69% belonged to the “approved drawing

among the members of the Japan Auto Components

components,” 4 17% belonged to the “assigned

Industries Association. Of these, 150 firms returned
responses,

resultinginaresponse

rate

4

of

approximately 44.1%. In the questionnaire, the21

Under the approved drawing components’ practice, a
supplier conducts detailed engineering based on rather
rough specifications provided by the customer automaker.
After the automaker approves the drawings, the supplierowns the final drawings and produces components based

KonnoFigure 5. Outline of component transactions (1)(1) Most important component of the respondents
Subassemblycomponent（ = 150））（n

Machining processing
component

19.3

14.0

12.0

Electronic/electrical component

Plastic
component
17.3

12.7

4.7

18.0

(2) Main customer automaker (“A” automaker) of the respondents（（n = 150））

40.0

Nissan

Honda

15.3

14.0

2.0

Metals component

Press component

ToyotaNo answer

Others

Mazda

Mitsubishi

6.7

Suzuki

Fuji

NissanDiesel 0.7

7.3 2.7 4.0 6.0

Daihatsu 0.7

Isuzu

No answer
0.7
Hino
2.0

drawing components,” 5 and 10% belonged to thedevelopment competitions. Some 23% stated they6

received exclusive orders from automakers. The“detailed-controlled

drawingcomponents.”“Supplier proprietary components” were subjected toremaining 11% cited biddings.

3% of these transactions. These data indicate that

The respondents were also requested to selectsuppliers participated in detailed engineering as partthe most important capability from the fiveof the development of components in more than 86%

alternatives for winning a competition. The most(combining the approved drawing components andimportant capability, selected by 53%, was proposing

assignedand developing new component technologies ordrawingcomponents)

of

the

total

transactions.

new-concept components beyond the improvement ofWith regard to competition, 67% of theexisting technologies. The second most important

responding suppliers stated that they were selected bycapability, selected by 23%, was lowering costs
through manufacturing process improvements. The

on it for delivery to the automaker. See Asanuma (1989)
and Fujimoto (1999).
5
Under the assigned drawing components practice, a
supplier conducts detailed engineering based on thecustomer automaker’s basic drawing. The automakerowns the final drawing. This type of component is
positioned between the approved drawing components
and the detailed-controlled drawing components. See
Fujimoto (1999).
6
Under the detailed-controlled drawing components
practice, an automaker undertakes detailed engineering
for a component. Further, the automaker owns the final
drawing and presents it to a supplier for production. See
Asanuma (1989) and Fujimoto (1999).

third, selected by 17%, was reducing costs throughdesign improvements. The fourth, selected by 4%,
was developing components in accordance withspecifications provided by automakers. The fifth,
selected by 3%, was guaranteeing quality andjust-in-time delivery.
Regarding the relationship with a main customer
22

Enhancement of the advanced R&D cooperation

Figure 6. Outline of component transactions (2)(1) Amount of development workload that the respondents undertook
40%-50%10%-20%0%-10%

30%-40%9.3

1.3
6.0 4.7
4.0（n = 150）

6.7

60%-70%70%-80%9.3

90%-100%
17.3

14.2

20%-30% 50%-60%

13.3

No answer
6.7

80%-90%(2) Change in this ratio over the last 4 years
Increase

Decrease
1 2(No change)
3

4

5

36.3

42.3

14.1

（n = 150）
2.7

Average

No answer

2.7

3.6
2.0

(3) Type of component transaction
Assigned drawing component（n = 150）

10.0

Approved drawing component

No answer

69.3

2.71.3

16.7

Detailed-controlled
drawing component

Supplier proprietary component(4) Type of competition(n = 150)

Bidding

Development competition

Exclusive orders

9.9
10.7

67.4
67.3

22.0
21.3
No answer 0.7(5) Most important capability
Lowering costs throughmanufacturing process
improvements(n = 150)

22.7
23.4

Reducing costs
Developing components inthroughaccordance with specifications
designgiven by automakers
improvements

2.7
2.8

17.3
17.7

Guaranteeing quality andjust-in-time delivery

4.0
4.3

52.7
51.1

No answer

0.7

Proposing and developing new component
technologies or new-concept components
beyond improvement in existing technologies

automaker, 63% of the responding suppliers selecteddevelopment process increased,” and 75% selected“Started to participate in development activities from

“There was more frequent overall communicationa much earlier stage than before,” 43% selected “We(includes all forms of communication—emails,

have increased the number of onsite guest engineers

phone calls, and face-to-face).” These results suggest

who work at the main customer automaker,” 62%that the relationship between suppliers and their main

selected “Face-to-face communication during thecustomer automakers is becoming tighter and closer
23

Konnowith regard to R&D activities.

suppliers, 23% selected “Stages for R&D into

In the modern Japanese auto industry, as

new-concept components or modules, or new

indicated above, major suppliers have deepened

elemental technologies (such as new materials),

relations with their main customer automakers.

including pilot studies on technologies that are not

Meanwhile, in order to survive fierce competition,planned for specific models”; 43% selected “Stages

suppliers are required to have the capability tofor R&D of components for specific models,developorincluding new technologies or concepts beyond

technologies beyond improvements in existing

improvements in existing technologies or products”;

technologies.

28% selected “Stages for R&D of components basednewcutting-edge

components

on improvements in existing products”; 3% selected
3.2. Stages for R&D cooperation“No help from the main customer automaker or no

Next, we would like to examine the reality ofparticipation in the automaker’s R&D projects”; andcooperation in the development of advanced

1% for “Others.” Based on discussions in section 1,

technologies.

the advanced technology development cooperation is

Responses to Question 1 on the stages for R&D

identified for the first and second cases. When

cooperation with a major customer automaker or

queried about any change in the stages forreceiving assistance from such cooperation arecooperation over the past 4 years, 63% stated thatcompiled in Figure 7. Of the total responding

they began to cooperate with the main customer

Figure 7. Outline of component transactions (3)Change in relationship with “A” automaker over the last 4 years

+ve

-Ve
12

a. Timing of participation has
become much earlier(no change)

0.0
0.7

b. Increased number ofon-site guest engineers

4.7
0.7

c. Increased face-to-facecommunication

3.3
1.3

d. More frequent overall
communication

1.3
1.3

3

34.7

55.7

64.7

9.3 1.3

3.7

63.3

9.3 1.3

3.5

42.7

6.01.3

3.6

61.3

10.7 1.3

3.8

75.3

54.0

33.3

22.7

Percentageof 4 + 5

5

50.7

32.0

Average4（n=150）24

Enhancement of the advanced R&D cooperation

Figure 8. Stages for R&D cooperation(1) Timing of participation in joint R&D project/gaining technical cooperation
with “A” automaker

1. Stages for R&D into new-concept components
or modules or new elemental technologies（n = 150）

23.3

3. Stages for R&D of components based on
improvements in existing technologies

42.7

28.0

5. Others (0.7)

4.0

No answer
1.3

2. Stages for R&D of components for specific Models, 4. No help from the main customer automakerincluding new technologies or concepts
or no participation in the automaker’s R&D projects(2) Change in this ratio over the last four years
Later12（n = 150） 2.7

Earlier Average(No change)
3

4

5

28.7

52.7

10.0

5.2

3.7

0.7

drawing type. Classification by the components’automakers in earlier R&D stages than in the past.

drawing practice may be too imprecise to be useful.

Consequently, a majority of suppliers are now
customer

The suppliers’ average workload portion of theirautomakers even in the development of advanced

joint R&D operations with their main customer

technologies at an earlier time than before.

automakers was significantly higher (the significancecooperating

with

their

respective

level at 1% in t-test) for suppliers cooperating with
3.3. R&D cooperation and intercompany

automakers in advanced technology development

relationsthan for those refraining from such cooperation. With

Next, we used the questionnaire survey data toregard to any change in such workload portion overconsider any differences between suppliers thatthe past 4 years, the former (suppliers cooperating

cooperate and those that do not cooperate with thewith automakers in advanced technology R&D

main customer automakers in the development ofoperations) pointed to a more significant expansion

advanced technologies.

(1%) than the latter (those refraining from such
betweencooperation). With regard to relations with main

automakers and their respective suppliers arecustomer automakers, the former feature cooperation

predominantly based upon the approved drawing

in earlier R&D stages (1%) as compared to the latter,components practice. Therefore, no significant

a faster increase (5%) in face-to-face communications,difference was noted between various components’a faster increase (5%) in overall communications, andAs

mentioned

earlier,

relations25

Konnoa greater expansion (1%) in onsite guest engineers

As an indicator of advanced technology

stationed at automakers. These data suggest thatdevelopment cooperation as an explained variable ofsuppliers cooperating with automakers in advanced

the working hypothesis, we have constructed atechnology R&D operations have closer relations

dichotomous variable—“1” for the first and second

with automakers than those refraining from such

responses to “Question 1” in Section 3.2 and “0” forcooperation.

the third and fourth responses. One respondent
selected the fifth alternative (“Others”) and was

3.4. Suppliers’ capabilities and cooperation

excluded from the samples because no details werewith automakers in advanced technology

provided.

development

As for the suppliers’ knowledge levels as the

Next, we would like to examine the relationshipdefining variable, component-specific knowledge is

between suppliers’ capabilities and their cooperation

separated from architectural knowledge, based on

withTakeishi (2003). 7 For control variables, we have usedautomakers

inadvanced

technology

development activities.

the technology change for controlling changes in the

From the resources-based view of the firm, therelevant component technologies, the externalcore elements of resources and capabilities that defineinterdependency

corporate competitive advantage are knowledge andarchitecture characteristics of relevant components,

know-how accumulated in the companies (e.g.,

and the internal interdependency for controlling theBarney, 1997; Teece, Pisano, & Shuen, 1997). This

internal

may mean that the higher the knowledge andcomponents, based on earlier studies such as Takeishi

know-how accumulated in a supplier, the more likely(2003), Nobeoka (1999), and Han (2002). For details

it is for that supplier to be permitted to participate inincluding original questions that constitute variables,

advanced technology development. Therefore, thesee Table 1.

forarchitecture

controllingthecharacteristics

externalofthefollowing hypothesis is proposed: The higher the

The logit analysis has been used for theknowledge and know-how accumulated in a supplier,verification of the hypothesis since the explained

the more likely it is for that supplier to be permitted tovariable is a dichotomous variable. Table 2 indicatesparticipate in advanced technology development.

averages of major variables, standard deviations, andWe have utilized the abovementioned supplier

the correlation matrix. Table 3 shows the results of thequestionnaire survey data for verification. As
7incomplete responses were excluded from the data,
the number of samples or responding suppliers forthis analysis came to 145.
26

Component-specific knowledge is the knowledge ofperformances, costs, and production processes for
specific components. Architectural knowledge is theknowledge of the coordination of components that are
structurally and functionally related to each other(Takeisihi, 2003).

Enhancement of the advanced R&D cooperation

Table 1. Explanations of variables
Variable

Specification

Note
Question: In what stage of component R&D operations at the major customer automaker do you
participate or gain help from the customer? (Choose one alternative)
1. Stages for R&D into new-concept components or modules, or new elemental technologies (suchThe dichotomous variable is set at
Participation in theas new materials), including pilot studies on technologies that are not planned for specific models"1" for Alternatives 1 or 2 of the
2. Stages for R&D of components for specific models, including new technologies or concepts
advanced technology
five listed on the right side and at
beyond improvements in existing products.
development"0" for Alternatives 3 or 4.
3. Stages for R&D of components based on improvements in existing products.
4. No help from the main customer automaker or no participation in the automaker’s R&D projects
5. Others (Specifically: )Question: What is your estimated level of knowledge about the following points compared to thelevels for automakers? (A five-point Likert scale for each question)
Component-specific Average score of responses to 10
a. Functional design b. Structural design c. Material design d. Durability design
knowledge
right questions
e. Core technology f. Manufacturing process g. Quality control h. Manufacturing cost i. Material
cost j. Components cost
Question: What is your estimated level of knowledge about the following points compared to thelevels for automakers?
a. Final customers’ needs and preferences regarding Component X (main component)b. Automakers’ manufacturing processes (particularly, availability for assembling)c. Functional coordination with other components
d. Structural coordination with other components
Architectural
Average score of responses to 8
knowledge
right questions
Question: What is your estimated level of knowledge compared to the levels for automakers about
the following points regarding “other components” linked closely to Component X?
a. Knowledge of engineeringb. Knowledge of productionc. Knowledge of evaluationd. Knowledge of costs
Question: How do you evaluate the following item in comparison with other components in
Score of responses to the rightgeneral?
Technology change
questiona. Technological changes are fast

External
interdependency

Internal
interdependency

Toyota dummy

Question: How do you evaluate the following items in comparison with other components ingeneral?
a. External interfaces are standardized within the company.
Total of the following scores ofb. External interfaces are standardized within the industry (adopted at two or more companies).
responses to right questions:c. Component X functions independently (can be designed without considerations to functions ofExternal interdependency = -a-bother components)
c+d-e+fd. Component X functions multidimensionally.
e. Component X is structurally independent (can be designed without considerations to structures ofother components).
Question: How do you evaluate the following items in comparison with other components ingeneral?
Total of the following scores ofg. If a subcomponent design is modified, most other subcomponent designs must be modified.
responses to right questions:h. If a mix of materials is modified even slightly for Component X, the production method andInternal interdependency = g+h
production process conditions (pressure, temperature, timing, time, procedures, etc.) must be
modified considerably.
Question: What is you main customer automaker? (Choose one)A dummy variable set at 1 for
Response 1 of responses to right 1. Toyota 2. Nissan 3. Honda 4. Mitsubishi 5. Mazda 6. Suzuki 7. Daihatsu
8. Fuji 9. Isuzu 10. Hino 11. Nissan Diesel 12. Others
questions and 0 for any other
response

important than architectural knowledge for suppliers

logit analysis.
First, Model 1 of Table 3 indicates that the

to be permitted to cooperate with automakers in

suppliers’ component-specific knowledge has aadvanced technology development. Architectural

positive effect on their cooperation with automakers

knowledge is thus insignificant. Third, the model also

in advanced technology development. The effect isindicates that the technology change as a control

observed at a 10% significance level. This means thatvariable has a positive effect at a 1% significancethe working hypothesis has been supported in regard

level and the external interdependency has a positive

to component-specific knowledge. Second, the model

effect at a 5% significance level. These indications

indicates that component-specific knowledge is moremean that the faster the technology change and the27

KonnoTable 2. Descriptive statistics and the correlation matrix of major variables

1
2
3
4
5
6
7

Variable
Participation in the advanced technology development
Component-specific knowledge
Architectural knowledge
Technology change
External interdependency
Internal interdependency
Toyota dummy

AV
0.67
3.80
2.97
3.43
-4.57
6.77
0.39

SD
0.47
0.61
0.67
0.79
3.21
1.52
0.49

1
1.00
0.23
0.06
0.28
0.24
0.02
0.15

2

3

4

5

6

7

1.00
0.22
0.14
0.01
0.10
0.01

1.00
0.07
-0.11
0.12
-0.11

1.00
0.18
0.06
-0.19

1.00
0.04
0.03

1.00
-0.06

1.00

Note: If the absolute value of a correlation coefficient ≦ 0.22 then it is significant at the 1% level, and if theabsolute value is ≧ 0.18 then it is significant at the 5% level.

Table 3. Logit analysis results

1
2Participation in the advanced technology development

Model
Explained variable
β

p

S.E.

β

S.E.

p

Component-specific knowledge

0.52

0.30

0.08

0.49

0.30

0.10

Architectural knowledge

0.13

0.27

0.63

0.19

0.28

0.49

Technology change

0.65

0.26

0.01

0.80

0.27

0.00

External interdependency

0.16

0.07

0.02

0.16

0.07

0.02

Internal interdependency

-0.05

0.13

0.71

-0.03

0.13

0.81

1.02

0.43

0.02

-3.81

1.65

0.02

Toyota dummy
Constant term

-2.76

1.55

0.08

-2logL

162.9

156.9

Negelkerke R2

0.19

0.24

Sample size

145

145

Note: A yellow cell means p ＜ 0.10

more interdependent the components compared tocloser business relations with automakers.

others, the higher is the probability for suppliers to bepermitted to cooperate with automakers from the

3.5. Progressive practice of Toyota’s suppliers

advanced technology development stage. ThisThe analysis in section 2 found that Toyota hasfinding is an interesting theme for future study.

progressed ahead of other Japanese automakers inThus, these results suggest that suppliers that are
identified

ashavingrelatively

cooperation with suppliers in the development ofhigher-leveladvanced technologies. Therefore, this subsection

component-specific knowledge and the capability to

examines the differences between suppliers whose

develop advanced technologies or new components

main customer automaker is Toyota (Toyota’s

beyond improvements in existing technologies aresuppliers) and the other suppliers.

more likely than other suppliers to have cooperated

Figure 9 shows a comparison of the responses

with automakers from the advanced technology

provided by Toyota’s suppliers and the others todevelopment stage and have eventually developed“Question 1” in section 3.2. Of Toyota’s suppliers,
28

Enhancement of the advanced R&D cooperation

Figure 9. Advanced technology R&D cooperation and business relations(1) Development workload portion of the respondent with “A” automaker
%
0

10

20

30

50

40

60

90

80

70

1

(No change)

a. Development workload（n = 138） portion of the respondent

2

“Yes”
Average“No”
Average

46.8％

65.3％

（n = 138）(2) The change in the relation over the last four years
-ve

100

3

+ve
4

5
3.3

3.8

b. Timing of participation has（n = 147） become much earlier

3.5

3.8

c. Increased number of（n = 147） on-site guest engineers

3.4

3.7

d. Increased face-to-face（n = 146） communication

3.6

3.9

e. More frequent overall
communication

3.2

3.6

（n = 147）

those in the first category accounted for more thanparticipate in the main customer’s advanced

35%. This percentage more than doubled the level fortechnology development projects. The probability

the other suppliers. Of Toyota’s suppliers, those in the

gap was calculated at approximately 36 percentage

second category also accounted for more than 35%.

points.

This percentage is slightly lower than that for the

In this way, Toyota’s joint R&D operations withother suppliers; however, a combination of the firstmajor suppliers from the advanced technology

and second categories for Toyota’s suppliers was 16.2

development stage are more positive than the otherpercentage points larger than for the other suppliers.

automakers.

The difference between Toyota’s suppliers and theothers was at a 1% significance level.

4. Discussions and Conclusion

Model 2, in which a Toyota dummy is added toModel 1 of Table 3, indicated the Toyota dummy’s

4.1. Cooperation in advanced technology

positive effect at a 5% significance level even after all

development and intercompany relations

the other variables were controlled. Moreover, ModelThe

2 indicated that the addition of the Toyota dummy

automakers and their respective suppliers have

improved the regression’s explanation power. In short,

expanded their cooperation into the development of

Toyota’s suppliers are more likely than the others toadvanced technologies over the past decade.
29

above

analysesindicatedthatJapanese

KonnoIn the Japanese automotive market, theresources (human, materials, financial, or knowledge)

automakers need to realize sufficient functionality

should be provided, and the probability of success.

and product quality at a low price. Furthermore, for

Additionally, with the advanced technology

example, the automakers need to realize not only thedevelopment

basic drive, turn, stop, and gasoline mileage functions

technology is only actualized when both parties

but also user-friendliness, huge baggage area, airbags,

provide their latest technology and know-how to eachactive safety, and CO2/NOX reduction features. Thus,

other, engage in extended information exchange, andtoday, automotive technology development races

repeat trial and error processes. This kind of

have grown fiercer.

knowledge transfer, fusion, and creation process is

projects,

new

and

innovative

For most of the automotive components,

bilateral, highly sophisticated, and invisible; therefore,technological innovations are rapid, including

it is difficult to manage. In addition, even if andevelopment and utilization of new materials

automaker and a supplier succeeded in generating(particularly a shift from metals to plastics) and

new innovative technologies, it is difficult to measureadvanced IT technologies, miniaturization, andhow much of the contribution was made by whichlightening. In addition, a shift has made rapid

party, or how much of the resulting profits should be

progress to modules over the recent years. The new

attributed to which party.

design concepts for automotive components have

Furthermore, in case either of them disclose

been proposed one after another and some have been

proprietary

put into practice.

repercussions are tremendous. Even if parties signed

information

to

third

parties,theUnder these circumstances, automakers have

NDA (Non-Disclosure Agreement), it is difficult tobeen prompted to cooperate with their suppliers forprove illegal activity or wrongdoing on an objective

the development of advanced technologies excluding

basis.

cores (e.g., Konno & Okuda, 2005). Such conditions

According to the above discussion, we canhave apparently exerted a great impact on businessconclude that because the joint style advanced

relations between automakers and their suppliers.

technology development activities are difficult to

The advanced technology development projects

manage only by way of contracts, automakers tend toare more difficult to manage than projects that only

collaborate with true core suppliers. Core suppliers,

involveexisting

in this sense, refers to suppliers with whom thetechnologies. The former projects are not free from a

automaker has a long-term, cooperative, and trustfulhigh level of uncertainty; therefore, the parties find it

relationship, as well as suppliers who have high R&D

difficult to precisely judge in advance what each ofcapabilities. Consequently, although the number ofthem should do, to what extent, what level ofcore suppliers that can participate in automakers’

makingimprovements

to30Enhancement of the advanced R&D cooperation

advanced technology development is limited, theadvancing rapidly, Toyota’s excellent production andrelationships between automakers and the coreproduct development operations cannot guarantee its

suppliers should become closer (Konno, 2002).

future competitiveness. If it fails to develop advanced
technologies, even Toyota could be outperformed by

4.2. Progressive practice of Toyota’s suppliers

the others. Given Toyota’s recent success, it seems

and future problems

that the network that Toyota has constructed forEven amid this general trend, our findings indicate

cooperation with suppliers in the development ofthat Toyota has progressed ahead of other automakers.

advanced technologies might have contributed to the

Toyota has cooperated with major suppliers from thefirm’s international competitive edge.

advanced technology development stage more

The progressiveness of the network that Toyota

positively than other automakers. Its quantitative

has built for cooperation with suppliers in theachievements in this regard are far more than those ofdevelopment of advanced technologies indicates thethe other automakers. Toyota has also proactively

firm’s excellent management of cooperation. This

coordinated the joint style advanced technology

paper does not address details on automakers’

development projects that include two or moremanagement of cooperation with suppliers in the

suppliers (which include horizontal cooperation

development of advanced technologies. However,between suppliers).

this is a very interesting theme.

Since automotive technologies have been

In any case, studies have not been conducted in

Figure 10. Differences between Toyota’s suppliers and the others

1. Stages for R&D into new-concept
components or modules or new
elemental technologies
2. Stages for R&D of components for
specific models, including newtechnologies or concepts

3. Stages for R&D of components
based on improvements in existing
technologies
Toyota's suppliers

4. No help from the main customer
automaker or no participation in theautomaker’s’ R&D projects

The other suppliers

0

10

20

30
％

31

40

50

Konnothis area. In the future, multifaceted surveys should besangyo ni okeru buhin torihiki patahn no hatten to

conducted

henyo:

toexaminethemanagementofcooperation in advanced technology development.

Ichijimekah

enoankehtochousakekka wo chuushinni [A report on aquestionnaire

surveyforJapanese

first-tiercomponents suppliers]. (Discussion Paper No. 85).

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33

Konno34ABAS: Annals of Business Administrative ScienceVol. 6 December 2007

CHIEF EDITOR

Junjiro Shintaku, the University of TokyoEDITORIAL BOARD

Makoto Abe, the University of Tokyo
Takahiro Fujimoto, the University of Tokyo
Makoto Kasuya, the University of Tokyo
Nobuo Takahashi, the University of Tokyo
Technical Editor: Maki Nishida, Global Business Research Center

ABAS: Annals of Business Administrative Science is published annually by Global
Business Research Center, Marunouchi, Chiyoda-ku, Tokyo, JAPAN. http://www.gbrc.jp