MMRCDISCUSSION PAPER SERIES
No. 386

Customized component transaction with insufficient trust:
Case study of the LCD-panel industry
Koichi Nakagawa
Komazawa University, Japan
Won-Wook SongThe University of Tokyo, Japan
February 2012

東京大学ものづくり経営研究センター
Manufacturing Management Research Center (MMRC)
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Customized component transaction with insufficient trust:
Case study of the LCD-panel industry

Koichi Nakagawa, Won-Wook Song

Abstract
A new form of interfirm transaction named customized component transaction withinsufficient trust is investigated in this study. Trust is important in customized component
transaction. But firms often face situations in which they are unable to build trustfulrelationships in today’s global supply chain. By the case study of the Liquid Crystal Display(LCD) panel industry, we explore the features, problems and solutions for such trustlesstransactions.

Keywords
Business transaction, insufficient trust, supplier’s relational skills, LCD panel

Customized component transaction withinsufficient trust:
Case study of the LCD-panel industry

Koichi Nakagawa,Komazawa University, Japan
Won-Wook SongThe University of Tokyo, Japan
Abstract
A new form of interfirm transaction named customized component transaction withinsufficient trust is investigated in this study. Trust is important in customized
component transaction. But firms often face situations in which they are unable tobuild trustful relationships in today’s global supply chain. By the case study of theLiquid Crystal Display (LCD) panel industry, we explore the features, problems andsolutions for such trustless transactions.
Keywords
Business transaction, insufficient trust, supplier’s relational skills, LCD panel

1Purpose of the study
The paper discusses a new problem in interfirm transactions and proposes a solution to
it. In this study, we named the phenomenon “customized component transaction withinsufficient trust” (CCTIT). Trust is important in customized component transaction
because it enables makers and suppliers to coordinate broadly and thoroughly.
However, at present, not only makers but also suppliers often face situations in which
they are unable to build trustful relationships with their business partners. In the global
supply chain, players have different perspectives, rules of competition, commercial
institutions, and strategies. In such a supply chain, makers and suppliers have to
conduct transactions despite having the feeling of the potential risk that customer or
supplier's may engage in unexpected conducts, even though a transacted component
must be technically coordinated with customers’ products. Here we define suchtransactions as “CCTIT,” and explore the features, problems and solutions in a casestudy of the Liquid Crystal Display (LCD) panel industry.
In this study, we focus on the supplier-side responses to CCTIT, although the makerside is also important. The chief reason for our focus is that component suppliers havelarger impact by CCTIT than makers. This is true in several industries such as
electronics and automobiles. In the past, transaction network was closed within a
specific developed country and its structure was limited and relatively stable. However,present-day makers in newly industrialized economies have grown up while suppliers
have not relatively. As a result, component suppliers in developed countries gradually
increased the volume of transactions with such newcomers. In this sense, the situationof the supplier-side has changed more than the maker-side. This raises the question of
how supplies respond to CCTIT.
Literature review: Customization, partnerships, trust, and relational skills
According to transaction cost theory, there are three basic alternatives for governing atransaction relationship; 1) vertical integration, 2) arm’s length relationships, and 3)
partnerships (Mahoney, 1992; Williamson, 1975). Vertical integration is preferred
when the components must be highly customized because the buyer reducestransaction costs, such as the risk of opportunism. In contrast, when components arehighly standardized, firms should use arm’s length relationships with the suppliers
2who focus on a particular component. Consequently, partnerships fall in between
vertical integration and arm’s length relationships. In partnerships, makers andsuppliers collaborate technically to improve total product performance in production
and development (Clark and Fujimoto, 1991). Partnerships are preferable when
specialization is important and firms can create value through customization. Thus,
partnerships are often used in making technically complex products such as
automobiles and computers, because such products need component customization as
well as component specialization (Dyer, 2000; Iansiti, 1998).
In order to build and maintain partnerships, trust is very important (Dyer, 2000; Sako,
1991). Here, we define trust as one party’s confidence that the other party involved in
the exchange will fulfill its promises and commitments. If both buyers and suppliers
are trusted, each feels that there is less risk of opportunism, and as a result theyenhance their commitment to the partnership. Firms can share knowledge andcooperate with trustful partners. As a result, interfirm trust contributes to thedevelopment of partnerships.
To focus on the supplier side, another important aspect is relational skills (Asanuma,1989). Relational skills are to be possessed by the supplier to respond efficiently to thespecific needs of the buyer. Relational skills comprise the base of technologicalcapability and accumulation of know-how for technical collaboration in productdevelopment and manufacturing. Thus, even if both makers and suppliers have trust,they cannot collaborate effectively without relational skills.
Relational skills promote the flow of information (or knowledge sharing) from makers
to suppliers (Takeishi, 2002). Information about product technology and productconcepts helps suppliers customize their components in accordance with maker’s final
product. Firms that have relational skills can acquire more information from customers,
interpret it adequately, and embed it into their component design.
In summary, in the technically complex product industry, partnership collaboration
between the maker and the supplier contributes to total product performance. Interfirm
trust and relational skills are two essential characteristics for effective partnerships
because both promote the flow of information used in customizing component design(Figure 1).

3

Need of component

Total productcustomization

performance

Collaboration in
R&D and manufacturing

Interfirm trust

Suppliers’
relational skills

Figure 1 Structure of maker-supplier partnerships

Research question: Insufficient trust resulting from globalization
Although it may be well-known that establishing partnerships is an advantageous
approach in making complex technology products, present-days firms sometimes did
not choose establishing partnerships. The chief reason for this is the globalization of
the supply chain. In the past, makers and suppliers had a limited number of business
partners. This was particularly true in Japan, where transaction networks were very
limited and remained unchanged in the long-term (Asanuma, 1989). However, sincearound 2000, the period in which globalization hastened, entrants of makers andsuppliers in the newly industrialized countries have restructured the supply chain andthreatened the traditional long-term stability. Newcomers in newly developing
countries have different perspectives, rules of competition, commercial institutions,and strategies. Thus, transactions with such newcomers are risky as to whether they
include an intuition of opportunism. Therefore, we can conclude that firms oftentransact with others with insufficient trust in the globalized supply chain.
Thereafter, there are three essential problems that appear: What is CCTIT like? Whatis its most important problem? How do suppliers cope with CCTIT? Researches have
not yet considered this issue; this paper attempts to become one of the first to do so.
4In this paper, we focus on the flow of information between makers and suppliers aswell as their relational skills. As discussed previously, trust is meaningful in business
relationships because it enables greater exchange of information in a transaction. An
insufficient amount of trust decreases the flow of information and disturbs effective
component customization. In this case, suppliers would have to change their relational
skills to improve the flow of information or compensate for acquiring only small
amounts of information.
The case study of LCD panel industry
Research method

We examined CCTIT through a case study of the LCD panel industry. We used the
LCD panel industry because the maker-supplier relationships are not entirely
trustworthy in the industry. Currently, the LCD panel makers are located in various
countries. They are Korean (Samsung and LG), Taiwanese (AUO and CMO), andJapanese (Sharp). By contrast, many LCD component suppliers are located in Japan.
Transactions between those makers and suppliers often have CCTIT. Historicallyspeaking, firms in the industry often experienced opportunistic conduct like
technology leaks by transaction counterparts and felt that a substantial risk ofopportunism existed in transaction (Shintaku, 2008; Shintaku, Shu, and Su, 2006).
Through our observation of the industry, we tried to obtain basic understandings of thefeatures, problems, and solutions for CCTIT.
To assess the actual situation of transactions in the LCD panel industry, we conducted
a questionnaire survey and field research with Japanese and Korean suppliers during
2009 - 2010. In the questionnaire survey, we received responses from 28 Japanesesuppliers and four Korean suppliers. In the field-based research, we interviewed nine
Japanese suppliers and three Korean suppliers.
The contents of this case study are as follows: First, we explain the history of the LCD
panel industry to understand the reason for its insufficient amount of interfirm trust;second, we investigate the actual situation of maker-supplier relationships in the LCD
panel industry by checking the questionnaire and field survey; finally, we examine theproblem and potential solutions to it through an in-depth firm analysis.
History: Why do makers and suppliers not have trustful relationships?
5

To understand why makers and suppliers do not have trustful relationships, we must
analyze the history of the LCD panel industry. In the early stage of the LCD panel
industry, firms had trustful relationships because such technical collaboration led tocompetitiveness. However, since the late 1990s, when Asian newcomers tried tocompete with Japanese incumbents, relationships got worse in terms of trust because
technology leaks and thefts often occurred in transactions.
In the 1970s and 1980s, which are considered the nascent days of the LCD panel
industry, competition occurred between Japanese and U.S. firms, with Japanese firms
eventually winning by taking advantage of their trustful and long-term relationships
with suppliers. To develop an LCD panel, the integration of electronics, chemicals,
semiconductors, and other technologies are necessary. The partnerships of each area’s
specialists were suitable for that technical integration. While U.S. LCD makers formed
arm’s-length relationships with their suppliers, Japanese rivals chose to establish longterm trustful relationships. As a result, Japanese LCD makers, including Sharp,
became the leaders of the LCD panel industry (Numagami, 1999).
In this early stage, important backgrounds of CCTIT were prepared: First, technicalknowledge was dispersed among each maker and supplier and no one had whole LCD
technology; second, there were relatively small number of LCD panel makers andtheir suppliers remained. In other words, every LCD panel maker had to depend on asmall number of the suppliers which had specific technology of LCD component.
In 1990s when Korean firms like Samsung and LG entered into the LCD industry,maker-supplier relationships within Japan changed. During that era, the LCD industry
grew rapidly because of the innovation of the large panel. The LCD panel started to be
used in more products such as notebook PCs, monitors for desktop PCs, and TVs.
Korean makers were convinced the growth of the LCD industry and attempted to enter
into the sector. In contrast, Japanese makers had a pessimistic view about the growthof the industry and were passive about making big investments. Because of this, theJapanese suppliers gradually included their customers from Japanese to Korean firms.
At the time, Japanese suppliers shared considerable information, educating Korean
makers on several technologies, and established good relationships with them. The
Koreans did not have enough technology and had trouble with the mass production of
LCD panels. Moreover, Japanese suppliers would not be able to earn revenue if their
6

Korean customers could not start production; thus, they gave technologies which they
accumulated on which they transacted with Japanese customers. However, as a result,
the relationships between Japanese makers and Japanese suppliers became worse by
those technology transfers. The Japanese LCD makers regard these transfers as
unwilling technical leaks. Thereafter, Japanese LCD makers were strictly prohibitedfrom sharing information and technology with their suppliers.
In the 2000s, the relationships between Korean makers and Japanese suppliers
deteriorated. Starting around 2000, Korean makers began vertical integration to cut
costs and got technical and business leadership. At the time, competition in the LCD
panel industry intensified, and every LCD maker tried to beat competitors by gaining a
cost and technological advantage. Korean makers attempted to develop certain
important components of LCDs, including polarizers, glass panels, and back-lightunits. Korean makers took advantage of the component technology that had beenbrought to them through transactions with Japanese suppliers when they started
making those components. Then Japanese suppliers began to feel that there were risks
in transacting with Korean makers. In particular, Japanese suppliers hid their coretechnology from customers to protect themselves against technology leaks.
An overview of maker-supplier relationships in the LCD panel industry

Next, we examine the maker-supplier relationships currently formed, as shown in thequestionnaire and field research. In this section, we reconfirm that transactions often
became CCTIT in the LCD panel industry and other types of transactions also existed.
First, we assess the overall situation of the suppliers. The average component supplier
has around 200 million dollars in sales and a few hundred employees. While two thirdsof the suppliers are chemical manufacturers that make optical plastics or films, the restof them are sub-assemblers and electric component manufacturers. Essentially, theysold their products to all customers in the LCD panel industry. There were very few
who restrict number of customers.
Next, we observe the situation of the maker-supplier relationships. Here, we stress thatboth the degree of customization and the degree of relationships are varied. In Table 1,
we show how the degree of customization ranges from a standardized commodity tofull customization.
7

Table 1 Suppliers’ component type in LCD panel industry
Standardized

Semi-customized Full customized

9

13

9

n＝31.
In addition, the degree of partnerships ranges from mutual collaborative to arm’slength relationships. Table 2 and 3 show the results of the questionnaire survey inregard to technical collaboration with makers. We classified technical collaboration
into six types; Advanced R&D collaboration, component development cooperation,customer product development cooperation, technology transfer from customer tosupplier, technology transfer from supplier to customer, and technical instruction
meeting with customers. Table 2 shows how many suppliers engage in technicalcollaboration. The results show that while more than half of engage in advanced R&D,
only around 35% of suppliers cooperate in customer or supplier product developmentwith makers. Furthermore, these suppliers do not engage in technology transfer or
instruction meeting. As a result, suppliers did not engage in many different types oftechnical collaboration. Table 3 shows that there were no suppliers that engage in all
six type of collaboration and most of them (about 40%) engaged in only one type ofcollaboration. As a whole, the degree of technical collaboration ranges broadly, but its
dispersion is concentrated on a relatively low level of collaboration.
Table 2 Suppliers and types of technical collaboration they perform
Advanced

Component

R&D

development productcollaboratio

cooperationn,Customer

11 (38％)

Technology

Technical

transfertransfer

instruction

frommeetingdevelopment fromcooperation

14 (48％)

Technology

customer to supplier

9 (31％)

n＝29.

8

to withsupplier

customercustomers

5 (17％)

10 (34％)7 (24％)

Table 3 Number of types of collaboration of suppliers
6 types

5 types

4 types

3 types

2 types

1 types0 types

0 (0％)

1 (3％)

4 (13％)

6 (20％)

3 (10％)

11 (38%)4 (13%)

n＝29.
Then, we examine the relationship between the degree of customization and that oftechnical collaboration. To do so, we created respective indexes. To make the index forthe degree of customization, we used four variables gathered from our questionnaire:
variable X1: “the coverage of customers by one component model.” (1: the entire
industry, 2: several customers, 3: single customer); variable X2: “The potential
applicability of one component design” (1: applicable directly to several customers, 2:applicable to certain customers with design modification, 3: not the design, but thebasic technology of the component is applicable to certain customers 4: notapplicable); variable X3: “the number of newly developed models of the component
within one year” (1: less than 5, 2: 5~10, 3: 10~50, 4: 50~100, 5: more than 100);
variable X4: “subjective evaluation of the degree of customization" (five point Likert
scale: 1: fully standardized components to 5: fully customized components). We
composed the four variables under one index titled “the degree of customization,”
according to the principal component analysis. Finally, we obtain ane index “thedegree of component customization” (CC):CC = 0.91 X1 + 0.52 X2 + 0.67 X3 + 0.59 X4 - 8.33
To establish the index of “the degree of technical collaboration”, we use the value inTable 3, i.e., the number of collaboration types performed with the customer. As
shown in Table 3, the values ranged from 0 to 5 and higher values mean that the
suppliers engage in strong collaboration with their customers.
Figure 2 shows the results of the relationship between the degree of customization andthat of technical collaboration. The horizontal and vertical axes show the degree ofcomponent customization and technical collaboration, respectively. From this figure,
we see a gentle slope from the lower left to the upper right (correlation was 0.42 (p =0.02)). From this observation, we can reconfirm the basic understanding that the more9customized the component, the more technical collaboration is necessary. However,
we also observe that many samples are concentrated on the lower side of the figure: In
the LCD panel industry the suppliers did not engage in much technical collaboration
as a whole, regardless of the degree of customization. Half of the samples show lessthan two collaborative activities. In addition, we observe that certain firms did not
engage in much technical collaboration, even though the degree of customization of
their product is high.
Figure 2
Relationship between the degree of customization and the degree of technical collaboration
6

5

4

Degree oftechnical

3

collaborationr = 0.422(p = 0.02)
n = 29

1

0
‐3

‐2

‐1

0

1

2

3

Degree of component customization

Detailed analysis for CCTIT: A firm-level survey

Next, in the field-based survey of Japanese suppliers, we tried to acquire a moredetailed understanding of the features, problems, and potential solutions for CCTIT.
Fujifilm, polarizer protecting film business

Fujifilm is the leading polarizer protecting film supplier, having over a 70% share in
the industry and earning around three billion USD sales in 2009. In particular, Fujifilm
has a superior competitive advantage through its high-spec product, a viewing-angle
widening type (Table 4). Their main customers are Korean polarizer makers, the10

largest of whom is LG chemical. The company’s chief competitor is Konica Minolta,
which has about a 20% share in the industry. Other competitors, including Hyosung in
Korea, were small and technologically disadvantageous, enabling us to conclude that
Fujifilm has been quite successful in the industry.
Table 4 Sales and share in the polarizer protecting film industry (2009)
Plain typeViewing angle w

Sum

Share

protecting film

idening type prot

（Mil. yen）（％）

（Mil. yen）

ecting film
（Mil. yen）

Sum

114,500

160,700

275,200

Fujifilm

82,000

119,600

201,600

73.3％

Konica Minolta Opt

32,50033,40065,900

23.9％

4,400

4,400

1.6％

3,300

3,300

1.2％

Nihon Zeon
Nitto Denko
2

Avr. Unit price (Yen/ m ）

272

723

Sources: Fuji Chimera Soken (2010)

Fujifilm’s TAC film business started in 1988 and established their competitive
advantage in the mid-1990s. In the early 1990s, Fujifilm established a technicalcollaborative relationship with a Japanese LCD panel maker. Fujifilm and the LCD
maker cooperated to solve the poor viewing angle problem of the TFT-LCD, and in
1995 finally developed a new polarizer protecting film that improved the width of theviewing angle (named wide-view film). Thereafter, Fujifilm became and remained, fora period of time, a technological leader through their collaborating with Japanese LCD
makers or polarizer makers.
However, Fujifilm is experiencing difficult business conditions. Since around 2000,
the main LCD makers have shifted from Japanese makers to Korean makers. Although
Fujifilm’s technical lead was built through collaboration with LCD and polarizer
makers, the company could not establish strong partnerships with Korean makers. As
previously mentioned, not only Japanese parts suppliers, including Fujifilm, but also
Korean panel makers felt that there was a risk of technical and marketing information
leaks in transactions. This hampered Fujifilm’s ability to establish partnerships with
Korean customers, which are important to develop a new protecting film.
In fact, Korean panel makers seldom shared technical and marketing information with11

parts suppliers. If Fujifilm received any such information, it would be able to make awell-designed protecting film that was technically coordinated with a customer’s need.
However, LCD panel makers give Fujifilm only the spec requests for the protecting
film, and that is not enough for Fujifilm to integrate protecting film technology to thecustomer’s panel design. “We cannot understand the true technical needs of customer
behind the spec requests (sales manager of Fujifilm LCD department).”
In order to develop a new protecting film without partnerships, Fujifilm used tapered
integration of a small polarizer maker, Sanritz. In 2005, Fujifilm acquired over 30% ofstock in Sanritz. The purpose of the tapered acquisition was not to start the polarizer
business but to learn about polarizer technology. “Fujifilm improved the efficiency ofprotecting film development by the integration of Fujifilm’s optical film technology
and Sanritz’s polarizer technology1.”
Sanritz was a middle-class polarizer manufacturer that had about a 10% share of themarket in 2005. In addition to polarizer manufacturing technology, Sanritz knew what
improvements polarizer manufacturers wanted protecting film suppliers to make. The
tapered integration of Sanritz enabled Fujifilm to develop a new protecting film that
fitted customer needs better than before. “When Fujifilm developed the new protecting
film for polarizer, Sanritz evaluated a trial model by using it for their new polarizer.
From such a strong collaboration, Fujifilm studied the way of thinking of polarizer
makers. It enabled us to guess the true concept and specification of customer’s new
product (Sales manager of Fujifilm LCD department).”
Japanese chemical material supplier (Company A)

Company A develops and produces a variety of polymer film materials for LCD panelsand has sales of several hundred million dollars. It had certain material models that
had a top share in certain niche areas in the LCD industry. To increase its sales,
Company A tried to sell such niche materials to almost any potential customer,
including Japanese, Korean, and Taiwanese panel makers.
Similar to Fujifilm, Company A also had trouble in developing customized materials
because their customers who made optical films did not provide enough information
about their products. To solve this problem, Company A gathered information about
1

Fujifilm corporation press release, June 20th, 2005.
http://www.fujifilm.co.jp/news_r/nrj1385.htm
12customer products from sources other than the customer. To gather information about
what the customer wanted, Company A’s sales forces often contacted other component
suppliers, the “customer’s customer,” such as back-light unit makers, or the“customer’s customer’s customer,” such as panel makers. Company A, as if playing
jigsaw puzzle, compared information from several sources and estimated the direct
customer’s needs. “We tried to know the panorama of the new panel development
project, and inferred what we should make from the information about the whole panel
development project (Sales department manager of Company A).”
An understanding of veteran sales engineer

To obtain hints for customization from an insufficient information flow, LCD
component suppliers used veteran sales engineers to interact with the customer. As
Table 5 shows, about one-third of sales personnel are sales engineers who have therequisite know-how of LCD technology, and about 60% of sales personnel haveworked in the LCD business for more than ten years. Thus, we can say that in the LCD
industry suppliers often use veteran sales engineers who have basic technologicalskills and have worked in the industry for several years.
Table 5 Characteristics of sales personnel of an LCD component supplier
Number of

Ratio of

Length ofRatio of the firms in

Technical

Technical

sales

engineer-based

servicewhich sales decides

understanding about

understanding about

personnelsales( year )technical target intheir component

customer product( number )personnel

development( five-point scale,( five-point scale,(%)

program

1 – do not know,

1 – do not know,(%)

5 – know well)

5 – know well)

Average

14.14

31.39

10.36

51.6

3.37

3.53

Standard

11.80

-

4.53

-

0.79

1.01

deviation

N = 29These sales engineers studied customer product technology and used it in developing
new components. Table 5 also shows that sales personnel had more knowledge about
13

customer technology than about the suppliers own component technology (the score ofunderstanding about customer technology is 3.53, while that of supplier component
technology is 3.37). More than half the number of samples included a statement thatthe sales department decided the target of the product development program. In
summary, veteran sales engineers are one of the most important people for integrating
component technology into customer products.
Discussion
In this section, we discuss the features, problems, and solutions for CCTIT from the
supplier’s viewpoint. We ask: How does it differ from the traditional partnerships
transaction, and how do suppliers respond to them? Let us discuss these questions
using the results of the case study of the LCD panel industry.
Features and the critical problem of CCTIT

At first, we stressed that there were several types of transactions in the LCD panel
industry, and that not all of them were CCTIT. However, we found that technically or
strategically important parts, such as protecting film and color filter materials, were
often transacted at the risk of the counterpart engaging in opportunistic conduct.
CCTIT in the LCD panel industry has several distinct features, including component
transaction that starts at the time of the panel maker’s new product development
program. Because of the technical leaks in the past, both makers and suppliers hid
technically important information about their transactions from each other. Panelmakers hid information about the product concept and detailed design and gave
suppliers only specification requests for parts. Parts suppliers hid information about
the core technology of their parts and gave makers only sample products. Althoughcertain technically important parts are necessary to be highly integrated into a panel’s
design, both suppliers and makers feel that it was difficult to integrate each other’s
product technology.
Considering this, it becomes obvious that the scarce information flow from a customer
is a critical problem for suppliers. Moreover, because customers do not provide
technical information about their products, suppliers have trouble customizing theircomponents.
14

Potential solutions: An evolution of the relational skills

From our case study, LCD component suppliers adapted to CCTIT by reconstructing
their capability for customization, i.e., their relational skills. As mentioned previously,both trust and relational skills can enhance the flow of information from a producer toits supplier. Therefore, suppliers have to rebuild their relational skills to respond to thelack of trust. In fact, suppliers reformed their routines for customization by 1)
acquiring customer technology by themselves, 2) using information sources other thancustomers, and 3) improving the flow of information from customers by using veteransales engineers. From the viewpoint of the flow of information, all of them are theimprovement of information gathering and processing capabilities to cover the limited
flow of information from their customers. As a whole, in CCTIT, suppliers’ relational
skills evolved from a traditional partnership-based, customer dependent mode to amore independent one.

Need of component

Total productcustomization

performance

Do not collaborate in

Evolution of Suppliers’

R&D and manufacturing

relational skills(Information gathering &processing capability)

Insufficientinterfirm trust
Figure 3 Structure of CCTIT

Possession of customer technology

In CCTIT, customers had not given suppliers their product’s detailed design. Fujifilm
15

and Company A overcame this problem by possessing customer technology
independently. Fujifilm acquired customer technology through the tapered integrationof small polarizer maker, Sanritz. Company A acquired it through its own R&D. From
our research, one-third LCD component suppliers, in general, made trial products forcustomers, and over 70% of them stated that they understood a certain amount of theircustomer’s product technology. Such knowledge about the customer’s product became
the basis for the supplier’s relational skills, which are used in integrating its
component technology with the customer’s product design (Prencipe, 2003). In CCTIT,
in particular, when suppliers cannot obtain product information from their customers,
the supplier’s own knowledge acquisition becomes more important than having atrustful transaction. In this sense, possession of customer technology is the corecomponent of relational skills for CCTIT.
Using information sources other than customers

In CCTIT, sources of information other than the customer are important because thecustomer does not give enough information to suppliers. In the LCD industry,
suppliers supplement the quality and quantity of the flow of information from makers
by obtaining it from other sources.
Using veteran sales engineers

From the case study, we also uncovered the importance of veteran sales engineers.
These engineers have mastered customer product technology and used that knowledge
to customize their company’s components. They are gatekeepers who gather external
information, interpret it, and share it with the development team (Allen, 1977). In thissense, using veteran sales engineers is an effective way to gather information directlyfrom the customer.
Conclusion
The trustless transactions seen in the LCD panel industry might not be an unusual
situation. Traditional long-term trustful relationships cannot always be established in
the global supply chain, because players in the global supply chain have different
perspectives, rules of competition, commercial institutions, and strategies. Makers and16

suppliers transact with each other despite having the feeling of the risks that customers
or supplier will engage in unexpected conduct. Although the experiences in the LCD
business teach us what CCTIT is about, additional research will give us more
understanding about it specific attributes and foster future research about CCTIT.

Acknowledgement
This study was financially supported by the Manufacturing Management ResearchCenter at the University of Tokyo and the Murata Foundation for Academic
Development. We sincerely appreciate their help.
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