The Japanese Model of the Firm

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During this essay, it will be analysed the differences and similarities between The Japanese Theory Firm and The Transactional Cost Approach by Williamson and we will see how realistic could be this approach in our contemporary economy system.

One crucial aspect that helped the current Technological Revolution was The Japanese Theory of the Firm best developed by Aoki, in which the firm is seen from a different perspective as it was seen before from the United States. To understand better this difference, it is necessary to make a comparison between both models.

To begin with, the Model H which means the American Firm which was considered as a hierarchical model in which the frequency of the transaction was important to decide if it was better to internalize rather than externalize always respecting the hierarchical model within the firm. I think that this model could better applied in a context of uncertainty and variable markets what differs from the Japanese Model.

The Horizontal Coordination is one of the most important characteristics of the Japanese Model, there must be a horizontal coordination in order to operate in a quick and flexible way to respond better to the technological changes and variations of the market, while for the Model H, this could be a problem, as Aoki (1990) argues "the H mode of coordination may become problematical, however when diverse consumers, tastes comes come to demand a variety of products" and "when the need to deliver ordered products without delays becomes imperative for gaining a competitive edge" (pag 4). It explains that the model H just focuses on the information "a priori", information that already exists from the specialization of assets, it means for example the production of good which are too specific and standardized, this would be for the H Model. Aoki (1990) argues that " The H model has to essential features: 1 The hierarchical separation between planning and implemental operations and 2 the emphasis on the economies of the specialization" (page 5).

On the other hand, in the Japanese model the information ex-post that emerges from the practice is taken into account in order to change the initial production planning and it could be used for the organizational goals for instance, if there are clients asking for new products, if there is a problem in the quality of the product, the initial production planning could be adjusted due to the stakeholder's demands and the change in the market and all this requests a Horizontal Coordination.

I consider that the Japanese Model could better applied in firms than the Hierarchical Model due to certain advantages that one model has over the other. For instance, the capacity of learning from the personal when applying new technologies to produce the goods, the importance of communication between the executive levels in the firm when for example, within the company the production department needs help from the marketing department which have information on the up date stakeholder's needs as well as letting someone from one department to move to another one, in this way the employee could get familiar with other work processes which facilitates the exchange and process of information in order to guaranty better ways of production . These could be the more relevant advantages from the Japanese Model. One example of the Horizontal Coordination would be the Automotris case which is called "kanban" this is a card that keeps connect one section of the production area with another, when for example there is one garage that requires small parts to assembly a car they send this card right to the next garage to get the supplies then these are sent to the issuer. It actually minimizes time and cost to communicate with the other areas without having to communicate with the suppliers area showing this that The Horizontal Coordination works better than the Hierarchical Coordination.

In the Japanese model the employee could be...
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