The reason to form a “Keiretsu” in terms of technology transfer

“Keiretsu” is a network of businesses that own stakes in each other as a means of mutual security and technology exchange especially in Japan, and usually includes large manufacturers and their suppliers of raw materials and components. This study focuses on a large automobile company, Toyota Corporation which is well known to have a large Keiretsu network, and investigate the contribution of having Keiretsu companies to the parent company in terms of technology transfer. The author collected patents with Toyota as an applicant during 1983-1999, and extracted the patent citations between the focal patents and the patents the focal patent cites (backward citations). Each paired-patent between the focal patent and the backward patent was categorized into (a) a citation from parent company (self-citations), (b) a citation from a Keiretsu company (Keiretsu-citations), or (c) a citation neither from a parent company nor from a Keiretsu company (external-citations). Then the author tested which category really contributes to the values of the focal patents in the parent company. The analysis showed that the Keiretsu-citations have a moderate contribution to Toyota. A strong reason for the parent company to form the Keiretsu was not found in terms of technology transfer.