Abstract: Major Japanese enterprises can be broadly divided into two types: One is the corporate groups that re-formed after the dissolution of the zaibatsu following World War II, known as the six major corporate groups. The other is the large independent corporate groups that newly grew in the postwar era. The corporate groups include, for example, the Mitsubishi Group and the Mitsui Group, which existed before the war, while the large independent corporate groups include the Toyota Motor Group and the Matsushita Electric Group. These large corporate groups differ in their organizational structures. Since this paper intends to discuss the business practices of Japanese companies, the details of corporate group types should be referred to in Reference (1).

The business practices of Japanese companies are subject to controversy as a peculiarity of the Japanese economy. That is, regarding the view of business transaction networks, known in Japan as keiretsu, one side argues that they are unique to Japan and represent the closed nature of the Japanese economy. On the other hand, another side claims that keiretsu, a form of transaction relationship, is consistent with economic rationality and should be disseminated globally. The closed nature argument has been advanced by foreign countries such as the United States, criticizing Japanese corporate practices, while the rationality argument represents the Japanese counterclaim. Even within Japan, there is criticism of keiretsu, but conversely, some American economists contend that the Japanese keiretsu system merits study.

Although multiple discussions exist, the views of U.S. and Japanese economists on Japanese keiretsu vary. In other words, both corporate groups and corporate keiretsu are inter-company issues, and they share commonalities limited to that scope. Of course, within the same inter-company relationships, the two also differ in certain respects. Let us consider the problem of corporate keiretsu with this in mind, based on previous research.

Furthermore, since the issue of keiretsu, which has become a diplomatic matter between the United States and Japan, it is necessary to distinguish between corporate groups and corporate keiretsu, and to analyze each from its respective perspective. Therefore, we shall examine the problems of both countries from a more objective standpoint.

Key words: business groups, affiliates, trading practices, rationality, exclusivity, and pros and cons of business affiliates