Abstract:

The Japanese environment offers an opportunity to explore the relationship between the organizational structure of the firm and its performance by making a distinction between the firms affiliated to an industrial group, namely the keiretsu, and the independent ones. The goal of this article is to respond to the following issue: how do the firms belonging to the same country (Japan) and having the same investment opportunities be more constrained than their counterparts, even though they have the same instruments for financing their investments and ensuring their growth? Does being a part of the firms of a keiretsu have any influence on the nature of the chosen research and development (R&D) investement or in tangible/fixed assets? To respond to this issue we used a bi-equational regression model that has two endogenous variables: the investment in R&D and investment in tangible asset, which will be explained by the same exogenous variable. The found results show, on the one hand, that investments in tangible assets have a sensitivity to cash flows that is stronger than the expenses of investment in R&D. On the second hand Group-affiliated firms have relatively easy access to funds relative to independent firms because of their ability to use internal capital market benefits and to tap more financial resources.