Accepted Manuscript

Title: Factors affecting Japanese auto suppliers’ predictions

about the future of electric vehicles: An exploratory empirical
study

Author: Shuichi Ishida Ph.D Mats Magnusson Ph.D Akio

Nagahira Ph.D

PII: S0016-3287(15)30083-5
DOI: http://dx.doi.org/doi:10.1016/j.futures.2017.03.009
Reference: JFTR 2207

To appear in:

Received date: 13-11-2015

Please cite this article as: S. Ishida, M. Magnusson, A. Nagahira, Factors affecting
Japanese auto suppliers’ predictions about the future of electric vehicles: An exploratory
empirical study, Futures (2017), http://dx.doi.org/10.1016/j.futures.2017.03.009

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Factors affecting Japanese auto suppliers’ predictions about the future of electric
vehicles: An exploratory empirical study

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Shuichi Ishida, Ph.D.

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Head of Centre for Global MOT Research
Ritsumeikan University,

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Kyoto, Japan

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Mats Magnusson, Ph.D.
Professor in Product Innovation Engineering
KTH Royal Institute of Technology
Stockholm, Sweden
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Akio Nagahira, Ph.D.
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Professor of Technology Management

Tohoku University
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Sendai, Japan
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Abstract:
This article investigates the effects of different characteristics of supplier-customer relationships in the
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Japanese automotive industry, and how these influence predictions about future technologies of a
disruptive nature, such as Electric Vehicles (EVs). We conducted a survey of a broad set of suppliers in
the Japanese automotive industry and another survey of suppliers registered with Toyota’s two supplier
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associations. The data were used to analyse the influence of particular relationships and practices on
information gathering about new technologies, preparations for R&D and production of new components,
and predictions about new technologies. The study shows that suppliers’ R&D intensity and the usage
degree of the drawing-supplied parts system lead to predictions favouring the uptake of new technologies.
Moreover, communication between automakers and suppliers and arm’s-length relationships
simultaneously lead to favourable views on the future of new technologies, especially with regard to EVs.
Moreover, we find that Japanese-style cooperative relationships, arm’s-length relationships,
communication between automakers and suppliers, and communication among suppliers all lead to less
favourable views on new technology uptake (in this case, EVs). We discuss the implications of these

Page 1 of 42
findings for research and practice, specifically for EVs.

1. Introduction
Apart from the strong organisational capability of automakers such as Toyota and Honda (Clark and
Fujimoto, 1991; Dyer, 1996; Dyer and Singh, 1998), a specific source of Japan’s competitive advantage
in the automotive industry is the long-term cooperative relationship between automakers and suppliers

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(Asanuma, 1989; Cusumano and Takeishi, 1991; Nishiguchi, 1994; Sako and Helper, 1998). Transaction

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systems between Toyota, with its particularly distinctive cooperative relationships, and its suppliers have
been variously called Toyota-ism, the Toyota way, and lean manufacturing. Each of these models has been

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recognised as providing manufacturing management with a significant competitive advantage (Dohse et
al., 1985; Liker, 2004; Womack et al., 1990) through their continuous innovation of processes and the

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resulting improvements in cost, quality, and timeliness. However, such arguments assume the continued
existence of a dominant design (Abernathy and Utterback, 1978) in the automotive industry, in this case, a

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product architecture based on the internal combustion engine. Few studies have examined the awareness
and behaviour of suppliers whose components may become obsolete owing to future technological
change, and how these are influenced by lead firms such as Toyota and other Original Equipment
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Manufacturers (OEMs). At this specific moment, the automotive industry finds itself in a situation where
the longevity of a dominant design (which has lasted for almost a century) is being increasingly
questioned. With the recent emergence of alternative propulsion technologies such as Fuel Cell Vehicles
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(FCVs), hybrid cars, and Electric Vehicles (EVs), a future shift to a new dominant design appears quite
likely, although there is substantial uncertainty regarding the development of each of these specific
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technologies. Consequently, the automotive industry offers an interesting opportunity to investigate how
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companies work with regard to the prediction of future technologies.

The automotive industry’s response to global warming and depleting petroleum resources is notable. In
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2011, Japan’s domestic market share of hybrid vehicles was more than 10% (Nikkei Shinbun, 2012).
Further, in North America and Europe, hybrid vehicle sales are expanding at a healthy pace (MarketLine,
2014), and the demand for low-carbon emission vehicles is expected to grow steadily (Ministry of the
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Environment, Government of Japan, 2013). Using this momentum and following the lead of U.S.
President Obama signing the Green New Deal into law (U.S. Department of Energy, 2011), surveys were
conducted in the Netherlands (Kampman et al., 2011), Canada (PricewaterhouseCoopers, 2011), and
Japan (Momota, 2011). The findings of these surveys support the opinion that the automotive industry, as
a whole, will be moving towards increased use of propulsion technologies other than the traditional
combustion engine; moreover, there is substantial uncertainty regarding its successor, the new dominant
design.
In recent years, it has been observed that Japanese automakers are no longer as dominant as they used
to be in their relationships with suppliers; many of the latter have established more equilibrated business

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relationships through transactions with multiple automakers (Nobeoka, 1996; Sako, 2004). The suppliers
have been required to form their own strategies while playing an important role in devising the game
plans of the specific automaker that is their primary transaction company, such as in a keiretsu (a
supplier’s group). An effect of this is that suppliers increasingly have to actively understand and foresee
technological changes in order to be prepared for disruptions of their existing businesses. An important
question related to this strategic behaviour is how suppliers shape their perspectives on future

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technologies, given their strong relationships and reliance on the automakers, and how this will influence

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their long-term survival and competitiveness. Automakers usually deal with internal as well as external
resources. In contrast, suppliers are organisations that supply their resources to automakers, that is, the

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flow of resources is one-sided. If a new dominant design generated by automakers, it will render some
components unnecessary or obsolete, and the supplier(s) of these components will be forced out of the

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market.
The purpose of this study is not to discuss the success or failure of predictions about the future of

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specific technologies. Rather, this study intends to understand how suppliers make predictions about
future technologies and how they deal with the implications of these predictions, while forming a basic
perception of new technologies in the context of society (in general) and the industry (in particular). In
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this article, we investigate the effects of relationships between suppliers and OEMs, and how these effects
play a role in suppliers’ predictions about future technologies. In particular, we examine how Japanese
automotive suppliers—with their robust and sophisticated systems designed for the production of internal
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combustion engine vehicles—respond to a potential disruptive innovation (Christensen and Bower, 1996)
that will likely succeed the earlier dominant design. Furthermore, this article addresses the impacts of the
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characteristics of integration (Fujimoto, 2007), which has traditionally been recognized as a strength in
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the context of Japan’s auto industry, and Japanese-style cooperative relationships (Asanuma, 1989;
Cusumano and Takeishi, 1991; Nishiguchi, 1994; Sako and Helper, 1998) on suppliers’ predictions about
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future technologies.
Many studies have focused on the difficulties that companies face during periods of technological
change. One stream of research shows that organisations in a stable environment have limited fields of
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exploration; further, their experience restricts the exploitation of new knowledge because their focus on
increasing efficiency leads them to establish internal routines centred on this objective (March, 1991).
Prior studies have shown that strongly cohesive competencies become impediments to the
implementation of new knowledge (Leonard-Barton, 1992; Tushman and Anderson, 2005). Also, factors
outside the single organization have been highlighted as sources of inertia and inability to innovate. A
particular factor concerns the negative effect of so-called value network lock-ins, resulting from the way
firms interact with their established mainstream customers and investors, and the view of desired product
performance improvements that emerge from this interaction (Christensen, 1997). Thus, an important
factor causing the inability to escape disruptive innovation is the use of value criteria shared within a

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value network (Christensen and Rosenbloom, 1995; Christensen, 1997). Various methods to avoid these
issues have been noted by groups responsible for existing technologies (Burgelman, 1985; Greenwood
and Hinings, 1993; Smith and Tushman, 2005) and they include the following: avoiding prejudices
against new technology divisions that arise through the organisational separation of new and existing
technology; increasing synergies by facilitating the effective interaction of both technology divisions
(Brown and Eisenhardt, 1997; Iansiti et al., 2003); or ensuring superior parallel development (Shibata and

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Kodama, 2008). Summarising the above, it is clear that firms face challenges in terms of predicting shifts

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to new technologies, and that the interaction and collaboration with important established customers may
condition the ability of suppliers to act strategically and avoid being locked into an old technology when

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other actors in the industry move to establish a new dominant design. This study investigates how
suppliers’ views on future dominant technologies and their strategic innovation behaviours are

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conditioned by relationships with their main customers with a clear view of the dominant technology in
the future. In the next section, we describe the research setting and methods used in this study.

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Subsequently, we review the existing literature, conduct the analysis, and present the results. The final
section highlights the conclusions of this empirical research.
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2. Research Methods
As mentioned above, the automotive industry of today offers an important and interesting setup for
understanding technological change and its business implications, as it allows us to study how firms
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actually confront this uncertain phenomenon by making technology predictions and ideating
development.
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2.1. Research setting

The research setting for this study is the Japanese automotive industry, particularly Toyota and its
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suppliers. While there are several alternatives for the next generation of automobiles (such as FCVs,
hybrid vehicles, and EVs), this article specifically focuses on motor-driven EVs for the following reasons.
First, hybrid vehicles will not dramatically change the relationship between automakers and suppliers
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because they are equipped with combustion engines, for which there are existing suppliers;
simultaneously, hybrid vehicles have permitted newcomers such as suppliers for motor driving devices or
electrical systems. Second, the demand forecast for hybrid vehicles is as stable as that for combustion
engine vehicles because the hybrid vehicle business has been successful in recent years. Therefore, there
is no need to assume a radical change—which involves many suppliers having to break away from their
business relationships with automakers—for the present. FCVs differ from motor-driven EVs in terms of
their basic architecture even though an FCV can be assumed to be an EV in the broader sense. Third,
certain issues affect the business climate forecast for FCVs, such as the instability due to the insufficient
number of hydrogen supply stations. Honda commenced lease sales for FCX Clarity in 2008 despite these

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limitations (Nelson, 2014). Existing studies of leading global automotive manufacturers clarify that there
are significantly different views on what will constitute the dominant future technology (Kley et al., 2011;
Loisel et al., 2014). As mentioned above, hybrid vehicles should primarily be seen as a means to prolong
the present dominant reliance on combustion engines. Whether EVs or FCVs will constitute the future
dominant technology is unclear at present, and influential car manufacturers have taken different
positions regarding the two technologies. Whereas Nissan as well as several European and US

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manufacturers have focused extensively on EVs (to some extent accelerated by the success of Tesla),

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Toyota has instead put its emphasis on FCVs. These differences in technological focus offer interesting
opportunities as they allow us to observe the effects of leading car manufacturers’ technology strategies

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on their suppliers’ perceptions about future technologies.

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Japanese suppliers include large corporations with revenues exceeding tens of billions of dollars, as
well as small- and medium-sized businesses with revenues of millions of dollars. Surveys conducted as

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part of this study showed that 40–50% of the companies are small- and medium-sized, with fewer than
500 employees. In addition, many of these companies have either not created new technology divisions or
do not have the human resources or financial wherewithal to do so. Alternatively, some of their products
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cannot be used in vehicles based on new technologies. A pilot survey for this study was conducted from
the end of 2010 to the beginning of 2011; seven Japanese suppliers were investigated. Focusing
specifically on EVs, we discovered that most of these suppliers had no proactive plans with regard to this
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new technology.
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2.2. Survey design

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Two independent (though related) surveys were conducted as part of this exploratory study. The first
might be regarded as a ‘macro-level analysis’ broadly focusing on Japan’s automotive industry—it
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surveyed the Japanese auto suppliers’ predictions about future technologies (more specifically, EVs) and
how these predictions are related to their specific strategies and work practices. The second survey was a
‘micro-level analysis’ focusing on the suppliers belonging to Toyota-related associations (Kyohokai and
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Eihokai). The latter survey was designed to examine their predictions about future technologies in terms
of EVs and how these predictions are related to their specific strategies and work practices.
The first survey examined the activities undertaken by automakers and suppliers in the overall
automotive industry as well as their effects, as opposed to focusing on supplier activities for specific
automakers. Rather than mutual supplier relationships, this survey focused on the stand-alone strategies
and work practices of each supplier (drawing-supplied parts system, drawing-approved parts system,
R&D intensity, and corporate diversification). This survey was used to test the hypotheses (presented in
the following chapter) used to determine the relationships between these strategies and work practices,
and technology predictions for the industry in general.

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 The drawing-supplied and drawing-approved parts systems are implemented by the suppliers associated
with each individual automaker. Suppliers conduct R&D to increase their R&D intensity and corporate
diversification, although increasing the latter by multi-faceted related and unrelated diversification
captures the individual efforts of suppliers. All the suppliers targeted in the first survey were parts
manufacturers, and the survey included an analysis of the technological efforts related to auto parts, such
as drawing systems and R&D functions.

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The second survey targeted Toyota’s supplier associations and tested specific hypotheses (developed in

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the following section) to gauge the effects of the activities of supplier associations and
supplier-manufacturer relationships on technology-related predictions. Following the situation with

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Toyota’s associations, it was thought that Japanese suppliers could be regarded as representative suppliers
if the commitment level towards the associations and the cohesion among the members were sufficiently

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high (Dyer, 1994). Further, based on samples with these types of distinguishing features, the effect of
Japanese-style cooperative relationships on technology-related predictions could be examined. This effect

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could be measured for the entire industry; however, as was previously mentioned, many suppliers
currently provide parts and services to multiple automakers, and some companies strongly believe in
implementing arm’s-length transactions. If such companies were included in the sample, it would be
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difficult to identify the effect of Japanese-style cooperative relationships on technology-related
predictions, which were previously explained as being related to the principle of action typical of
Japanese auto suppliers. Further, unlike the first survey, the second survey included non-parts suppliers
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(such as equipment suppliers and distributors), because this survey did not merely assume efforts toward
technological auto parts development as a given. Therefore, it was necessary to administer the two
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surveys independently because combining the questionnaires would not have been an effective research
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strategy.
Based on this reasoning regarding the surveys, two research models (A and B) were designed. Each
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model used 18 measurement items for 6 variables, resulting in a total of 36 measurement items and 12
variables (Table 1). All the measurement items used a 5-point Likert scale; the participants were asked to
indicate their responses ranging from ‘strongly disagree’ (1) to ‘strongly agree’ (5). Certain measurement
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items required a specific numeric value, such as DSPS3 (‘percentage of revenues consisting of supplied
drawings’). In this case, respondents noted the exact value if they were aware of it or the approximate
value when an exact figure was not known. However, this led to vague responses such as ‘several million
dollars’ or ‘several tens of thousands of dollars’. To handle this issue, the values were confirmed to the
maximum extent possible using annual reports (such as those from Tokyo Shoko Research) or
well-known Japanese private databases (such as Teikoku Databank).

2.2. Data collection

The survey for research model A was conducted in October 2014. It targeted technology planning

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personnel in 559 corporations: 442 members of the Japan Auto Parts Industries Association and 117
personnel randomly selected from an industry research list of suppliers (Industry Research & Consulting,
2010). A total of 219 responses were received; eliminating the incomplete responses left us with 207
usable survey responses, representing a 37.0% response rate. The technology planning division was
targeted because it conducts technology marketing in Japan’s manufacturing industry; therefore, it is
closely involved in setting technology-related strategy as well as collecting information about

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technological changes and other factors relevant for commercialisation (Toya, 2011).

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The survey for research model B was conducted in April 2014. It targeted 220 companies within
Toyota’s Kyohokai association and 127 companies within Eihokai association; 17 of these companies

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were members of both associations, bringing the total to 330 companies. The survey was sent to the heads
of the technology planning divisions, and 171 responses were received. Surveys with incomplete

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responses were eliminated, leaving 152 usable responses, representing a 46.1% response rate. The
technology planning division was targeted in this survey for the same reasons as in the survey for research
model A.
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Prior to sending out the surveys, the contents and nature of the survey for research model A were
confirmed with 24 heads of technology planning divisions from 20 companies. A similar process was
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conducted for research model B, with 20 people from 16 companies belonging to the associations.

2.3. Method of analysis

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A partial least squares (PLS) analysis was used for several reasons. As a first step, structural equation
modelling (SEM) was deemed inappropriate (Chin, 1998a, b) since it seeks meaning in implied and
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observed covariance structures when the theories and theoretical models are relatively new. The PLS
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method is different from SEM in that the data measurement scale has virtually no constraints. This allows
researchers to use measured ratios and interval scales along with dichotomous categorical data. In
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addition, a PLS analysis is not hindered by a relatively small sample size (Kline, 1998; Hair et al., 1998;
Chin et al., 2003); 4–6 indicators require a sample size of only 100–150. These surveys used 6 indicators
in models A and B, and the resulting sample sizes were 207 and 152, respectively. To gain effective
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results using the AMOS or LISREL software typically used in SEM, a larger sample would have been
required. However, increasing the sample size, especially in the case of model B, was difficult because
the survey targeted a specific organisation. Thus, we found the PLS method to be the appropriate tool for
this exploratory study.

3. Exposition of Theory and Hypothesis Development

3.1. Impact of the characteristics of Japanese suppliers

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This section presents an industry-wide perspective of the impact of the characteristics of Japanese
suppliers on their predictions about future technologies (and then, in particular, their views on EVs), their
R&D preparations, and the production of EV components.

3.1.1. Predictions about future technologies and R&D preparations

Prior studies have emphasised the advantages of the long-term cooperative relationships among

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Japanese auto suppliers (Asanuma, 1989; Clark and Fujimoto, 1991; Cusumano and Takeishi, 1991;

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Nishiguchi, 1994). These studies focussed on cooperation in various tasks as well as joint problem
solving between automakers and suppliers. Thus, in the context of product architecture based on the

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internal combustion engine, cooperative relationships between automakers and suppliers have been
shown to benefit suppliers (Cusumano and Takeishi, 1991; Nishiguchi, 1994). In addition, these

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collaborative relationships themselves generate equal benefits for automakers as well as suppliers
(Asanuma, 1989; MacMillan, 1990). The inter-corporate system of relationships that is unique to Japan

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has given rise to the trading system known as keiretsu (Shimokawa, 1985; Smitka, 1991). These
Japanese-style cooperative relationships did not result from one-to-one exclusive relationships between
automakers and suppliers. Many suppliers in Japan currently supply components to several automakers,
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and automakers may procure the same kind of parts from multiple suppliers. The various aspects of these
transactions are established in a balanced power relationship (Richardson, 1993).
For the last two decades, end-user demand in the auto industry has become more diverse, leading to
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greater variety in the types of parts handled by automakers (Sanchez, 1995). Therefore, it is difficult for
the keiretsu of a single automaker to achieve economies of scale; suppliers must pursue economies of
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scope by supplying similar parts to various automakers (Goldhar and Jelinek, 1983; Kotha, 1995; Sanchez,
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1995). However, this response is in the context of the sustainable, balanced relationships that exist
between automakers and suppliers of the parts for internal combustion vehicles; the response to vast
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technological changes in product architecture (as is the case with EVs and FCVs) could be very different.
Hazeldine et al. (2009) showed that the future of product architecture in the auto industry is uncertain;
there are multiple possible scenarios. Overall, however, the automotive demand would remain mostly
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unchanged. Even if automotive demand continues to increase, the demand for existing internal
combustion vehicles is likely to drop (in relative terms) as new technologies mature and become
increasingly competitive in terms of performance and cost. When this happens, it is likely that simply
providing similar internal combustion vehicle parts to multiple automakers (as has been done so far) will
no longer be profitable. In addition, depending on the part(s), multiple suppliers may have to exit the auto
industry. The parts in internal combustion vehicles can be classified according to the type of body
components: engine parts; electrical and electronic parts; lighting; meters; gauges, and instruments;
drivetrain, gearing, and operating units; suspension and controllers; and other parts. In EVs, some of these
parts—engine parts, drivetrains, gearing, and operating units; and transmissions and shafts in

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particular—will not be required; instead, new parts such as batteries, inverter controllers, motors, battery
packs, and charging units will be needed. If one assumes that the entire automotive industry shifts from
internal combustion vehicles to EVs, the size of the market lost would be 3 trillion yen for engine parts,
1.8 trillion yen for transmission parts, and 0.3 trillion yen for drivetrain-related parts as of 2008,
amounting to a total of 5.1 trillion yen (Japan Society for the Promotion of Machine Industry, 2008).
If this estimate is accurate, suppliers who lose their market would need to expand operations by

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venturing into varied products and specialties. However, if this expansion is too far removed from their

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existing operations, it would have low probability of success and would negatively influence corporate
earnings (Rumelt, 1982; Meyer and Roberts, 1986). Predictions about future technologies will establish a

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foundation for long-term strategies (Chandler, 1962: 13) that can be regarded as guidelines for strategic
decision making by suppliers (Ansoff, 1965: 75). To achieve the suppliers’ goals resulting from these

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long-term strategies, companies would need to prepare courses of action for and allocate various
resources to R&D and production (Chandler, 1962: 13). It is necessary to distinguish intended strategy

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from realised strategy (Mintzberg, 1978). However, since an early product technology strategy with
regard to EVs has not yet been linked to corporate performance, it is reasonable to consider that
companies prepare for both R&D as well as production based on the present perspective related to EVs.
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This leads us to formulate our first hypothesis.

H1. As the prediction about the future of a new technology (in this case, EVs) becomes more favourable
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in terms of the technology’s uptake in the market, the level to which companies prepare for R&D and the
production of new (in this case, EV-related) components increases.
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3.1.2. Drawing-supplied parts system and drawing-approved parts system

The ‘drawing-supplied parts system’ and ‘drawing-approved parts system’ are important findings of
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prior studies on the Japanese automotive industry (Asanuma, 1989; Clark and Fujimoto, 1991). In the
drawing-approved parts system, suppliers create preliminary as well as detailed designs based on rough
specifications provided by the automakers (Nawa, 2004). They present these designs to the automakers
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for approval. On the other hand, in the drawing-supplied parts system, the automakers themselves
complete the preliminary and detailed designs, which the suppliers simply follow while producing parts.
Thus, in the drawing-approved parts system, suppliers strengthen their parts development capability and
their ability to offer proposals to automakers; the system demands an ‘active’ response from automakers
to the suppliers’ proactive efforts to incorporate end-user information. In contrast, the basic stance of
various companies in the drawing-supplied parts system (although different for each company) is
generally more ‘passive’ (Fujimoto and Ge, 2006). Based on these ideas presented in prior research, it can
be argued that the differences between these two systems could influence predictions about new
technologies. The drawing-approved parts system, in particular, requires suppliers to create designs while

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proactively incorporating end-customer needs as part of the proposal made to automakers. Therefore,
there is likely to be a marked effect on predictions regarding both new technology as well as products in
the drawing-approved parts system. However, in the drawing-supplied parts system, the automakers are
more likely to have a better perspective about the parts they require and the products in which they will be
used, which could render suppliers relatively indifferent.
When one considers the social capital between automakers and suppliers, however, a different aspect

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comes to the fore. Social capital is a concept that is used to explain individual relationships of trust and

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human relationships in general (Coleman, 1988; Putnam, 1993); care must be taken when applying it to
organisational relationships. However, the theory has been used to explain inter-corporate (Nahapiet and

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Ghoshal, 1998; Tsai and Ghoshal, 1998) and buyer-supplier relationships (Hughes and Perrons, 2011;
Villenaa et al., 2011). Nahapiet and Ghoshal (1998) classify social capital into three dimensions:

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cognitive, relational, and structural. As the level of cognitive social capital increases, groupthink (Janis,
1982) and isomorphism begin to set in (Uzzi, 1997; Arregle et al., 2007); thus, new sources of

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information may be ignored (Staw et al., 1981). As a result, innovation is likely to slow down as both
sides think in a similar fashion, which could lead them to lose sight of their goals (Locke et al., 1999);
this could also lead to opportunistic behaviour (Granovetter, 1985), suboptimal decisions (Bendoly et al.,
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2010), and poor decision making (McFadyen and Cannella, 2004). According to DiMaggio and Powell
(1983), mimetic isomorphism is the result of high uncertainty in fields involving organisations that supply
similar services and products, as is the case with automotive suppliers. This leads the organisations to
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implement what they consider to be successful strategic models.

As was previously discussed, Japanese suppliers currently work with several automakers, though their
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close relationships with automakers in the drawing-approved parts system were formed over many years
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and with specific automakers. Thus, even design systems that anticipate end-customer needs (such as the
drawing-approved parts system) render it difficult for suppliers to escape the successful model they
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previously created with automakers. This could lead to biased predictions related to new technologies and
product trends, such as in the case of EVs. However, there could be many opportunities to directly and
indirectly prepare for R&D and the production of EV-related parts, given the numerous occasions when
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suppliers deal with parts that have undergone a high level of technological change (Fujimoto and Ge,
2006). On the other hand, the drawing-supplied parts system accepts unilateral production demands from
automakers; therefore, it has a lower level of bi-directionality in supplier relationships with automakers.
From that perspective, this system does not engender the close relationships that the drawing-approved
parts system does. Therefore, the drawing-supplied parts system may be more effective than the
drawing-approved parts system in creating predictions about future technologies owing to the suppliers’
relatively better grasp of trends.
An important characteristic of Japanese automakers and suppliers is their Japanese-style cooperative
relationship (Asanuma, 1989; Cusumano and Takeishi, 1991; Nishiguchi, 1994; Sako and Helper, 1998),

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which is considered to have goodwill trust (Sako, 1991; Sako, 1992) based on mutually beneficial
intentions and close human relationships (Ouchi, 1980), despite it being a mere economic trading
relationship. Thus, even the drawing-supplied parts system, with its low bi-directionality, may lose
objectivity. However, since many automakers and suppliers currently have multiple transactional
relationships (Richardson, 1993), the relationships of specific companies in the drawing-supplied parts
system may not be as close as their relationship with a single company. Even if the number of trading

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partners in the drawing-approved parts system were to increase, the close relationships between

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automakers and suppliers would most likely remain intact. In the drawing-supplied parts system (where a
limited number of specific parts are handled in most cases), there are fewer parts with large technological

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changes compared to the number of such parts in the drawing-approved parts system. Therefore, the
preparations for R&D and the production of parts based on new technologies may be less likely. Based on

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the existing knowledge about the Japanese drawing-approved and drawing-supplied parts systems, a
number of hypotheses related to new technologies and their related components can be derived in relation

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to the overall priorities of established car manufacturers, which, according to extant knowledge, are the
present dominant technology, as in the case of the internal combustion engine.
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H2. As the importance of drawing-approved parts systems increases, suppliers become more inclined to
predict a favourable view with regard to the uptake of new technologies (in this case, EVs) by the market,
as the prediction is less dependent on views held by established car manufacturing customers.
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H3. As the importance of drawing-approved parts systems increases, a suppliers’ preparation for R&D
and production of new (in this case, EV-related) components increases, as it is less influenced by
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established car manufacturing customers.

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H4. As the importance of drawing-supplied parts systems increases, suppliers become less inclined to
predict a favourable view on the uptake of new technologies (in this case, EVs) by the market, as the
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prediction is more dependent on the view held by established car manufacturing customers.
H5. As the importance of drawing-supplied parts systems increases, a suppliers’ preparation for R&D
and production of new (in this case, EV-related) components decreases, as it is more influenced by
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established car manufacturing customers.

3.1.3. R&D intensity

Certain suppliers have R&D divisions that conduct basic research with a lean budget; these divisions
help these suppliers to satisfy certain vague requests made by automakers (Nawa, 2004). These R&D
divisions are common in companies that use the drawing-approved parts system, which offers many
opportunities to present new technologies. Many companies that use the drawing-supplied parts system
also have R&D divisions (Konno, 2007). However, most of the suppliers are typically small- and
medium-sized businesses with insufficient R&D investment. These R&D divisions are generally

Page 11 of 42
encouraged to submit research papers to academic conferences frequented by engineers in related fields,
and they are aware that executives often visit them to proffer advice and provide encouragement (Kor,
2006; Chen et al., 2010; Currim et al., 2012).
In this article, R&D intensity is defined as the degree of such executive understanding and
encouragement and the level of R&D expenditures (Kor, 2006; Chen et al., 2010; Currim et al., 2012).
Increasing R&D intensity alone, however, does not enhance competitive advantage (Lin et al., 2006).

t
When a company with a low level of technology announces increased R&D expenditures, their stock

ip
price generally tends to drop (Chan et al., 1990). Nevertheless, R&D intensity is important for corporate
growth (Audretsch et al., 2004), and it brings about growth in small- and medium-sized companies with

cr
relatively high levels of technology (Nunesa et al., 2012). These results could be interpreted differently
depending on the auto suppliers’ levels of technology; however, when producing parts, suppliers with

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R&D divisions require a certain level of technology. Further, we can infer that the level of R&D intensity
among suppliers will help increase corporate growth in general. However, there are no clear findings

an
regarding the effect of R&D intensity on predicting technology. As R&D intensity increases, the
acquisition of extensive knowledge through improved absorptive capacity (Cohen and Levinthal, 1989,
1990; Zahra and George, 2002) and knowledge spillovers (Jaffe, 1986; Griliches, 1992) from automakers
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or other companies in the same industry may increase. This could lead to an improved prediction
regarding EVs, and an increased degree of preparation for R&D and the production of EV-related parts.
Based on this reasoning, we propose the following two hypotheses.
d

H6. As a supplier’s R&D intensity increases, it takes a more favourable view regarding the uptake of new
e

technologies (in this case, EVs) by the market, as it is less dependent on the view held by established car
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manufacturing customers.
H7. As a supplier’s R&D intensity increases, its level of preparation for R&D and production of new (in
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this case, EV-related) components increases, as it is less influenced by established car manufacturing
customers.
Ac

3.1.4. Corporate diversification

Prior studies have shown that R&D intensity has a significant, mutually complementary relationship
with corporate diversification (Teece, 1998; Vinod and Rao, 2000; Lin et al., 2006). This article defines
corporate diversification as the level of related or unrelated diversification. Most of the large suppliers in
Japan were found to be working towards corporate diversification (Konno, 2007). Many of these large
suppliers have a high level of R&D intensity, as measured by the relatively high ratio of their R&D
expenditures to revenues and their many patents (Fukao and Ito, 2001). Related diversification by
suppliers is intended for entry into new product areas such as hybrid vehicle parts as well as
communications and control systems in electrical components (Industry Research & Consulting, 2010).

Page 12 of 42
On the other hand, some auto suppliers attempt unrelated diversification; for instance, a few suppliers
produce exterior and interior décor as well as intake and exhaust parts (Industry Research & Consulting,
2010). Both related and unrelated diversifications assume existing competence; there are very few
examples of companies foraying into areas in which they have no experience (Industry Research &
Consulting, 2010). Having diversified personnel is critical to diversifying operations (Fernández-Olmos
and Díez-Vial, 2013); among the Japanese auto suppliers, those with high R&D intensity have employees

t
with experience beyond the technological fields related to the parts they manufacture (Industry Research

ip
& Consulting, 2010). Corporate diversification due to a wide variety of business opportunities due to
market change has a close relationship with the diversification of competencies (Granstrand and Sjölander,

cr
1990; Chiesa and Manzini, 1997; Granstrand, 1998). However, technological diversification that is deeply
relevant to corporate diversification has a larger positive impact on exploratory innovative competence

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than on exploitative innovative competence (Quintana-Garcia and Benavides-Velasco, 2008). Thus,
corporate diversification may have a favourable effect on the prediction regarding EVs. In addition,

an
corporate diversification provides more opportunities to observe and react to changes in the market and to
gain absorptive capability, as it allows firms to predict the commercial potential of technological advances
and to exploit technological opportunities (Cohen and Levinthal, 1990; Levinthal and March, 1993).
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H8. As a supplier’s corporate diversification increases, it predicts a more favourable future for a new
technology (in this case, EVs) in terms of its uptake by the market, as it is less dependent on the view held
d

by established car manufacturing customers.

H9. As a supplier’s corporate diversification increases, its level of preparation for R&D and production
e

of new (in this case, EV-related) components increases, as it is less influenced by the view held by
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established car manufacturing customers.

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3.2. Influence of the characteristics of suppliers belonging to supplier associations

This section discusses the impact of the characteristics of Japanese suppliers that belong to supplier
associations on EV-related information gathering and predictions related to EVs. These are dealt with
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from the perspective of supplier associations.

3.2.1. Supplier associations

Supplier associations of Toyota hold an important position among automotive suppliers in Japan. These
associations are voluntary cooperatives organised by the suppliers that are important to specific
automakers (Asanuma, 1989; Sako, 1992). Kyohokai, the supplier association for Toyota organised in
1939, has symbolic significance among Japan’s supplier associations. Kyohokai is not directly related to
operations (such as the joint ordering of parts); rather, it focuses on non-profit activities such as
improving ‘shared awareness of issues’ and ‘bi-directional communication’. As mutually supportive

Page 13 of 42
partners, member companies have created slogans such as ‘strengthening Japanese manufacturing’ and
‘taking care of issues for global development’, based on Toyota’s global procurement policies. The
association also encourages reciprocal study and interaction among its members. Eihokai is a cooperative
organisation created by Toyota’s equipment- and logistics-related suppliers. Its predecessor, Hoeikai,
which was founded in 1962, aimed to improve the technology and management skills of non-parts
suppliers (die casting, jig, and gauge manufacturers, for instance). From 1983 onwards, it included

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equipment- and distribution-related suppliers (Kyohokai, 1994). A joint conference sponsored by

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Kyohokai and Eihokai in 1987 was the first in which a Toyota chairman participated. As a result, Toyota
came to recognise these organisations in a semi-official manner. Although the essence of their work is the

cr
same, these associations act independently. Since 2006, a management council comprising corporations
belonging to Kyohokai and Eihokai has been working to deepen the mutual awareness of issues spanning

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both organisations in areas such as sales, facilities, and distribution.

3.2.2. Information gathering

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The specific activities of the associations through which suppliers have nurtured cooperative
relationships among themselves (Sako, 1992; Hines, 1996) include receiving technical guidance from
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automakers, conducting lively discussions, and preparing proposals in member study groups. The
research groups associated with Toyota are called jishuken; participation is voluntary in case suppliers do
not want instruction or interference from the association. Jishuken are organised into special
d

problem-solving groups in which each supplier learns about kaizen (continuous improvement)-related
themes such as productivity, cost, and quality (Sako, 1992; Hines, 1996). The primary difference between
e

the so-called quality control (QC) circles and jishuken is that the former are focused on kaizen within
pt

single divisions, while the latter involve multiple corporations and divisions. The automakers assume a
leadership role in jishuken; however, it is noteworthy that suppliers express opinions and ideas in the
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communication process (Marksberry et al., 2010). Study groups similar to jishuken can be found
associated with automakers other than Toyota; however, Toyota’s suppliers are known to be more
committed compared to those of other automakers (Manabe, 2004). There is little specific evidence that
Ac

EV-related themes have been major topics of discussion in jishuken. Nevertheless, communication among
jishuken members enables suppliers to gather a variety of information, which should lead to opportunities
to gain information or to make predictions about the future of EVs, as shown in previous studies (Rau,
2006; Letterie et al., 2008). Based on these findings, we derive our next hypothesis.

H10. As a supplier’s information gathering about new technologies (in this case, EV-related) increases, it
predicts a more favourable future for these new technologies with regard to their uptake by the market, as
it is less dependent on the view held by established car manufacturing customers.

Page 14 of 42
3.2.3. Horizontal communication among suppliers
Horizontal communication among suppliers (as seen in jishuken) involves discussions related to
existing technological platforms regarding internal combustion vehicles, including hybrid vehicles. This
does not necessarily imply that the productivity issues discussed in this context are unrelated to
next-generation technologies. Frequent high-level interactions strengthen the mutual ties among the
associations (Dahlstrom and Ingram, 2003; McFadyen and Cannella, 2004; Oke and Idiagbon-Oke, 2010).

t
As a result, the level of social capital among association members also increases, rendering the

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associations less likely to escape the relationships built in the context of internal combustion vehicles
(Gargiulo and Benassi, 2000) owing to the fear of forfeiting the relationship-specific assets amassed over

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many years (Anderson and Jap, 2005; Poppo et al., 2008). Therefore, as communication among suppliers
belonging to these associations increases, the suppliers become more likely to disadvantageously affect

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predictions about the future of EVs. Since the research activities of these associations are related to the
production and the QC of existing internal combustion vehicles, single-loop learning is strengthened

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primarily; concurrently, a move to double-loop learning is impeded (Argyris and Schön, 1978; Gargiulo
and Benassi, 2000) regardless of how frequently the suppliers interact with one another. Thus, only the
learning about existing products is strengthened, and communication among suppliers may not influence
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the gathering of information regarding EVs and other changes in technology. Hence, the following
hypotheses related to horizontal communication among suppliers can be formulated.
d

H11. As communication among suppliers increases, they take an increasingly unfavourable view
regarding the uptake of new technologies (in this case, EVs), as such communication tends to focus on
e

existing operations.
pt

H12. As communication among suppliers increases, their information gathering concerning new
technologies (in this case, EVs) is reduced, as such communication will substitute other types of external
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search.

3.2.4. Vertical communication between automakers and suppliers

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Supplier associations may exist to serve as mediators in response to opportunistic behaviour on the part
of automakers (Sako, 1996). Frequent contact between personnel from both sides for discussions on joint
design and cost management has successfully engendered mutual trust (Morgan and Hunt, 1994;
Fujimoto, 2007) while preventing antagonism between automakers and suppliers. Close vertical
communication between automakers and suppliers has reduced the need for detailed agreements (Dyer,
1994). Trust built in this manner leads to quality communication (Anderson and Narus, 1990).
Automakers and suppliers accrue social capital through the continuous cycle of joint activities. Moreover,
they can expect further improvements in their technological base for existing internal combustion vehicles.
On the other hand, the trust developed through deepening relationships potentially brings about

Page 15 of 42
groupthink, isomorphism, and an indifference to new information. This leads to a strong affinity for
existing relationships predicated on internal combustion vehicles and a tendency to resist the
discontinuation of the existing relationships with automakers (Kim et al., 2006; Li et al., 2006). These
tendencies counter the development of predictions favouring the uptake of emerging technologies. Many
Japanese automakers have articulated clear favourable positions with regard to the uptake of EVs, and
they are taking concrete steps in this direction, such as demonstration experiments (Greimel, 2008;

t
Hitchings and Nieto, 2009), whereas other automakers (such as Toyota) have instead come to focus their

ip
efforts to develop new technology on FCVs. However, irrespective of the specific stance of particular
automakers, close communication between automakers and suppliers may drive or lead to improved

cr
technology-related information gathering. Consequently, we formulate the following hypotheses
regarding vertical communication.

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H13. As communication between a supplier and its car manufacturing customers increases, the suppliers

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hold an increasingly unfavourable view with regard to the future uptake of new technologies by the
market (in this case, EVs), as such communication tends to focus on existing operations.
H14. As communication between a supplier and its car manufacturing customers increases, the supplier’s
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information gathering concerning new technologies (in this case, EVs) increases.

3.2.5. Arm’s-length relationships

d

Another important characteristic of the automaker-supplier relationships in Japan is that Japanese

cooperative transactions provide more advantages compared to the arm’s-length transactions that are
e

common in Europe and the U.S. These transactions were classified as arm’s-length contractual relations
pt

(ACR) and obligational contractual relations (OCR) by Sako (1992). Based on this categorisation, the
cooperative relationships within Japan’s automotive industry are typically OCRs. The ACRs are based on
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specific, discrete economic transactions; they involve impersonal relationships in which the parties
involved are not averse to changing transaction partners after the contracts expire. As was discussed
previously, from an industry-wide perspective, the transactional relationships between a single supplier
Ac

and multiple automakers in a market may be arm’s length in nature. However, in the context of
associations, it is difficult to find clear ACRs among suppliers that belong to an association of the
automaker.
In the future, discontinuous technological changes (such as EVs) may favour suppliers that need to
leave an association because of technological constraints to maintain minimal arm’s-length relationships
or weak ties (Granovetter, 1973; Burt, 1992), thus enabling them to distance themselves from automakers.
This may be more suitable for the gathering of new information by the suppliers. In other words, the
principle of action founded on arm’s-length relationships may improve the gathering of EV-related
information. In addition, it is clear that several types of existing technologies will never be used in EVs.

Page 16 of 42
Therefore, when companies that never belonged to the auto industry begin making batteries and motors,
and they find it easy to enter the industry, they may feel less loyal towards associations and exit them
when they notice lower barriers to market entry and changes in the competitive environment (Hirschman,
1970). Given the merits of the commodity markets, which are characterized by multiple suppliers, low
asset specificity, and little market uncertainty, companies tend to be continually focused on short-term
profits (Skjøtt-Larsen et al., 2003), which may have a disadvantageous impact on the predictions

t
regarding emerging technologies. Two hypotheses related to the effects of arm’s-length relationships are

ip
derived from the theory discussed so far.

cr
H15. As the importance of using arm’s-length relationships increases, suppliers take an increasingly
unfavourable view about the future uptake of new technologies (in this case, EVs), as they are less

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focused on long-term development.
H16. As the importance of using arm’s-length relationships increases, a supplier’s information gathering

an
concerning new technologies (in this case, EVs) is increased, as it is less influenced by established car
manufacturing customers.
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3.2.6. Japanese-style cooperative relationships
Over time, Japanese automakers and suppliers have jointly solved problems and coordinated tasks.
Goodwill trust (Sako, 1991; Sako, 1992), such as that in association activities, is critical for working
d

together effectively; it also promotes information exchange between companies. This, in turn, engenders
mutual trust and loyalty (Industry Research & Consulting, 2010). These are the most distinctive aspects of
e

the Japanese transactional practice known as keiretsu (Shimokawa, 1985; Smitka, 1991), which is a
pt

typical characteristic of Japanese-style cooperative relationships that are maintained despite changes in
the competitive environment (Asanuma, 1989; Cusumano and Takeishi, 1991; Nishiguchi, 1994; Sako
ce

and Helper, 1998). It is noteworthy that many suppliers may belong to the keiretsu of a particular
automaker while also supplying parts to multiple automakers (Richardson, 1993; Nishiguchi, 1994),
making them highly autonomous in dealing with broad inter-organisational transactions (Martin et al.,
Ac

1995). Generally, such autonomous suppliers have greater bargaining power with automakers (Porter,
1980; Cowley, 1988) and may prefer arm’s-length rather than cooperative transactions. However,
research on typical ACRs in the U.S. auto industry revealed instances of relationships between
automakers and suppliers that are long-term and cooperative in nature (Helper, 1991). Thus, regardless of
the ability to create inter-organisational transactions, Japanese suppliers belonging to associations are
unlikely to be more opportunistic than the U.S. suppliers. As a result, these suppliers—that act in
accordance with the principles of Japanese-style cooperative relationships—may find it difficult to
separate from an automaker with whom they have had long-term relationships (Christensen and
Rosenbloom, 1995; Christensen, 1997). Therefore, the principles of action based on Japanese-style

Page 17 of 42
cooperative relationships will not lead to proactive technology-related information gathering; further,
these principles of action may make it difficult to gain clear predictions regarding new technologies such
as EVs. Thus, we formulate the following hypotheses.

H17. As the importance of using Japanese-style cooperative relationships increases, a supplier’s

predictions about new technologies (in this case, EVs) tend to become increasingly unfavourable with

t
regard to their uptake by the market, as they are more influenced by established car manufacturing

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customers.
H18. As the importance of using Japanese-style cooperative relationships increases, a supplier’s

cr
information gathering concerning new technologies (in this case, EVs) is reduced.

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We outlined 18 hypotheses regarding the characteristics of Japanese suppliers that impact the
predictions about future technologies. These are represented in the comprehensive research models
presented in Figure 1.

4. Results
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4.1. Demographic characteristics of the samples
The demographic characteristics of the samples were found to be as follows. In research model A, of
d

the 207 corporations that provided effective responses, 16 (7.7%) had 10,000 or more employees; 18
(8.7%) had between 5,000 and 9,999 employees; 32 (15.5%) had between 1,500 and 4,999 employees; 53
e

(25.6%) had between 500 and 1,499 employees; and 88 (42.5%) had 499 or fewer employees. Of these,
pt

21 corporations had 100 or fewer employees (i.e. 10.1% of the total). One hundred and forty-four
companies handled engine-related parts, transmissions, torque converters, intake systems, fuel systems,
ce

exhaust systems, lubrication systems, charger and starter systems, ignition systems, hydraulic brakes, or
other parts not used in EVs (69.6% of the total), while 78 companies (37.6%) focused exclusively on
parts not used in EVs.
Ac

In research model B, of the 152 corporations that provided effective responses, 15 (9.8%) had 10,000
or more employees; 12 (7.9%) had between 5,000 and 9,999 employees; 20 (13.1%) had between 1,500
and 4,999 employees; 46 (30.2%) had between 500 and 1,499 employees; and 59 (38.8%) had 499 or
fewer employees. Nine corporations had 100 or fewer employees (5.9% of the total), and 100
corporations (65.8%) handled parts not used in EVs. Of these, 45 corporations (29.6% of the total)
focused exclusively on parts not used in EVs. Table 2 presents the demographic characteristics of the
samples.

4.2. Measure validation

Page 18 of 42
 From the measures, we assessed convergent validity by examining composite reliability (CR), average
variance extracted (AVE), mean, and standard deviation (SD). The correlation matrix is presented in Table
3. It indicates that AVE was 0.5 or greater. The values for CR need to be 0.6 or greater (Bagozzi and Yi,
1988); we confirmed that all values exceeded 0.6. All correlation coefficients must be less than 0.8, at
which point multicollinearity is believed to arise (Bryman and Cramer, 1994). All the values were found
to be below this level. Further, discriminant validity was examined via the square root of AVE (Bock et al.,

t
2005) to evaluate the severity of common method variance in the PLS model. In addition, a common

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method variance analysis (Klein et al., 2007; Liang et al., 2007; Siponen and Vance, 2010) was
conducted to evaluate the model’s validity; the results are presented in Table 4. The substantive variances

cr
of the indicators were generally above the values for the method variances. The average explained
variances of substantive indicators were 0.671 and 0.619 in research models A and B, respectively. The

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average method-based variances were 0.026 and 0.022 in research models A and B, respectively. The
ratios of substantive variance to method variance were approximately 26:1 and 28:1 in research models A

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and B, respectively. Further, four method factors in research model A had p < 0.01, while this was the
case with three method factors in research model B. Aside from these cases, most of the method factor
loadings were not significant. Thus, within both models, it was confirmed that common method variances
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did not affect the results of the PLS analysis. In these results (which are explained below), differing levels
of dominance were confirmed, indicating the possibility of a small impact of common method variance
within the PLS model (Patnayakuni et al., 2006).
d

Next, we tested for item reliability of each construct within the PLS analysis; the results are shown in
Table 5. Values that are not significant at low levels should not be included in item loadings (Chu et al.,
e

2004). To show item reliability, it was assumed that an item loading of 0.5 or higher is desirable (Rivard
pt

and Huff, 1988; Janz and Prasarnphanich, 2003; Hasan and Ali, 2007). The results showed that item
loadings were higher than 0.5 in both research models A and B. The t-value of ALRL1 in research model
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B (‘participation in associations primarily for company profit’) was rather low, although the accurate
p-value was calculated to be 0.019 at the 2% level of significance. Thus, there are no issues with the
analysis. Further, it is recommended that the values of Cronbach’s alpha for all the indicators should be
Ac

higher than 0.6 (Nunnally, 1967); all the results measured in this study satisfied this criterion. Thus, all
the measurement items were found to be sufficiently reliable.

4.3. Structural model analysis

A PLS analysis was used to assess both the research models in order to test the hypotheses proposed in
this study. Figure 2 illustrates the results of the analysis. Using a t-test, a bootstrapping procedure (with
500 sub-samples) (Chin, 1998b) was conducted to examine the statistical significance of each path
coefficient. The variance explained in the endogenous variables (R2) as well as the significance of the
regression coefficients reflect the quality of the PLS model (Chin, 1998b; Saadé, 2007).

Page 19 of 42
 The variance explained in the endogenous variables (R2) in research model A was 15.4% for
predictions about new technologies (EVs) and 30.1% for initiatives related to parts, R&D, and
manufacturing concerning new technologies (EVs). Of the nine path coefficients, seven were statistically
significant at levels of 1–10%. The variance explained in the endogenous variables (R2) in research model
B was 23.8% for predictions about new technologies and 27.9% for information gathering. Of the nine
path coefficients, seven showed statistical significance at levels of 1–10%.

t
Table 6 presents the results of the hypotheses testing; the results mostly support the hypotheses that were

ip
proposed in this study. In research model A, however, there is no conclusive evidence to validate H5 (‘As
the importance of drawing-supplied parts systems increases, a suppliers’ preparation for R&D and

cr
production of new components decreases, as it is more influenced by established car manufacturing
customers’) and H8 (‘As a supplier’s corporate diversification increases, it predicts a more favourable

us
future for EVs in terms of uptake by the market, as it is less dependent on the view held by established car
manufacturing customers’). The results supported H1 (‘As the prediction about the future of a new

an
technology becomes more favourable in terms of its future uptake in the market, the level to which
companies prepare for R&D and the production of new components also increases’) at the 5% level (the
accurate p-value calculated from the t-statistics was 0.011, thus close to the 1% level). The results for H2
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(‘As the importance of drawing-approved parts systems increases, suppliers become more inclined to
predict a favourable view with regard to the uptake of EVs by the market, as the prediction is less
dependent on views held by established car manufacturing customers’) were also statistically significant
d

at the 5% level (also, here, the accurate p-value calculated from the t-statistics was close to 15, more
exactly, 0.015). However, the results show that the relationship between the variables is a negative one,
e

implying that giving increased importance to the drawing-approved parts systems results in a more
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unfavourable prediction about the future of new technologies. A similar observation in terms of a reversed
sign on the inter-relationship was seen in the results for H4 (‘As the importance of drawing-supplied parts
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systems increases, suppliers become less inclined to predict favourable uptake of EVs by the market, as
the prediction is more dependent on the view held by established car manufacturing customers’), although
with a significance level of only 10% (more specifically, the accurate p-value calculated from the
Ac

t-statistics being 0.064). Nevertheless, it is evident that placing increased importance on the
drawing-supplied parts systems leads suppliers to make more favourable predictions about the uptake of
new technologies. Also, H9 (‘As a supplier’s corporate diversification increases, its level of preparation
for R&D and production of new components increases, as it is less influenced by the view held by
established car manufacturing customers’) was found to be statistically significant at the 10% level (the
accurate p-value calculated from the t-statistics being 0.066).
In research model B, we did not find clear proof in support of H12 (‘As communication among
suppliers increases, their information gathering concerning new technologies is reduced, as
communication with other suppliers will substitute other types of external search) and H18 (‘As the

Page 20 of 42
importance of using Japanese-style cooperative relationships increases, a supplier’s information gathering
concerning new technologies is reduced’). An unfavourable causal relationship was assumed for all the
hypotheses, but the (non-significant) relationship in H18 was actually found to be favourable.

5. Discussion

t
At present, the Japanese auto industry is faced with the seemingly inevitable adoption of new

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technologies such as EVs, whose product architecture differs greatly from that of vehicles based on
traditional internal combustion engines. This exploratory study identified several important factors that

cr
could affect the predictions about new technologies, using the example of EVs as an empirical probe;
prior studies suggested that these factors support the advantages held by Japanese auto suppliers.

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The analysis of research model A—based on the Japanese auto parts industry as a whole, regardless of
the automakers’ keiretsu—yielded the following results. Favourable predictions about the future of new

an
technologies (focused on EVs, in this case) led companies to prepare for R&D and production related to
these new technologies. Only R&D intensity and the drawing-supplied parts system induced more
favourable predictions about the uptake of new technologies. The last half of these results is the opposite
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to what was hypothesized, and thus calls for more in-depth analysis. Another surprising result was that the
drawing-approved parts system, which offers many opportunities for close interactions between
automakers and suppliers, as well as the possibility for suppliers to take the initiative to develop and
d

propose new technologies and components, showed a high possibility of impeding the development of
predictions about EVs. The reason behind this finding could be that R&D and the production of internal
e

combustion engine parts account for much of these suppliers’ business, and they are therefore likely to
pt

keep their focus on internal combustion engine parts. Yet another possible reason for the negative impact
of the drawing-approved parts system may be that many suppliers have limited technological capabilities
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and that this is why they do not have a favourable view about the uptake of new technologies such as EVs.
Hence, a possible explanation to the observed negative inter-relationship is that it may be moderated by
suppliers’ technological capabilities. Irrespective of which explanation is valid, it can be concluded that
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even though automakers may express a clear vision about the future of EVs to the rest of the world, the
suppliers tend to continue producing the same parts as before. In addition, automakers as well as suppliers
work with multiple companies, and commonality regarding parts is used to win the global cost
competition (Garud and Kumaraswamy, 1995; Nobeoka and Cusumano, 1995; Nobeoka and Cusumano,
1997). From this perspective, the work done by automakers and suppliers on these existing parts has
benefitted the industry. Thus, we can say that a strong drawing-approved parts system tends to increase
self-awareness among suppliers regarding their current operations, even if they are not particularly
sceptical about the future of EVs.
Moreover, the drawing-approved parts system was considered to accelerate the preparation for R&D

Page 21 of 42
and production related to EV parts. Companies using this system conducted R&D more often,1 which
may have facilitated their progress to R&D and production related to new technologies. Extant research
has highlighted that the drawing-approved parts system is a source of competitive advantage for the
Japanese auto industry (Fujimoto, 2007). In addition, an increased level of cognitive social capital (Staw
et al., 1981; Janis, 1982; Uzzi, 1997; Nahapiet and Ghoshal, 1998; Arregle et al., 2007) could impede
responses to discontinuous technological changes such as EVs. In the context of the production of

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existing internal combustion vehicles, Japanese suppliers have an unchallenged advantage, as typified by

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the drawing-approved parts system. If the drawing-supplied parts system (with automakers pushing
drawings of mass-produced parts onto suppliers) were implemented at a high level, suppliers could

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experience a crisis; this could be linked to the development of more unfavourable predictions about EVs.
Nevertheless, once a favourable prediction is developed to some extent (even passively), a causal chain

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can be confirmed, in which the likelihood of the preparations for R&D and production related to the new
technology can be increased. Thus, contrary to what was hypothesized, the drawing-supplied parts system
leads to more favourable predictions about new technologies.
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With regard to R&D intensity, some prior researchers were of the opinion that ‘the performance of
basic research may be thought of as a ticket of admission to an information network’ (Rosenberg, 1990).
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Similarly, we recognised that securing opportunities to interact with the technological paradigms (Dosi,
1982) of the automobile industry is important for acquiring more optimistic perspectives on new
technologies. In addition, a direct tie was confirmed between R&D intensity and preparation for R&D and
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production of new technologies. In other areas, the results showed the likelihood of preparations for R&D
and production based on new technologies in companies that were aggressively undertaking corporate
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diversification. However, there was no conclusive evidence of these preparations being based on
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predictions about new technologies; thus, these preparations should be regarded as an unexpected
by-product of practicing R&D and production related to new technologies. Ng (2007) argues that
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unrelated diversification regarding entrepreneurial orientation is mostly explained by absorptive capacity;

absorptive capacity allows the discovery of new applications for resources during conditions of market
failure that are characterised by ‘incomplete’ markets.
Ac

An additional set of findings were obtained by analysing research model B, which examined
associations with a specific automaker. With regard to information gathering concerning new technologies,
there are vertical information flows that include communication between the automaker and suppliers, as
well as horizontal information flows that include communication among suppliers. The former were
found to have a favourable effect on the uptake of new technologies, whereas no such effect resulted from
the latter. In the context of the relationships among suppliers effectively gathering information on new
technologies, no conclusive evidence was found regarding the effectiveness of Japanese-style cooperative
relationships, which are regarded to be a specific strength of Japan’s suppliers (Asanuma, 1989;

1
Industrial Research and Consulting in Japan (IRC) reported in 2010.

Page 22 of 42
Cusumano and Takeishi, 1991; Nishiguchi, 1994; Sako and Helper, 1998). However, it is interesting to
note that arm’s-length relationships (Sako, 1992), which are common in Europe and the U.S., were found
to significantly affect information gathering concerning new technologies. It has previously been shown
that weak ties (captured here as arm’s-length relationships) lead to more radical innovation, whereas
stronger ties (represented here by Japanese-style cooperative relationships) are conducive for more
incremental innovation (Hemphälä and Magnusson, 2012).

t
In this study, information gathering concerning new technologies was the only factor that had a

ip
favourable impact on the predicted uptake of these new technologies (EVs, in this case). While
communication with automakers was effective for technology-related information gathering, the data

cr
implied that it could directly impede the formation of predictions about the future of EVs. This could be
due to the optimisation of the value network to manage a single technology system (Christensen and

us
Rosenbloom, 1995; Christensen, 1997); as part of the keiretsu system, associations are optimised
primarily for the internal combustion vehicles value network. Thus, although automakers present a rather

an
clear vision of new technologies to society, within the association (which is part of the internal
combustion vehicle value network), they often treat suppliers as the ‘face of the internal combustion
vehicle’. Despite such bias in communication, suppliers should be able to find effective information about
M
new technologies. Their relationship should allow for communication with automakers to obtain
information about new technologies, followed by the formation of predictions regarding the same.
The data implied the effectiveness of a path where arm’s-length relationships in information gathering
d

led to the formation of predictions of new technologies. However, Japanese-style cooperative

relationships reflected no such influence on the formation of predictions; rather, they reflected the
e

possibility of creating a less favourable view regarding the future of new technologies. The fact that
pt

arm’s-length relationships and Japanese-style cooperative relationships disadvantageously affect the

predictions about EVs indicates that the activities of associations could impede the formation of these
ce

predictions. This would be in line with the arguments put forward in the prior literature on disruptive
innovations, where it has been suggested that the mere existence of connections in a value network could
hamper fruitful technological discontinuities (Christensen and Rosenbloom, 1995; Christensen and Bower,
Ac

1996). Similarly, it is likely that communication among suppliers within an association is not conducive
to forming optimistic predictions about new disruptive technologies; such communication would instead
primarily focus on existing technologies and businesses. These findings support the results of previous
studies that showed that factors related to Japanese-style cooperative relationships could obstruct the
suppliers’ ability to foresee EV-related technological changes.
From the above, Japanese-style corporative relationships do not appear to be fruitful information
sources for predictions about new technologies of a potentially disruptive nature. However, relying on
arm’s-length relationships presents similar issues. Altogether, we observe a challenging, and to some
extent, paradoxical inter-relationship between different supplier-customer relationships, information

Page 23 of 42
gathering, and future predictions concerning new technologies. On the one hand, we note that both types
of relationships helped information gathering, which in turn is fundamental for the generation of
predictions about new technologies. On the other hand, both these types of relationships lead to
unfavourable predictions with regard to the uptake of the new technologies by the market. How to handle
this complexity stands out as a serious and important task for management research and practice.

t
6. Conclusions

ip
This exploratory study revealed several factors that affect how Japanese suppliers form predictions

cr
about the future of new technologies. First, we conclude that suppliers’ R&D intensity and the degree to
which the drawing-supplied parts system is used clearly leads to predictions that favour the uptake of new

us
technologies. At the same time, the analysis of supplier associations indicates that communication
between automakers and suppliers and arm’s-length relationships also lead to predictions that favour new

an
technology adoption via their effects on information gathering about these technologies. However,
simultaneously, these two supplier-customer characteristics also lead to less favourable predictions about
future technologies (focusing on EVs, in this case). From an industry-wide perspective, the
M
drawing-approved parts system leads to predictions that do not favour new technology uptake. Focusing
on the supplier association aspects, it is found that Japanese-style cooperative relationships, arm’s-length
relationships, communication between automakers and suppliers, and communication among suppliers all
d

lead to a less favourable view of new technology uptake (in this case, EVs). The observations indicate
that Japanese auto suppliers make predictions about the future of new technologies through the
e

communication between a variety of unusual partners in relation to R&D or the drawing-supplied parts
pt

transactions with various automakers, rather than through close relationships pertaining to the drawing
approved parts system or supplier associations.
ce

Summarising these results, we see that several characteristics of Japanese-style cooperative relationships
are likely to obstruct the formation of predictions favouring the uptake of new technologies such as EVs.
Whereas the mentioned characteristics have previously been recognized as sources of competitive
Ac

advantage for the Japanese automotive industry, the findings of this study indicate that these advantages
may also be a source of inertia and resistance to adopting new technologies of a more disruptive nature.
Turning to the observed case of EVs, we note that various surveys across countries (Kampman et al.
2011; Momota, 2011; PricewaterhouseCoopers, 2011; U.S. Department of Energy, 2011) highlight
different aspects influencing the adoption of this new technology. It becomes clear that the low degree of
agreement between the predictions of these surveys and the cognition of the Japanese suppliers in terms
of EV sales, production volumes, and restructuring levels of the auto parts industry in the future is notable.
Consequently, the Japanese supplier’s characteristics of strong integration, which have been traditionally
seen as a strength in the context of Japan’s auto industry, and Japanese-style cooperative relationship may

Page 24 of 42
hamper the response to the disruptive innovation that EVs can be considered to constitute.
Furthermore, the R&D intensity of Japanese suppliers is insufficient as an organisational function; this
was strongly implied to contribute to the ability to spot new technology trends without being influenced
by one’s environment and the accuracy of one’s predictions about EVs. Similar to the case of the
drawing-approved parts system (which is normally considered a particular strength of Japanese suppliers),
when suppliers have a close relationship with automakers, they must be particularly careful. As is the case

t
with the drawing-supplied parts system, it is necessary to maintain a sense of tension and crisis. The

ip
pursuit of corporate diversification could lead to the best possible performance in terms of new initiatives,
because of its exploratory innovative competence in providing a wide variety of business and

cr
technological opportunities. There are many opportunities for social efforts such as those found in
associations (e.g., Kyohokai and Eihokai), and it is likely that many of these activities will condition the

us
predictions about new technologies and businesses in a way that leads to slow adoption compared to
competitors. Overcoming this hurdle would require an objective stance with regard to these activities, as

appropriate distance.
an
well as the gathering of suitable information regarding products that mark new eras, while maintaining an

Recently, some firms started providing parts for EVs. However, most Japanese auto suppliers remain
M
sceptical about the growth potential of the EV market. The findings reported in this study may be
significant for suppliers that face the transition to the next generation of products with ‘little change in
their customer base but great changes in technology’(Anderson and Tushman, 1990) as well as EVs.
d

However, this research was conducted on a single industry, and care should be taken not to generalize the
results from such a limited data set. Thus, a limitation of this research is that product changes that
e

maintain value continuity in the market cannot be generalized. Future studies may consider this aspect in
pt

more detail.
ce

Acknowledgments
This article was supported by a grant-in-aid received from the Japanese Ministry of Education, Culture,
Sports, Science, and Technology for foundational research on (B) 23300135. The authors wish to thank
Ac

all the organisations that were part of this study.

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us
Highlights

an
Drawing-approved parts system is not the effective information source for the predictions about EVs.
M
Drawing-supplied parts system is rather the effective information source for the predictions about EVs.

Japanese-style corporative relationships are not the effective information sources for the predictions about
d

EVs.
e

Arm’s-length relationships are the effective information source for the predictions about EVs in the
pt

context of EV-related information gathering.

ce
Ac

Page 34 of 42
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us
Future
prediction
Corporate 0.053 0.197# Drawing-supplied
on new

an
diversification technologies parts system
R2=0.154

0.201# 0.027

M
0.217*
0.305** -0.204*

ed
Preparation for
R&D 0.299** R&D and 0.259* Drawing-approved
intensity production parts system
pt R2=0.301

** p<0.01. * p<0.05. #p<0.10.

Research model A
ce

Future
Japanese style prediction
-0.303** -0.346** Communication
cooperative on new
Ac

technologies with an automaker

relationships
R2=0.238

0.104 0.269**
0.414**
-0.201* -0.192#

Information Communication
Arm's length 0.283** -0.001
gathering with
relationships
R2=0.279 parts suppliers

Research model B ** p<0.01. * p<0.05. #p<0.10.

Fig. 2. Results of Partial Least Squares Analysis

Page 35 of 42
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Future
Corporate prediction Drawing-supplied

an
diversification on new parts system
technologies

M
ed
Preparation for
R&D Drawing-approved
R&D and
intensity parts system
pt production

Research model A
ce

Future
Japanese style
prediction Communication
cooperative
Ac

on new with an automaker

relationships
technologies

Communication
Arm's length Information
with
relationships gathering
parts suppliers

Research model B

Fig. 1. Research Models

Page 36 of 42
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Table 1. Measurement Items
Research model A:
Valuable M easurement items Indicator
Corporate diversification We are considering entering new fields within the automotive parts industry (related diversification) CDIV1

an
We are considering entering new fields outside the automotive parts industry (unrelated diversification) CDIV2
Diversity in personnel is critical to achieving business diversification CDIV3
R&D intensity The company encourages academic publishing and participation in conferences RADI1
Executives understand the importance of R&D RADI2

M
Percentage of revenues spent on R&D (specific figures) RADI3
Drawing-supplied parts system We will continue producing parts based on the drawing-supplied parts system DSPS1
We need to have confidence in the assembly makers involved in the drawing-supplied parts system DSPS2
Percentage of revenues comprising drawing-supplied parts system parts DSPS3
Drawing-approved parts system We will continue producing parts based on the drawing-approved parts system DAPS1

ed
We can thoroughly understand assembly makers through the drawing-approved parts system DAPS2
Percentage of revenues arising from the drawing-approved parts system DAPS3
Future prediction on Evs EV sales will increase in the future FPEV１
The percentage of EVs to total cars sold will continue to grow FPEV2
pt EVs will force a restructuring of the auto parts industry (e.g., many suppliers will leave the industry) FPEV3
Preparation for R&D and production We are conducting R&D on EV parts technology PRPE1
of EV-related components We have begun production of EV parts PRPE2
ce
Our company's technology is indirectly related to EV parts technology PRPE3

Research model B:
Valuable M easurement items Indicator
Communication with parts suppliers We frequently interact with other suppliers in the supplier association CM PS1
Ac

Communication with an automaker
Arm's length relationships
Japanese style cooperative relationships
Information gathering
Future prediction on Evs
We share a strong bond with other suppliers in the supplier association CM PS2
We gain valuable information from other suppliers in the supplier association CM PS3
We participate in the jishuken of assembly makers affiliated with the supplier association CM AM 1
We frequently interact with employees of assembly makers affiliated with the supplier association CM AM 2
We frequently receive technical instruction from assembly makers affiliated with the supplier association CM AM 3
We participate in the supplier association primarily for our own profit ALRL1
We always prioritize business based on agreements, regardless of the supplier association activities ALRL2
We are always ready to change our primary trading partners ALRL3
We participate in the supplier association with little regard for our own profit JCRL1
M aintaining and improving relationships with other suppliers in the supplier association is most important to us JCRL2
Trust in assembly makers and other suppliers has increased through participation in the supplier association activities JCRL3
We gain information on EVs from assembly makers affiliated with the supplier association IFGT １
We gain information on EVs from other suppliers in the supplier association IFGT2
We gain information on EVs through proactive participation in non-the supplier association activities IFGT3
EV sales will increase in the future FPEV4
The percentage of EVs to total cars sold will continue to grow FPEV5
EVs will force a restructuring of the auto parts industry (e.g., many suppliers will leave the industry) FPEV6

Page 37 of 42
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an
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Table 2. Demographic Characteristics
Research model A:
Organizational features Classification Frequency Percentage

ed
Number of employees 499 and under 88 42.50%
500-1499 53 25.60%
1500-4999 32 15.50%
5000-9999 18 8.70%
pt 10000 and over 16 7.70%
Total 207 100%
Companies that produce parts not used in EVs 144 69.60%
ce
Companies that produce exclusively non-EV parts 78 37.60%

Research model B:
Organizational features Classification Frequency Percentage
Ac

Number of employees 499 and under 59 38.80%

500-1499 46 30.20%
1500-4999 20 13.10%
5000-9999 12 7.90%
10000 and over 15 9.80%
Total 152 100%
Companies that produce parts not used in EVs 100 65.80%
Companies that produce exclusively non-EV parts 45 29.60%

Page 38 of 42
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us
an
Table 3. Correlation of the Latent Variable Scores with Square Root of AVE

Research model A:
Variable (a) (b) (c) (d) (e) (f)

M
(a) Corporate diversification 0.79
(b) R&D intensity 0.32** 0.88
(c) Drawing-supplied parts system -0.03 0.01 0.84
(d) Drawing-approved parts system -0.21* 0.24* -0.50** 0.90

ed
(e) Prediction about the future of Evs 0.11 0.28* 0.24* -0.14 0.73
(f) Preparation for R&D and production 0.20* 0.45** -0.05 0.25* 0.30** 0.88
AVE 0.63 0.77 0.71 0.81 0.53 0.77
CR 0.75 0.91 0.82 0.91 0.69 0.87
pt
Mean
SD
3.20
0.62
3.04
0.86
3.88
0.74
3.19
0.67
3.25
0.65
3.69
0.69
* p<0.05.
** p<0.01.
ce
Note: The bold numbers in the diagonal row are square roots of average variance extracted

Research model B:
Variable (a) (b) (c) (d) (e) (f)
Ac

(a) Communication with parts suppliers 0.92

(b) Communication with an automaker 0.41** 0.77
(c) Arms length relationships 0.54** 0.27* 0.79
(d) Japanese style cooperative relationships 0.35** 0.21* 0.30** 0.84
(e) Information gathering 0.33** 0.38** 0.41** 0.32** 0.83
(f) Prediction about the future of Evs -0.14 -0.24* -0.11 0.15 0.23* 0.86
AVE 0.84 0.59 0.62 0.70 0.69 0.74
CR 0.91 0.79 0.75 0.82 0.87 0.85
Mean 2.77 2.82 3.35 3.12 3.37 3.15
SD 0.85 0.73 0.59 0.77 0.87 0.85
* p<0.05.
** p<0.01.
Note: The bold numbers in the diagonal row are square roots of average variance extracted

Page 39 of 42
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Table 4. Common Method Variance Analysis
Research model A:
Valuable Indicator Substantive Factor (R1) R12 M ethod Factor (R2) R22
Corporate diversification CDIV1 0.741** 0.549 -0.009 0.001

an
CDIV2 0.834** 0.696 0.040 0.002
CDIV3 0.967** 0.935 -0.041 0.002
R&D intensity RADI1 0.903** 0.815 -0.375** 0.141
RADI2 0.909** 0.826 -0.287** 0.082
RADI3 0.815** 0.664 0.046 0.002

M
Drawing-supplied parts system DSPS1 0.724** 0.524 0.097 0.009
DSPS2 0.792** 0.627 0.102 0.010
DSPS3 0.694** 0.481 0.224** 0.050
Drawing-approved parts system DAPS1 0.707** 0.500 0.211** 0.045
DAPS2 0.897** 0.805 -0.079 0.006

ed
DAPS3 0.854** 0.729 0.007 0.000
Prediction about the future of Evs FPEV１ 0.679** 0.461 0.154 0.024
FPEV2 0.780** 0.608 -0.196 0.038
FPEV3 0.954** 0.910 -0.102 0.010
Preparation for R&D and production PRPE1 0.800** 0.640 0.093 0.008
pt
of EV-related components PRPE2 0.913** 0.834 -0.091 0.008
PRPE3 0.689** 0.475 0.196 0.038
Average 0.814 0.671 -0.001 0.026
ce
** p<0.01

Research model B:
Valuable Indicator Substantive Factor (R1) R12 M ethod Factor (R2) R22
Communication with parts suppliers CM PS1 0.926** 0.857 -0.149 0.022
Ac

CM PS2 0.820** 0.672 0.140 0.020

CM PS3 0.632** 0.399 0.095 0.009
Communication with an automaker CM AM 1 0.656** 0.43 0.075 0.006
CM AM 2 0.536** 0.287 0.122 0.015
CM AM 3 0.852** 0.726 -0.167 0.028
Arm's length relationships ALRL1 0.895** 0.801 -0.203** 0.041
ALRL2 0.736** 0.542 0.168 0.028
ALRL3 0.758** 0.575 0.157 0.025
Japanese style cooperative relationships JCRL1 0.892** 0.796 -0.119 0.014
JCRL2 0.816** 0.666 0.103 0.011
JCRL3 0.709** 0.503 0.213** 0.045
Information gathering IFGT １ 0.876** 0.767 -0.142 0.020
IFGT2 0.698** 0.487 -0.011 0.000
IFGT3 0.554** 0.307 0.141 0.002
Prediction about the future of Evs FPEV4 0.865** 0.748 -0.149 0.022
FPEV5 0.855** 0.731 0.140 0.020
FPEV6 0.924** 0.854 -0.219** 0.048
Average 0.778 0.619 0.011 0.022
** p<0.01

Page 40 of 42
Research model A:
Variable Indicator Item loading t-statistic Cronbach’s alpha
Corporate diversification 0.820
CDIV1 0.674 12.662**
CDIV2 0.763 11.961**
CDIV3 0.662 9.890**
R&D intensity 0.844
RADI1 0.909 34.466**
RADI2 0.950 63.992**
RADI3 0.756 13.997**
Drawing-supplied parts system 0.785
DSPS1 0.782 4.297**
DSPS2 0.773 16.542**
DSPS3 0.690 6.981**

t
Drawing-approved parts system 0.743

ip
DAPS1 0.701 11.340**
DAPS2 0.819 9.021**

cr
DAPS3 0.754 7.002**
Prediction about the future of Evs 0.813
FPEV１ 0.714 5.192**

us
FPEV2 0.745 4.150**
FPEV3 0.594 17.819**
Preparation for R&D and production 0.730
of EV-related components PRPE1
PRPE2
PRPE3
an 0.948
0.807
0.619
40.921**
9.722**
14.373**
** p<0.01
M
Research model B:
Variable Indicator Item loading t-statistic Cronbach’s alpha
d

Communication with parts suppliers 0.818

CM PS1 0.943 44.515**
e

CM PS2 0.892 11.945**

pt

CM PS3 0.515 6.810**

Communication with an automaker 0.661
CM AM 1 0.680 6.171**
ce

CM AM 2 0.749 10.556**
CM AM 3 0.646 5.318**
Arm's length relationships 0.760
Ac

ALRL1 0.576 2.412*

ALRL2 0.952 21.538**
ALRL3 0.621 4.654**
Japanese cooperative relationships 0.619
JCRL1 0.718 4.247**
JCRL2 0.944 13.196**
JCRL3 0.657 9.100**
Information gathering 0.779
IFGT １ 0.807 13.566**
IFGT2 0.860 18.449**
IFGT3 0.828 23.344**
Prediction about the future of Evs 0.648
FPEV4 0.889 7.393**
FPEV5 0.828 8.242**
FPEV6 0.568 16.515** Page 41 of 42
** p<0.01 * p<0.05
 cr
Table 6. Results of Hypotheses Tests
Research model A:

us
Hypothesis Path coefficient t-statistic Result
H1. As the prediction about the future of a new technology (in this case, EVs) becomes more favourable in terms of the technology ’s
uptake in the market, the level to which companies prepare for R&D and the production of new (in this case, EV-related) components 0.217* 2.643 supported
increases.

an
H2. As the importance of drawing-approved parts systems increases, suppliers become more inclined to predict a favourable view with
regard to the uptake of new technologies (in this case, EVs) by the market, as the prediction is less dependent on views held by -0.204* 2.505 not supported
established car manufacturing customers.
H3. As the importance of drawing-approved parts systems increases, a suppliers ’ preparation for R&D and production of new (in this
0.259* 2.335 supported
case, EV-related) components increases, as it is less influenced by established car manufacturing customers.

M
H4. As the importance of drawing-supplied parts systems increases, suppliers become less inclined to predict a favourable view on the
uptake of new technologies (in this case, EVs) by the market, as the prediction is more dependent on the view held by established car 0.197# 1.891 not supported
manufacturing customers
H5. As the importance of drawing-supplied parts systems increases, a suppliers ’ preparation for R&D and production of new (in this
0.027 0.268 -
case, EV-related) components decreases, as it is more influenced by established car manufacturing customers.

ed
H6. As a supplier’s R&D intensity increases, it takes a more favourable view regarding the uptake of new technologies (in this case,
0.305** 3.562 supported
EVs) by the market, as it is less dependent on the view held by established car manufacturing customers.
H7. As a supplier ’ s R&D intensity increases, its level of preparation for R&D and production of new (in this case, EV-related)
0.299** 3.085 supported
components increases, as it is less influenced by established car manufacturing customers.
pt
H8. As a supplier’s corporate diversification increases, it predicts a more favourable future for a new technology (in this case, EVs) in
terms of its uptake by the market, as it is less dependent on the view held by established car manufacturing customers.
0.053 0.620 -
H9. As a supplier’s corporate diversification increases, its level of preparation for R&D and production of new (in this case, EV-related)
0.201# 1.877 supported
components increases, as it is less influenced by the view held by established car manufacturing customers.
ce
** p<0.01. * p<0.05. #p<0.10.

Research model B:
Hypothesis Path coefficient t-statistic Result
Ac

H10. As a supplier’s information gathering about new technologies (in this case, EV-related) increases, it predicts a more favourable
future for these new technologies with regard to their uptake by the market, as it is less dependent on the view held by established car 0.414** 3.341 supported
manufacturing customers.
H11. As communication among suppliers increases, they take an increasingly unfavourable view regarding the uptake of new
-0.192# 1.738 supported
technologies (in this case, EVs), as such communication tends to focus on existing operations.
H12. As communication among suppliers increases, their information gathering concerning new technologies (in this case, EVs) is
-0.001 0.003 -
reduced, as such communication will substitute other types of external search.
H13. As communication between a supplier and its car manufacturing customers increases, the suppliers hold an increasingly
unfavourable view with regard to the future uptake of new technologies by the market (in this case, EVs), as such communication tends -0.346** 3.499 supported
to focus on existing operations.
H14. As communication between a supplier and its car manufacturing customers increases, the supplier ’ s information gathering
0.269** 2.787 supported
concerning new technologies (in this case, EVs) increases.
H15. As the importance of using arm’s-length relationships increases, suppliers take an increasingly unfavourable view about the future
-0.201# 1.843 supported
uptake of new technologies (in this case, EVs), as they are less focused on long-term development.
H16. As the importance of using arm’s-length relationships increases, a supplier’s information gathering concerning new technologies (in
0.283** 2.682 supported
this case, EVs) is increased, as it is less influenced by established car manufacturing customers.
H17. As the importance of using Japanese-style cooperative relationships increases, a supplier’s predictions about new technologies (in
this case, EVs) tend to become increasingly unfavourable with regard to their uptake by the market, as they are more influenced by -0.303** 2.698 supported
established car manufacturing customers.
H18. As the importance of using Japanese-style cooperative relationships increases, a supplier’s information gathering concerning new
0.104 0.876 -
technologies (in this case, EVs) is reduced.
Page 42 of 42 ** p<0.01. * p<0.05. #p<0.10.