Inter-Firm Linkages and Profitability in the Automobile Industry: The Implications for Supply Chain Management
The current studies on supply chain management are limited in their analysis of the linkages between firms in related industries. This study estimates the degree of linkages between automotive parts sup-pliers and automobile manufacturers. Significant linkages are demonstrated by the high correlation coefficients of the P/E ratio of auto parts suppliers and auto manufacturers and by the results of regression analysis. Demand uncertainty in the auto-mobile manufacturing industry, resulting from busi-ness cycles and unexpected labor disputes, is one of the major risks facing auto parts suppliers. Risk assess-ment, utilizing information on linkages, is important for demand management and developing profit-maximizing strategies.
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