Economic justification for partnerships

Entering into a partnership with a company, to whatever extent, implies a transition away from the mles of the open marketplace and towards alternatives. These different stmctures must demonstrate benefits otherwise they will not deliver competitive advantage. 

Open market relationships are typified by short-term contracts, arm s length relations, little joint development, and many suppliers per part. Observing that Japanese practice - and consequently the lean model of supply - differs significantly from this indicates that other, non-market mechanisms must be operating. 

The Japanese tend to infuse their transactions with the non-economic qualities of commitment and tmst. These characteristics are important in successful partnerships. While this may increase transaction costs and risks, it appears that the non-economic qualities help to secure other economic and strategic advantages that are difficult to achieve though the open market system. 

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