| The research study analyzes social structures in a large industrial district in Tokyo, as subcontracting networks in the machine tools industry. Theoretically, through the structural approach, it challenged flexible specialization theory, by revealing mechanisms of a social division of labor among small- and medium-sized enterprises (SME), with empirical data. Methodologically, both social network analysis and multinomial logit statistical tests were conducted, using both relational and quantitative data on 8,347 firms, from an official survey conducted in 1994–95. In addition, qualitative data from fieldwork interviews in 1999–2000 were used to describe local business practices.; Distinctive social structures embedded in the geographically bound economy were detected, as an aspect of the social capital, and discussed both their merits and structural problems. Through a web of complex subcontracting networks, SMEs generally took advantage of flexible specialization, as a regional production system, for fusion of knowledge and technology, in order to reduce production costs, risks, and uncertainty. However, SMEs, especially at marginal positions, also appeared to be locked into institutional constructs, including a hierarchical “pecking order” in the subcontracting networks, a core/periphery structure, a role structure consisting of clusters of firms with clear boundaries, and industry-specific subcontracting patterns.; The structural embeddedness, or competitive edge of SMEs, made it extremely difficult for them to leave their “community” networks, as a “paradox of embeddedness,” when the regional economy experienced large-scale transitions. There were many complex factors responsible for a “hollowing-out.” A microelectronic revolution in the 1980s left financially weak “sweat shops” technologically behind, and increased pressures on them, including competition with other Asian countries, unfavorable exchange rates, volatile land prices, a lack of successors for aging proprietors, and the long-lasting deepening recessions in the 1990s.; The research study suggests that flexible specialization is not a perfect production system that gives SMEs decisive advantage over the M-form large firms, since it contains inherent risks of lock-ins of marginal players into the regional networks. The research shed light on an aspect of tacit knowledge on the factory floor and sharing and transfer of skills through interfirm networks in a large industrial district, from economic sociology. |
