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The New Old EconomyNetworks, Institutions, and the Organizational Transformation of American Manufacturing$
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Josh Whitford

Print publication date: 2005

Print ISBN-13: 9780199286010

Published to Oxford Scholarship Online: September 2007

DOI: 10.1093/acprof:oso/9780199286010.001.0001

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Collaboration in Practice: The Cost Reduction (Incremental Innovation) Waltz

Collaboration in Practice: The Cost Reduction (Incremental Innovation) Waltz

(p.76) 4 Collaboration in Practice: The Cost Reduction (Incremental Innovation) Waltz
The New Old Economy

Josh Whitford (Contributor Webpage)

Oxford University Press

It has become standard practice for OEMs to expect annual cost reductions from the suppliers to whom they have increasingly devolved production and design responsibilities, often by selectively borrowing target costing techniques originally developed in Japan. These techniques are designed to ensure the protection of supplier margins need not translate into wage reductions or even into immediate changes in the organization of production, given the numerous and imaginative ways in which suppliers and OEMs can jointly develop incremental innovations of product and process to reduce total costs. This chapter uses this idea of ‘cost reduction’ as a point of entry to explain the relational intertwining of incremental innovation and interfirm collaboration.

Keywords:   OEM, cost reductions, target costing, interfirm collaboration, decentralized production

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