Toyota's competitive advantage: path dependency, dynamic capabilities, and sources of inimitability – a contrastive study with Nissan

Journal articles and books on Toyota's competitive advantage abound. More recent analyses tended to focus on Toyota alone (Coriat, 2000; Liker, 2004) while earlier literature examined the competitive advantage of the Japanese automobile industry as a whole (Asanuma, 1989; Womack, Jones, & Roos, 1990; Fruin, 1992; Dyer, 1994, 1996a, 1996b). Intensive analysis on the Toyota Production System (TPS) notwithstanding, what exactly constitutes the system's inimitability remains elusive. This paper contributes to existing literature by examining how a post-war industrial policy might have given rise to Toyota and Nissan adopting two different strategic logics (or governance structures) as each had a unique set of resources and competences. Different governance structures however, did not appear to contribute to inter-firm performance variance between the two competitors for at least 15 years. What then could be the source of Toyota's competitive advantage and its inimitability? This paper unravels how causal ambiguity might have confounded Nissan, Toyota's only significant domestic rival for the second half of the last century.