Firestone’s defective-tire crisis and the mass recall (2000)

How far to fold an acquired company into your own control

The heart of this episode lay less in the product accident itself than in a gap in consolidated governance: the authority delegated to an overseas subsidiary, and the risk information held within it, never reached the top of the company. Bridgestone had been held up as a success story of Japanese globalization, but ruling a subsidiary through capital and gripping the risks buried on its shop floor from headquarters were two different problems. Twelve years after the acquisition, the disconnection of information that had piled up behind local autonomy dulled the company’s response in the crucial early days.

President Kaizaki wielded a strong hand to contain the situation — ordering the voluntary recall and dispatching directors — yet stepped down while denying that he was taking responsibility for it. His forceful rebuttals of Ford were needed to dispel suspicion, but they also carried the cost of losing a long-standing customer. How far to fold an acquired company into your own control — Firestone’s defective-tire crisis remains a case that showed, painfully, that the success or failure of a large acquisition is decided by the depth of integration.