Organisational Governance Reducing Total Costs in the Railway Business: Implications from Japanese Vertically Integrated Private Companies

We investigated the effects of organisational governance on total costs in the railsector. Organisational governance here includes not only corporate governance, but also organisational design and strategies that can affect total costs. Using translog cost function with data on Japanese large private railway companies, we found that diver sification and small size of control and coordination functions in a company lead to a reduction in total costs, while a holding company structure increases total costs. Public ownership can reduce costs for com pa nies whose financial administration is in a crisissituation. Large share holders' own er ship is significant in limited circumstances.