Economic growth and the Japanese management system

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Economic growth and the Japanese management system
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Summary

• The foundations for Japanese development
• The Japanese economy from the 1880s to the 1940s
• The development of the Japanese management system
• Required reading Morikawa, 1997

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The earlier contacts with the West

• Two challenges to the Japanese social balances
• The challenge promoted by Christian faith to the
  traditional regime of obedience.
• The democratization in the use of weapons
  promoted by the introduction of guns.
• The answer Tokugawa rulers suppressed those
  challenges to traditional values.

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Tokugawa period (1603-1868)building up a social
structure

• Developed market institutions.
• Widespread education by the end of the Tokugawa
  period, 43 of boys and 10 of girls attended the
  school.
• Slow-growing population similar to western
  European patterns.

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Early Meiji Japan (1868-1885)growth of
traditional industries

• State monopoly of armed forces (The Last Samuray)
• Abolition of traditional institutions and caste
  system
• Copying foreign models education, army, public
  services, technology and business organization

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Institutional borrowing in Meiji Japan
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The Japanese economy(1880s-1940s) (i)

• The emergence of the Zaibatsu
• Def. a diversified group of firms, which are
  owned by a family
• Political patronage
• Non-manufacturing activities
• Organizational structure
• Not the only business players the role played
  by other companies investing into modern
  industries

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The Japanese economy(1880s-1940s) (ii)

• From light industry to heavy industry
• The importance of the textile industry from 10
  of the industrial output (1867) to 28 (1920) -
  Some of the largest Japanese firms were textile
  spinning companies
• Industrial performance was based on comparative
  advantages
• Late 1800s Japanese enterprises began to move
  to heavy industries
• However, Japan as an essentially traditional
  economy

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The Japanese enterprise system

• Life-time employment
• Seniority wage
• Company union

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What does this mean to management?

• Large incentives to long-term orientation
• Multi-layered information sharing
• Group dynamics

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Japanese manufacturing systemthe keiretsu

• The post-WWII dissolution of the former zaibatsu
• However, the re-creation of new interfirm
  linkages after the war
• Horizontal keiretsu
• Vertical keiretsu
• Distribution keiretsu
• Retailing networks (guruhpu)
• The competitive nature of Japanese capitalism
• An advantage of networks lower transaction costs

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Conclusion

• The importance of networks for the introduction
  of new manufacturing models
• The importance of government
• Cultural patterns, economic performance and
  business organization
• Why Japan is now in trouble?

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Japans unusual trade pattern (in )