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Large Japanese Corporations, Alternative Systems of Capitalism

Large Japanese Corporations, Alternative Systems of Capitalism . Ingmar Björkman Swedish School of Economics Helsinki, Finland & INSEAD Euro-Asia Centre Fontainebleau, France 14.9.2004. The Large Japanese Corporation.

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Large Japanese Corporations, Alternative Systems of Capitalism

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  1. Large Japanese Corporations, Alternative Systems of Capitalism Ingmar Björkman Swedish School of Economics Helsinki, Finland & INSEAD Euro-Asia Centre Fontainebleau, France 14.9.2004

  2. The Large Japanese Corporation 1. The ability to grow very large, and remain stable, while integrating complex and technically sophisticated operations. Dense networks of stable trading relationships. 2. The capability for advanced R & D and highly competitive product development. Capable of high levels of production efficiency based on detailed incremental improvements. 3. The capability for world-wide marketing and the creation of international brands. Rich in market information. 4. Long-term financial strategies based on moderate, stable yields and not on short- term results, helped by extensive ownership by related companies with similar agendas. Also commonly tied long-term to banks.

  3. The Large Japanese Corporation 5. Historically responsive to subtle government guidance by the Ministry of International Trade and Industry and the Ministry of Finance, although this influence is slowly decreasing. 6. Extremely competitive with a strong concern for market share. 7. A view of the firm as essentially existing for its employees (including managers) and not primarily for shareholders. 8. A paternalistic and humanistic culture with moral commitment to core employees, extensive welfare and fringe benefits. Unions identified with company. Length of service important promotion criterion.

  4. The Large Japanese Corporation 9. A consultative managerial style with extensive internal communication. Little manager/ worker class distinction. 10.Larger company => better reward system and higher societal status. But attacks against the Japanese business system lately, partly: Foreign ownership Poor firm performance Shareholder value key Lay-offs Merit-based promotions Break-up of cross-holdings

  5. Capitalist Corporations Western Individualist Western Communitarian Japanese Korean Chinese Family Adapted from: Gordon Redding

  6. Alternative Systems of Capitalism • Implications • Different strategic perspectives - • time horizons • yield expectations • risk attitude • criteria for alliance • behavioral priorities • loyalties to firm • capacities to co-ordinate complexity • capacities to operate abroad • traditions of control/discipline/reward • degrees of freedom to decide • political agendas Ultimately different reasons for existence!

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