Enterprises and Management

The Japanese enterprise and management system has become a byword for Japan's success all over the world. Its popularity is founded on empirical studies conducted during Japan's period of relative high growth. After the crash of the bubble economy in the early 1990s, the enterprises were confronted with the longest recession since 1945. A reconsideration of previous market strategies and organizational structures therefore became necessary.

The project started with an examination of the measures taken during the recession by Japanese enterprises. The structural changes in the general economic environment had to be taken into consideration. In particular, the growing internationalization of Japan's economy and the simultaneous rising pressure on its relative competitiveness. This latter was caused by a continuous appreciation of the domestic currency and rising labour costs as a consequence of the aging of the working population.

Taking into account the peculiarities of different sectors, case studies on four selected industries were conducted. The following common characteristics could be discerned:

1) The enterprises made efforts to streamline existing product portfolios and pursued a diversification policy that was far more selective than in the past. Simultaneously, an increasing number of evaluative instruments were introduced to make enterprise-internal cost structures more transparent and guarantee a profit-oriented evaluation of particular product lines and investment projects.

2) The working processes within companies were remodelled with regard to more efficient communication and decision-making. In the centre of these efforts on reorganization stood a reduction of hierarchy levels and staff positions as well as an expanded scope of decision-making for single business units.

3) The enterprises systematically increased and expanded their degree of internationalization, not only by extending the proportion of value added in other countries but also by ameliorating the regional focus (mainly in Asia) and the range of investment strategies (for example increasing joint ventures with foreign companies in third countries).

While these change-strategies were also applied in other countries, and seemed to support the hypothesis of a convergence of Japanese corporate governance practices with Western models, closer scrutiny revealed significant differences. Most important among these were personnel change-strategies as a central area of management and organization. It became apparent that Japanese enterprises as a whole did not resort to the measure of dismissing employees. In this respect, no substantial difference to previous phases of economic weakness could be discerned. A number of alternative strategies to reduce personnel costs were pursued instead. One of the most interesting and widespread methods was dispatching employees to other enterprises, either for a limited or for an indefinite period of time. In the framework of this project the question was examined whether this kind of inter-enterprise human-resource sharing had positive effects on the competitiveness of the participating enterprises.

The changes described above had led to a reorientation in scholarly research on Japanese enterprises. To obtain an overall view of the relevant aspects and problems, an international conference under the title "Between External Shocks and Internal Evolution: Towards a New Phase in Japanese Management Practices" was held in October 1997 in Tokyo, in cooperation with researchers of the Maison Franco-Japonaise, Tokyo, and supported by the Istituto Italiano di Kyoto. In the centre of the discussions was the issue of the special features or the uniqueness of the Japanese management model.