The Japanese management theory jungle-revisited
J. Bernard Keys
Basadur, M. (1992). Managing creativity: a Japanese model. Academy of Management Executive, 6(2): 29-42.
Baughn, C. C. & Osborn, R. N. (1990). The role of technology in the formation and form of multinational cooperative arrangements. Journal of High Technology Management Research, 1(2): 181-192.
Beatty, J. R., McCune, J. T. & Beatty, R. W. (1988). A policy-capturing approach to the study of United States and Japanese manager’s compensation decisions. Journal of Management, 14(3): 465-474. This study extends and updates a review published in the Academy of Management Review in 1984. First the external forces that have shaped Japanese management practices are reviewed. Next a description of the practices that have traditionally been viewed as Japanese management practices is presented. This section includes a discussion of overlapping Japanese organizations, long term planning horizons, decision making and control, just-in-time manufacturing, TQC, QCs and continuous improvement, aggressive R&D, lifetime employment, generalists career paths, company unions, and women as temporaries and support groups. The last section, focusing on the future o f Japanese management, critiques the effectiveness of Japanese management practices, reviews the changes taking place in Japanese management, presents a model which conceptualizes the Japanese management system of the future, and identifies eleven propositions describing projected changes in this system. Finally, the problems inherent in the research reviewed are summarized and some needs for future research are discussed.
In 1984 the authors summarized the theories which had been presented in a deluge of books and articles explaining the superiority of management practices in Japan. The fervor to find explanations to the secrets of the Japanese, coupled with vigorous promotion of particular viewpoints, had resulted in considerable controversy. Many researchers seemed to be falling into the trap of explaining the cause for success (seldom failure) of Japanese management practices by examining only a small portion of the managerial environment and attributing causality exclusively to the examined part. Similarly, other inquirers were falling prey to the trap3 of functional myopia, imputing success solely to their own functional specialty which they wished to see strengthened in the United States. The jungle of Japanese management theories was reminiscent of the “mental entanglement” that characterized American management theories in the 1950s and described in the classic 1961 article by Harold Koontz (Koontz, 1961).
From a review of the existing literature Keys and Miller (1984) identified five streams of thought which were influential in depicting Japanese management practice. These themes included “excellence in manufacturing management” (Hayes, 1981), “quality circles as an innovative and motivating technique” (Rehder, 1981), “statistical quality control as the key to productive effectiveness” (Deming, 1980), “a long planning horizon” (Anderson, 1981; Drucker, 1981) and “consensus decision making, as a form of participative management” (Ouchi, 1981).
Four additional streams of thought about Japanese management went beyond the single-factor approaches to develop broader, more comprehensive conceptualizations. Ouchi (1981) described Japanese organizations as…”characterized by lifetime employment, slow evaluation and promotion, nonspecialized career paths, implicit control mechanisms, collective decision making, collective responsibility, and holistic concern for employees” (Keys & Miller, 1984, p. 346). In sharp contrast he described features of American organizations as including… “short term employment, rapid evaluation and promotion, specialized career paths, explicit control mechanisms, individual decision making, individual responsibility, and segmented concern for workers”. Ouchi (1981) proposed an alternate Theory Z, a hybrid form of the American organization, which presumably capitalized on the best of both the American organization and the Japanese organization. Pascale and Athos (1981) portrayed the Japanese as masters of the soft S’s of management: staff, skills, and style, while American managers were thought to be less effective because they managed largely by utilizing the hard S’s of strategy, structure, and systems. Neither Ouchi (1981), nor Pascale and Athos (1981) believed that Japanese management practices were culture bound; therefore they felt that modified elements of the process could be successfully applied by U.S. firms.
Hatvany and Pucik (1981) suggested that the success of Japanese business was linked to a strategy that maximized its human resources through the development of an internal labor market, the creation of a corporate culture that promotes group values and cooperation, and the implementation of an intensive socialization process for incorporating new employees into the organization. Durlabhji (1983) made a notable attempt at holistic modeling of Japanese management by use of comparative interview data, but concluded with the same stereotyping typical of the other early studies.
Although empirical evidence was scarce, Keys and Miller (1984) hypothesized from a “mental factor analysis” that three underlying factors appeared to be highly influential to Japanese management success. They included the strong adherence of Japanese management to a long-run planning horizon, a commitment to lifetime employment and an unfailing preference for collective responsibility. Keys and Miller (1984) concluded that the development of better integrated, more comprehensive theories, which incorporated factors in the external environment, would be more appropriate in the future than studies of specific elements of Japanese management practice in narrow settings.
Much has been learned in the last decade about Japanese management theory and practice. This provided the stimulus to revisit the Japanese management theory jungle. We first review from literature (largely case research), the practices traditionally described as Japanese management and the external forces within Japan affecting these practices. Next, under “the Future of Japanese Management,” we present: (1) a discussion of the forces driving Japanese management practice toward change; (2) a comprehensive model depicting Japanese management and its interaction with external forces and outcomes; (3) a critical evaluation, where possible, of the effectiveness of each Japanese management practice reviewed; and (4) a series of propositions about the Japanese management system of the future.
The Traditional Japanese Management System
External Forces Shaping Japanese Management Practices
Japanese management practices are influenced by culture, by industrial organization, primarily the keiretsu, and by government, especially the Ministry of International Trade and Industry (MITI).
Culture. A number of cultural influences serve as the foundation for current Japanese management practices. These include the presence of a collective mentality, a great persistence in the face of difficulty, a strong emphasis on social reciprocity as the governing principal of relationships, a physically concentrated and culturally homogeneous society, and an uncommon appreciation for education and learning.
The philosophies of Confucianism and Zen Buddhism, widely taught in Japan, have profoundly affected the Japanese work ethic. Confucian philosophy regards the ideal society as one in which relationships, largely based on family and hierarchy, are maintained over time in perfect harmony. An individual’s identity is invariably described in terms of group values, consequently, most social and work activities in Japan are group activities (Alston, 1989; Barnland, 1993; Condon & Kurata, 1987; Durlabhji, 1993). Although individual motives are prevalent among the Japanese, they may not be acceptably displayed publicly (Befu, 1989). Apparently influenced by the philosophy of Confucianism, Japanese companies enshroud themselves with many of the characteristics of families, since Japanese workers depend on companies for social as well as economic sustenance; for example, lifetime employment (Durlabhji, 1993).
The Samurai remains the most popular folk hero in Japanese society and is admired for his ability, through the use of Zen, to overcome human emotion in pursuit of honorable objectives. Today, the philosophy of Zen is used to discipline the mind within the Japanese educational and social systems (Durlabhji, 1993). Zen maintains that life is a process, not a destination. This belief materializes as an unending drive for improvement (Fry, 1991) which is embodied in the concept of Japanese long-term planning.
The Japanese assign special value to personal relationships with business associates and maintain these relationships primarily through adherence to the law of reciprocity in social activities. Such relationships are cultivated over time and often take precedence over what Westerners would consider rational business decisions. New foreign participants in business systems are accepted slowly and inefficient distribution systems are often retained for long periods (Czinkota, 1985a; 1985b; Lazer, Murata & Kosaka, 1985; Tsurumi, 1982). This strong emphasis on relationship maintenance frequently allows conflicts to be resolved without resorting to the legal system. In a corporate setting, social reciprocity requires that superiors make personal investments in their subordinates. This approach is thought to build stronger bonds than rewarding employees with corporate resources, such as promotions and salary increases, as is common in the Western world (Befu, 1989; Kumara, Hara & Yano, 1991; Lincoln, 1989).
Japanese society is remarkably homogeneous and, due to the lack of usable land, physically concentrated. In Japan, group membership determines one’s status, and products play a defining role in identifying group members. Land and housing are so scarce that the Japanese are unable to invest conspicuously in them, consequently they are demanding about other high status products which can serve as indicators of social status (Mueller, 1987; Lazer et al., 1985).
Limited natural resources have forced the Japanese to promote trade with
foreign markets, spurring them to make technological and managerial advances in the area of logistics. The space and energy-efficient products of Japan became quite attractive in international markets in the 1970s because of the oil embargo, automobile downsizing and emerging concern for the environment (Fields, 1983; Lazer et al., 1985; Near & Olshavsky, 1985; Porter, 1990).
Japanese society greatly values education and learning (Porter, 1990; Tung, 1984a; Warner, 1991; White, 1989). Japanese students are usually considered about four years ahead of their U.S. counterparts upon graduation from high school (Tung, 1984a; White, 1989) and their test scores are consistently higher than those of American students at all levels (Stevenson, Chen & Lee, 1993). Traditionally the Japanese have provided their employees with excellent education and training through lifetime investment in development and job rotation (Neelankavil, 1992; Hodgetts & Luthans, 1989; Tung, 1984a).
The factors which are credited with producing this high level of achievement include family involvement, personal discipline, and high expectations. The Japanese believe academic success is determined by diligence and persistence, not by innate ability (Stevenson et al., 1993; White, 1989). Therefore, mothers, who seldom work, devote themselves to the task of guiding the education of their children (Ohmae, 1987; White, 1989). Consequently, the Confucian philosophy of valuing family relationships produces the motivating force for educational attainment while the Zen philosophy provides the mental discipline for successful study habits.
Much of their great zest for education, especially international education, springs from cultural imperatives following WWII when Japanese governmental employees were forced to communicate in English with the Western world (Ibe & Sato, 1989). The persistence of Japanese expatriates in remaining in international assignments for long periods encourages Japanese companies to invest heavily in international training (Tung, 1984a).
Industrial Organization. Many have argued that the secret to Japan’s global economic success is due to the rise of the post WWII keiretsu (Ferguson, 1990; Gerlach, 1987; Kearns, 1992; Rapoport, 1991). The leading keiretsus, the modern equivalent of the prewar zaibatsu, are often centered in large banks, Kinyu keiretsu (financial lineage) or kigyo shudan (enterprise group), and include as members other financial institutions, a highly diversified set of large manufacturing firms, and the principal player, the general trading company (Gerlach, 1987; Sarathy, 1985). The post-WWII McArthur administration broke up the family-owned zaibatsu, blaming them for the military machine that fostered imperialism. However, since 1952, the six largest groups have reacquired control of more than 25 percent of industry, a concentration similar to the one that existed before the war (Kearns, 1992).
Keiretsus possess numerous ways in which to aid affiliates. They can offer sizeable scale economies, highly integrated vertical relationships, networking that limits competition, leverage with highly favorable repayment schedules, considerable foreign direct investment, and significant governmental influence (Genay, 1991; Johnson, 1986; Sarathy, 1985). Most analyses of Japanese practices have overlooked the importance of the small-to-medium-size supplier firms, chu-sho kigyo, that have made Japan so technically proficient, and at the same time, highly flexible. Small subcontractors, who negotiate with the large keiretsu, must share design and development costs of the large firms, dai kigyo, absorb losses and layoffs when business encounters a recession, agree to prices imposed from above, and often provide jobs for retiring executives when central companies are unwilling to retain them (Cutts, 1992). Induced hiring by smaller firms includes not only corporate managers, 50-55 years of age, but retiring senior officials from government ministries as well. In this manner strong political and legal skills are imparted to top managers and strong information networks are insured between government and business (Suzuki, 1989). Suzuki (1989, p.8) says, “This flow of human resources from the upper institutions to the lower ones is called amakudari,…i.e. a person descending from heaven.”
Government. Political power in Japan lies in the strength of the twenty-one government ministries, the strongest of which is the Ministry of International Trade and Industry (MITI) (Morgan & Morgan, 1991). According to several writers, MITI orchestrates the economy with five year plans and rewards strategic industries that fit well into Japan’s vertically integrated economy, promoting a planned emphasis and guiding new technology development and implementation (Cutts, 1988; Green and Larson, 1987; Kearns, 1992; McCraw, 1986; Morgan & Morgan, 1991; Sullivan, 1992). Cutts (1988, p. 52) calls this relationship a “managed competition which fosters acceptance of informal cartel management.”
There appears to be little doubt that MITI uses government regulations in a discriminatory manner to restrict Japanese imports (Foote & Mitchell, 1989; Green & Larson, 1987; Prestowitz, 1987). Compared with U.S. successes in Europe, trade with Japan has produced an unfavorable result that some blame on excessive lobbying expenditures by the Japanese (Choate, 1990; Green & Larson, 1987). One prolific and rather articulate critic of Japanese unfair trade practices, says, “Japan has developed an insidious program of U.S. influence by propaganda dissemination through funding of U.S. universities and think tanks, by attempts to shape elementary and secondary school reading materials, teaching programs, and all-expense-paid trips to Japan for social-studies teachers, including the rewriting of World War II to omit Japan’s atrocities…” (Choate, 1990, p. 102).
Only a portion of the difficulty faced by U.S. firms when entering the Japanese market can be attributed to Japanese government policies. Difficulty of entry is exacerbated by the reluctance of the Japanese to seek what they fear is less stable employment with American firms. Similarly, customers are reluctant to buy high technology equipment, which requires considerable support, from foreign companies whom they view as less dependable than Japanese firms (Foote & Mitchell, 1989).
Summary of External Forces Shaping Japanese Management Practices
In summarizing the powerful forces shaping Japanese management Dunphy (1987) states:
The relative cultural homogeneity of the Japanese people makes culture a more powerful and uniform force in Japan than in more pluralist societies. Second, Japanese managerial and political elites have played a critical role in choosing, from available local and foreign cultural options, those practices which suited their own ends. They used traditional values to legitimize such practices, powerful socialization processes to inculcate associated behaviors, and material and moral incentives to reinforce these behaviors.
Unquestionably the forces of culture, industrial organization and government structures have worked in an integrated fashion, influencing the shape of Japanese management practices. However, experts in the field are uncertain as to which of the three outside forces are most influential in supporting Japanese management and providing barriers to foreign competitors (Kelley, Whatley & Worthley, 1987; Hall & Hall, 1987; Koike, 1990; Schonberger, 1982). The relevant question for research is not to decide whether Japanese management practice is influenced by outside forces, but how to build models for research which will clarify the effects of both internal and external forces on management practices. Heavy Japanese fixed investment abroad and Japanese attempts to operate subsidiaries within other regulatory and cultural systems is providing a comparative window for this research (Beechler & Yang, 1993; Beechler & Taylor, 1993).
General Management Practices
Organizational Structure. A review of the limited research available dealing with Japanese organizational patterns uncovered three unique features: an unusually large number of vertical levels, overlapping organizations, and corporate research units reporting to top management levels. A survey of 51 Japanese and 55 American plants found that Japanese organizations of even smaller mean size, averaged 5.5 management levels compared with 4.9 for the American organizations (Lincoln, 1989). In spite of this finding, the author and colleagues suggest that the unusual number of levels in the typical Japanese organization actually fosters commitment to the company. They reason that status differentiation is minimal in Japanese firms and that numerous, finely-layered levels are necessary to support small career steps in the lifetime employment process (Lincoln, 1989; Lincoln & Kalleberg, 1985; 1989). Another explanation reported by Hull and Azumi (1988) posits that Japanese firms have been able to grow to bureaucratic sizes while still retaining high morale, largely due to good interpersonal relationships of first level supervisors with workers on the plant floor. In the Hull and Azumi (1988) study, morale of workers was correlated with high influence on the part of managers, not workers, suggesting that status differentiation between Japanese workers and managers may be significant. Moreover, workers were more concerned about their supervisors’ influence above than with their own company-wide participation in management.
More plausible than organizational levels as a producer of positive results, is the frequent use by the Japanese of overlapping project and product management teams (Mansfield, 1988). Most Japanese cross functional design teams have assigned to them members who would be considered superfluous in the Western world, but who assist in adding diverse viewpoints (Nonaka, 1990). In the ideal sense explained by Nonaka (1990, p. 33) the overlapping assignments of product development team members, “…the sashimi approach,” allows employees to involve themselves in the specialties of others and “…ultimately sense tacit knowledge which cannot be articulated.” Japan is attempting to improve break-through product development by stimulating creativity through the constant exchange of laboratory and production personnel (Berger, 1987).
The third unusual organizational feature discovered is the elevated status of Japanese corporate laboratories, which report to top management levels. Placing them in such a prominent position ensures coordination and diffusion of technology throughout the company (Herbert, 1990).
Long Term Planning Horizon. Japanese long-term planning and persistence in pursuit of goals, gambare, is legendary. One of the factors supporting this lengthy planning horizon is the “patient capital” produced by the close relationship between Japanese firms and their banks and by the sharing of stock holdings by keiretsus. Large debt-to-equity ratios allowed by these relationships free firms from heavy reliance on stock financing and the requisite short term profit reporting. Furthermore, Japanese banks are typically among a member firm’s largest stockholders, a practice forbidden in the U.S. by the Glass-Steagall Act (Gerlach, 1987; Kearns, 1992; McCraw, 1986). Keiretsu’s also hold some of the largest blocks of stock of group members and competing groups, practices which remove stock shares from the volatility of public trading and promote the stability needed for long term planning (Genay, 1991; Gerlach, 1987). An econometric study of the top fifty Multinational Enterprises in the world revealed that U.S. MNEs report significantly higher profits than Japanese or European firms. The findings of this study support the hypothesis that Japanese firms are not as dependent on profit reporting (Haar, 1989) and are consistent with expectations from keiretsu banking support and joint stockholdings. As a result of these keiretsu related practices, mergers and acquisitions rarely take place with foreigners (even though Japanese joint ventures are common) and hostile takeovers are almost nonexistent (Gerlach, 1987).
Consensus Decision Making and Implicit Control. Like many of the Japanese management practices it appears that decision making styles are culturally influenced, in this case, by the preference for collective responsibility and accountability (Cang, 1987). Japanese decision making has typically been described as a consensus decision process in which emphasis is placed on building agreement. This is reportedly done through ringi, moving a decision around throughout the organization, and nemawashi, the process of planting ideas and information throughout the organization so that informal understanding is obtained before implementation is attempted. It is also posited that the social cohesiveness of Japanese groups promotes consensus between all employees affected by the decisions made (Vroom & Jago, 1988). Decision making and control procedures, indeed all general communications in Japan, are often described as being implicit and ambiguous (Ouchi, 1981; Pascale & Athos, 1981). However the great homogeneity of the Japanese culture and consequent group cohesiveness, is said to facilitate implicit communications (Barnlund, 1993). On the negative side, Japanese firms have often been accused of being too ambiguous and slow in their decision making, incorporating little creativity, and often plagued with “group think” (Mroczkowski & Hanaoka, 1989).
The unique elements of the Japanese manufacturing system currently include just-in-time manufacturing and purchasing (JIT), total quality control (TQC), and continuous improvement through the use of suggestion systems and quality circles (Young, 1992). A heavy emphasis on research and development is also considered an important element of Japanese manufacturing management. These practices were developed by Toyota and their Japanese followers after WWII as innovative ways to avoid high levels of worker and equipment specialization, long production runs and setup times, and the need for costly investment in large-scale manufacturing systems (Cusumano, 1988). Such processes are facilitated by an established network of small suppliers, who possess comparable levels of productivity to large firms but maintain lower labor costs. This nurturing of relationships with suppliers over the long term allows large companies to transfer some of their expensive set-up and design work to the more efficient suppliers (McMillan, 1990). A number of manufacturing systems attributed to Japanese innovation will be reviewed below.
Just-in-time Manufacturing (JIT). In JIT manufacturing, subassemblies are pulled through the production process and suppliers deliver materials as needed, eliminating the need for storage of raw materials inventory. Of even greater importance is the fact that each part is used immediately, forcing an early examination by the subsequent worker on the line, who makes immediate corrections if needed (Young, 1992). Just-in-time purchasing evolved from the necessity for conserving space in post-war Japan and was facilitated by the close proximity of suppliers to major manufacturers. Thousands of subcontractors produce parts for large Japanese manufacturers and deliver them when requested, allowing the trucks of the suppliers to become the warehouses of the manufacturers (Sullivan, 1992; Young, 1992). This process also results in early defect detection.
Total Quality Control (TQC). Total quality control systems, which operate extensively in Japan, require workers to report quality problems and to intervene in the production line when corrections must be made. To insure that the process is successful, employees must willingly assume considerable responsibility for quality, be team oriented and be mathematically proficient, often beyond the high-school level of U.S. students (Ohmae, 1987; Young, 1992). Although TQC was pioneered in the United States, the discipline necessary to perfect it is generally believed to be better supported by the Japanese culture (Gabor, 1988; Near & Olshavsky, 1985; Porter, 1990).
Quality Circles and Continuous Improvement. Quality circles were a natural outgrowth of the group orientation of the Japanese culture (Alston, 1989; Barnland, 1993; Condon and Kurata, 1987) and the Zen concept of continuous improvement (Fry, 1991; Herbert, 1990). They focus on general themes while suggestion systems are used to capture related and spin-off ideas from individuals (Basadur, 1992). Workers are expected to make daily suggestions for improvement in the work process and some companies, such as Nissan, even have a quota for suggestions (Young, 1992). Employees at leading Japanese companies annually submit, on average, from between 40 to 100 new suggestions for improvement each year (Basadur, 1992).
Research and Development. To a great extent the struggle for world industrial superiority will be won or lost on the battlefield of new product design. The Japanese have learned this lesson well, developing a reputation as heavy investors in R & D. In 1986, for the first time, a Japanese company, Hitachi, surpassed General Electric in the number of U.S. patents received (Berger, 1987). In 1988, Japanese companies received 21 percent of the patents issued in the United States and ranked fourth among top companies filing for American patents. Hitachi boasts the highest level of expenditures and largest R & D staff of any private company in the world (Berger, 1987; Herbert, 1990).
Human Resource Management Practices
The competitive advantages of the Japanese have often been attributed to superior human resource management systems (Chong & Jain, 1987; Hatvany & Pucik, 1981), which are highly integrated with manufacturing management (Hatvany & Pucik, 1981). HRM systems are frequently described as supported by pillars of management that reflect both Confucian and Buddhist principles. The “pillars” are characterized collectively as the elements of life time employment, generalist education, nonspecialized career paths, seniority based evaluation, promotion and compensation, decision making based on collective responsibility, implicit information evaluation, high frequency of managerial communications, and company unions (Adams, Peterson, & Schwind, 1988; Choy & Jain, 1987; Crump, 1989; Dillon, 1983; Hatvany & Pucik, 1981; Ouchi 1981). In this discussion we will also consider “women as temporaries and support groups in Japanese Management,” factors highly supportive of some of these “pillars.”
Lifetime Employment and Generalist Career Paths. The concept, known as lifetime employment, shushin koyo seido, was spawned by the social reciprocity and familistic values of the Japanese culture and nurtured by keiretsus. It mandates a powerful employee obligation to care for the company as reimbursement for a lifetime of steadily improving living standards (Kiernan, 1993). The traditional rationale suggests that this mechanism allows Japanese firms to implement technological innovation, facilitated by employee compliance and supported by the long term cultivation of employee skills through cross-training (Drucker, 1981). This strong company affiliation and company specific training makes it easier for intra-company transfers and restricts labor mobility from company to company.
Lifetime employment, cross training and change acceptance by employees, require weak company unions, rather than industrial or craft affiliations, and function best with hiring based on social fit rather than entry skills. It has also prompted Japanese firms to recruit and hire high school and college graduates who are generalists rather than specialists and to use intensive socialization to inculcate the culture of the organization (Gerlach, 1987; White, 1989). To support this system, keiretsus must maintain flexibility by using temporary employees, primarily women, and by transferring employees to one of their supplier units during economic downturns (Gerlach, 1987). Lifetime employment is thought by many to produce higher levels of job satisfaction and commitment than less stable employment processes and is one of the major ways of rewarding employee loyalty (Ouchi, 1981; Ouchi & Johnson, 1978). However, longitudinal studies conclude that lifetime employment is more complex than this, producing very negative job satisfaction effects among younger employees and positive ones for older employees (Wakabayashi, Gallagher & Graen, 1988).
Seniority-Based Evaluation, Promotion and Compensation Systems. The emphasis on pay for seniority, so popular in Japan, rather than pay for performance factors, is consistent with a cultural emphasis on collective responsibility (Beatty, McCune & Beatty, 1988; Daley, Jiambolio, Sundem & Kondo, 1985). It is called nenko garrets, or merit of years, which presumes that employees will develop skills valuable to the company by remaining with the same firm for most of their lifetime (Beatty et al., 1988). However, Susuki (1986) asserts that seniority-based evaluation, based on the principle of conformity and harmony with others (wa), is dominant only until mid life, about age 35. Beyond 35, employee evaluations are based largely on the tokuten principle of merit and performance (Suzuki, 1986). This may explain the age-segmented attitudinal effect of lifetime employment (Wakabayashi, Gallagher & Graen, 1988). Further research is needed to confirm or deny this assertion.
Japanese firms have traditionally utilized group-based flexible bonuses and benefits rather than individual incentive programs, because the former tend to promote cooperation and supportiveness of employees as a group. This built in flexibility has also allowed the reduction of direct labor costs, when necessary, without layoffs or reduction of marketing expenditures (Barney, 1990; Mroczkowski & Hanaoka, 1989).
Company Unions. In the 1940s Japanese unions were aggressively antibusiness, but they were pacified by adoption of the lifetime employment philosophy (Sullivan, 1992). In 1988 only 28 percent of private sector employees belonged to unions (Borrus, 1988). The present day company unions of Japan have become a supporting link in their integrated human resource practices.
Japanese plants in the United States have tended to locate in right-to-work states and in areas where unemployment is high. In some cases they have hired discriminately from predominantly young male, rural, white populations (Cole & Deskins, 1988; Young, 1992). When unionized, Japanese plants have purportedly been more willing than the U.S. firms to share private business information (Morishima, 1991), a practice that has been found to significantly improve profitability, employee productivity, and labor cost (Kleiner & Bouillon, 1988). Positive labor-management relations probably explain some of the superior success of the GM-NUMMI plant (General Motors-Japanese joint venture) over the GM-Fremont and GM-Van Nuys plants (Brown & Reich, 1989). Favorable labor-management relationships at GM-NUMMI led to the ability to flexibly hire employees, to cross-train them, to reduce the emphasis on seniority, and to avoid resistance to implementation of the team concept (Brown & Reich, 1989).
Women as Temporaries and Support Groups. Although a Japanese equal opportunity law was enacted in 1984, few changes have occurred for the majority of female employees in Japan. Most female recruits are hired as clerical staff, jimu-shoku, while most male recruits are hired as general staff, sogo-shoku. In 1989, the number of women who were section chiefs, kachos, or above was less than one percent (Adachi, 1989). Women are expected to resign when they marry and they find it very difficult to acquire a maternity leave. This frees Japanese firms from the obligation of lifetime jobs for women and permits more flexible career planning for males. Consequently, managerial training offered to female employees is centered on support activities while men are trained in core business functions (Adachi, 1989).
Although many arguments could be made suggesting the inefficiences of this system (women are underutilized and many of the best minds are overlooked, etc.), the Japanese use discriminatory practices to effectively support lifetime employment, long term international assignments, corporate restructuring, and cost reduction in the male dominated system (Adachi, 1989; Enderwick, 1989; Tung, 1984a). For example, since Japanese women have little opportunity for career jobs, they think of themselves primarily in the role of wife and mother and are more supportive of their expatriate husbands when the family goes on foreign assignment (Tung, 1984b). There is also abundant evidence to suggest that women are expected to accept responsibility for more family activities than in Western countries, allowing the men to focus more intensively on work (White, 1989).
The Japanese Management System of the Future
The traditional Japanese system of management is in a period of enormous change. Japanese management practices are giving way to a modified version similar but not identical to those predicted by Choy and Jain (1987) and Ouchi (1981). This transformation is being driven by four major forces:
1. Over the past decade the number of Japanese companies with Western operations and joint ventures has increased rapidly, challenging Japanese managers in their attempts to implement traditional practices in new cultures and within different legal systems (Adams et al., 1988; Choy, & Jain, 1987; Dicle et al., 1988; Dunphy, 1987).
2. Attitudinal change is taking place among the younger Japanese who are re-thinking their priorities and goals in life. Young professionals and managers, especially women, seem to be showing a preference for a more Western style of management (Mroczkowski, & Hanaoka, 1989). This shift is also driven by the domestic price structure in Japan, which allows a nation with the largest gross per capita national product in the world to force its average citizens to live far below the standard of the rest of the industrial world (Ohmae, 1987; Prestowitz, 1988).
3. Demographic, structural and economic change, are occurring in Japan, including first and foremost, a rapidly aging work force and a rising hourly wage which is now beyond parity with the Western industrial world (Akira, 1987; Dicle et al, 1988; Jones, 1988; McCune, 1990; Mroczkowski & Hanaoka, 1989; Wakayabashi et al., 1988).
4. The passion of the Japanese for learning, both personal and organizational, enriched by enrollment in western educational programs, has highlighted for its managers many of the weaknesses of the present Japanese system, and is stimulating change (Ohmae, 1987).
The Japanese management system is conceptualized in Figure 1. The external forces influencing Japanese management practices are shown in the first column. Next, management practices themselves are identified. In the third column the major competitive advantage of the Japanese, their passion for learning, is summarized. Finally the various outcomes of Japanese management are presented in column four. If Japanese management practices are superior to Western practices, the advantages should be observable in terms of productivity, product quality, and the utilization of human resources. A number of studies over the past decade, examining the effectiveness of Japanese management practices, will be discussed using this conceptualization.
Each of the items in the first three columns of Figure 1 is coded with a plus, minus or zero, indicating whether the literature suggests that the factor is growing, declining, or remaining constant in usage. In column 4 the codes suggest whether the factor is becoming more or less effective, or remaining the same ‘in effectiveness. Figure 1 is further explained below and propositions predicting the Japanese management system of the future are offered in the narrative.
Changes in External Forces
It is difficult to measure cultural change in a country and equally difficult to determine whether change is being driven by culture, government or management. However a number of patterns occurring in Japan seem to be indicative of deep-seated cultural change. A recent survey of Japanese management trainees found that they positioned themselves somewhat closer to Western values than Japanese values. Since the survey reflects traditional values at higher levels of the hierarchy, the authors believe that this could indicate a shift in values over generations (Adams et al., 1988). Change in the role of women in Japanese companies has been developing slowly but seems to be accelerating (Dicle et al., 1988; Lansing & Ready, 1988; Shimbun, 1988; Steinhoff & Tanaka, 1986). A “Japanese New Year Survey” conducted in 1985 revealed that 72 percent of those surveyed believed that men should be in the workplace and women should be in the home. However, in 1988 only 54 percent of those surveyed supported this idea, indicating some movement toward western views (Shimbun, 1988).
The increasing cost of manufacturing labor in the late 1980s created a surplus labor of 1.7 million workers (Wakabayashi et al., 1988). MITI, usually intent on production goals, was in 1990, calling for longer vacations, more consumer protection, higher imports, and better child care facilities–all these prior to discussing industrial goals (Rapoport, 1990). The Japanese work week was cut to 46 hours in 1988, from over 50 hours per week, and further reductions have been occurring since (Borrus, 1988; Liebermann, Lau, & Williams, 1990).
P1: The cultural underpinnings of Japanese society are shifting toward Western values, though the shift is not uniform across culture and is not rapid in all sectors.
The keiretsu appears to be growing in strength and the Japanese are finding ways to extend its influence across international boundaries, primarily through parts supply to transplanted operations (Blenhkorn & Noori, 1990; Johnson, 1986; Newman, 1990). Some observers of Japanese practices are citing statistics to suggest that Japan, through its headquarter keiretsus in Japan, is colonizing America (Kearns, 1992; Prestowitz, 1988). Recent articles on the Japanese keiretsu system have focused on the large firm, small supplier interface, a relationship which produces excellent quality at the expense of profits for the supplier firms and virtually shuts out foreign suppliers for manufacturing plants in Japan (Cutts, 1992; Sakai, 1990; Sullivan, 1992). More recently the relationship has been extended to parts supply in U.S. sited Japanese auto plants, threatening control of the U.S. domestic auto pans industry (Blenkhorn & Noori, 1990; Newman, 1990; Prestowitz, 1988). Studies of bankruptcies in Japan indicate that keiretsu controlled social relationships are more significant in determining banking success for financially troubled companies than are financial accounting ratios (Suzuki & Wright, 1985). Antitrust laws, as well as an uncooperative and mistrustful attitude toward each other, have prevented U.S. companies from utilizing the advantages of the keiritsu (Ferguson, 1990).
P2: Industrial organization in Japan, especially the keiretsu, will continue to provide competitive advantages and is being extended internationally.
Changes in Management Practices
Organization Structure. Organization structure has received less attention than other functions of Japanese management. Japanese organizations include more levels of organization than their U.S. counterparts, a characteristic which needs further examination before definitive conclusions are drawn (Lincoln, 1989). Perhaps the recent wave of restructuring in Japan and reduction in administrative staffs will trigger reduction in the number of organizational levels, as has occurred in the United States (Hori, 1993). Japanese organizations typically provide redundant overlapping boundaries in product and project management in order to enhance information sharing and creativity (Lincoln, 1989; Lincoln & Kalleberg, 1985; 1989; Mansfield, 1988; Nonaka, 1990).
P3: Organizational structure in Japan, notably overlapping product and project management team organizations, presents advantages in product development and in implementation of operations. No trends were detected in this area.
Planning. The long run planning horizon and the less explicit planning of the Japanese is evolving in favor of a more Western style of formal corporate planning (Dunphy, 1987; Kono, 1992). Yet the Japanese system remains more visionary and subject to change less often than those employed by the United States (Kono, 1992). Recent financial downturns in Japan have caused great harm to some highly leveraged Japanese companies and has prompted more short-term thinking.
P4: Long run planning is becoming more formal and moving toward a Western style, though it will retain a more visionary perspective.
Decision Making and Control. Consensus decision making based on employee-management participation appears to have always been built on more ritual than substance, and to be even less authentic in transplanted Japanese operations utilizing Western employees (Byham & Dixon, 1993; Dicle et al., 1988; Mroczkowski & Hanaoka, 1989; Stewart, Gudykunst, Ting-Toomey & Nishida, 1986; Sullivan, 1992). Questions about this process have intensified recently because of experiences with Japanese owned and managed U.S. based firms (Mroczkowski & Hanaoka, 1989; Sullivan, 1983; 1992). One of the few empirical studies testing decision styles of Japanese managers provides greater evidence for such doubts. It was found that Japanese employees do not express a preference for participative decision making, but rather prefer…” consultative decision making in which subordinates are asked for their opinions while managers make the final decisions, or a persuasive decision-making style, in which managers make decisions and explain the reasons for them to their subordinates” (Stewart et al., 1986, p. 250).
Recent research based on open-ended interviews with a number of leading Japanese and North American companies discovered that the Japanese build in creativity through structural techniques such as job rotation, employee suggestion systems, quality circles, and a compelling focus on product and process improvements (Basadur, 1992), which is consistent with findings of a number of other researchers (Adams et al., 1988; Mroczkowski & Hanaoka, 1989). Basadur (1992) also found employees were taught to be constructively discontented with their jobs, to use “problem finding cards” and to consider work problems as “golden eggs.”
Similarly, the traditional assertions in the literature about the Japanese lack of appreciation for explicit control have been challenged (Daley et al., 1985; Stewart et al., 1986). One survey of the 500 largest U.S. and Japanese firms reported that Japanese controllers attached more importance to monetary control and analytical methods in examining budgetary performance than did U.S. controllers (Daley et al., 1985). Another study which collected company documents and data from headquarters personnel in seven of the giant electronics firms in Japan found that even the most clan-like firms in the sample used formal rules and surveillance-type control extensively (Beechler, 1992). Beechler (1992, p. 31) also discovered that regardless of the degree of integration of international subsidiaries owned by the survey companies, there existed a “persistent trend of Japan-centric control of overseas operations.”
Japanese managerial accounting, an area explored in the accounting journals, but not integrated with HRM and manufacturing management research, may include explicit controls through built-in structural elements, providing incentives for employee creativity (Basadur, 1992), and motivation and behavior (Berger, 1987; Daley et al., 1985; Herbert, 1990; Hiromoto, 1988; Kharbanda, 1992; Kim & Song, 1990). For example, some analysts suggest that Japanese accounting systems are designed to motivate and influence employee behavior to conform to long-term manufacturing strategies, rather than to report precise costs and inform management as in the United States (Hiromoto, 1988; Kharbanda, 1992; Kim & Song, 1990). Rather than establishing standard costs, Hiromoto (1988) explains that Japanese companies target costs on the basis of a competitive market price, pressing employees to make continuous improvements by tightening constraints until the competitive market price is met. Furthermore, Japanese companies continue to utilize direct labor costs for overhead allocation to create a labor saving incentive, a practice abandoned in the United States because labor is now such a small part of total costs (Hiromoto, 1988). Similarly, penalties of overhead surcharges are added to products that use non-standard parts, motivating departments to substitute standard parts and thus reduce the number of parts carried in inventory (Hiromoto, 1988).
P5: Decision making and control systems of the Japanese are not built on employee-manager participation and consensus decision-making, but rather are built on consultative or persuasive decision styles. Their strength lies more with structural systems used to promote information amplification, control and creativity, some of which have been duplicated in the West.
Manufacturing Productivity and Change
Those who have reviewed productivity per worker agree that the Japanese made significant gains in the 1960s and 70s and that the Japanese productivity increase plateaued in the late 1980s (Cusumano, 1988; Hodgetts & Luthans, 1989; Lieberman et al., 1990). More recently, productivity gains have been company specific, with some registered by Japanese firms and some by U.S. firms (Lieberman et al., 1990). However, productivity advantages existing in the 1990’s are largely attributed to Japanese innovations in technology, a few select management practices, and top management selection, rather than to any unique characteristics of the Japanese workers (Cusumano, 1988; Hodgetts & Luthans, 1989; Lieberman et al., 1990). Based on the literature reviewed it appears that the forces of change, summarized earlier, are permitting and even enhancing the continuance of most Japanese manufacturing practices, both domestically and in transplants, except for just-in-time purchasing (Dicle et al., 1988; Lieberman et al., 1990; Hodgetts & Luthans, 1989). Sullivan (1992) reasons that this practice is declining in Japan because supplier plants are locating near factories, forcing competition for labor, and because the practice merely shifts costs from large manufacturers to suppliers. He also argues that the practice will prove ineffective in the United States where labor costs are high and control over vendors is limited. Other JIT systems are also subject to criticisms and probably require selective implementation (Harber et al., 1990; Im, 1989; Kamata, 1982).
U. S. manufacturing capabilities are probably reaching parity with the Japanese (Ebrahimpour & Johnson, 1992; Reitsperger & Daniel, 1990; Strutton & Pelton, 1993). Technology is very mobile and most Japanese manufacturing methods have been adopted by the more alert U.S. firms. R & D successes, bolstered by keiretsus, MITI and innovative policies, are continuing to flourish in Japan.
P6: Manufacturing productivity per employee in the United States is rapidly approaching or is exceeding parity with Japan. Advantages for Japanese companies appear in certain areas such as R & D and product design, but these appear to be heavily supported by governmental and vertical alliances.
Product Quality Effectiveness and Change
The evaluation of product quality can take at least three avenues: the critique of quality management processes, the assessment of product quality perception by buyers, or the evaluation of R & D management, investment and outcomes. All three research tracks tend to show the competitive advantage resting with the Japanese, but they also suggest that the quality gap is not great and that the United States is moving toward parity with the Japanese.
Various researchers have suggested that Japanese supervisors understand quality problem areas and communicate the TQC philosophy better than U.S. supervisors (Ebrahimpour & Cullen, 1993; Garvin, 1986). However, some recent research suggests a convergence of the quality attitudes and practices of American and Japanese management. Reitsperger and Daniel (1990) learned from a survey of matched samples of electronics industry operating managers from Japan and the Silicon Valley, that a larger proportion of the U.S. than the Japanese managers showed attitudes reflecting a TQC philosophy. Ebrahimpour and Cullen (1993), from an extensive comparative study, found that both American and Japanese owned firms in the U.S. vary in the style with which they operate quality control departments-some with an inspection (American) emphasis and some with a promotion (Japanese) emphasis. More Japanese operated than American operated firms emphasized the promotion emphasis, an emphasis which instills a greater awareness between quality performance and overall organizational performance. They concluded that a promotion emphasis for quality operations is more a function of management style than of the national culture.
P7: The Japanese possess some advantages in the management of quality processes, however the gap between Japanese and U.S. quality management is closing, though perhaps more slowly than the productivity gap.
Stereotypical advantages are usually attributed to Japanese products, often based correctly or incorrectly, on country-of-origin images (Johansson & Thorelli, 1985). Interestingly, when countries differ in the perceived quality of the products which they export, “country-of-origin” labeling becomes “deeply entrenched and enduring” in its influence on consumer choice (Strutton & Petton, 1993, p. 79). Country-of-origin studies conducted in areas of the world, other than the United States or Japan, shed some light on this subject. Consumers in Saudi Arabia and Bahrain (Yavas & Alpay, 1986), Nova Scotia (Kaynak & Cavusgil, 1983), the People’s Republic of China (Kaynak, 1989), Hong Kong (Cheung & Denton, 1993), and suppliers in Saudi Arabia (Yavas, Cavusgil, & Tuncalp, 1987), rated products from the United States and Japan similarly as possessing “high quality” (Cheung & Denton, 1993). However, these studies did find that Japan is perceived to have excelled along most criteria relating to service, promotion and distribution. The strength of the positive perceptions toward U.S. products in the sophisticated neutral trading nation of Hong Kong was unexpected.
The United States did not fare as well with consumers in another neutral trading nation, Finland, and with South East Asian shoppers in Kuala Lumpur. During the period 1975 to 1985, Finnish preference for Japanese products and marketing practices improved more that their preferences for U.S. products and marketing practices and the Japanese share of Finnish consumer imports steadily increased, while the U.S. share remained relatively constant (Darling & Wood, 1990). In Southeast Asia, Japanese products were evaluated as superior to U.S. products on four of five significant dimensions. However, the authors conclude that “possibly the most interesting result was that the overall product superiority, craftsmanship and durability traits were not regarded as salient differences between goods originating in the U.S. and Japan” (Strutton & Pelton, 1993, p. 79). Judged by these studies, overall Japanese quality is not perceived as favorably by the rest of the world as is often suggested in the popular literature of the United States.
P8: In neutral countries, the quality image of Japanese products continues to slightly exceed those of the United States, largely because of distribution, promotion and service advantages.
Traditional explanations for Japanese product development advantages have dwelt on expenditures for R & D and number of patent applications. More recent explanations have centered on time as a competitive advantage, supported by MITI and the keiretsu and discriminatory practices by the Japanese. The Japanese develop and introduce new products and processes much faster and more economically than the Americans. Their time advantage probably derives from a highly developed subcontractor network, the overlapping of various stages in product design, the excellent communications between functional departments, and the ability to build on advanced Western technology (Mansfield, 1988).
Patent applications by U.S. firms in Japan are processed more slowly than domestic applications, research suggests, because of discriminatory treatment (Kotabe, 1992). Companies like Hitachi are supported in Japan in the R & D race by keiretsus, which allows them to sustain prolonged losses, while building market share (Herbert, 1990). Although government funds make up a smaller percentage of R&D than in the United States, most government-funded R&D in Japan is in non-military applications such as general science (Herbert, 1990).
But perhaps the greatest competitive advantage possessed by the Japanese is their inventiveness inherent in R & D, which is exemplified by a strong integration of product R & D with manufacturing R & D, bolstered with in-house trained employees (Hull & Azumi, 1991).
P9: The Japanese will continue to invest more heavily in R & D than U.S. firms and to introduce new products faster and more economically than the United States utilizing superior organizational, communicative and integrative arrangements, discriminatory patent protection, superior governmental funding and exceptional support by keiretsus. These advantages will be aggressively protected and enhanced in the future.
Human Resource Management Effectiveness and Change
The attributes of Japanese human resource management and Japanese employees have been vigorously debated. Early writings, unsupported by empirical research or first-hand experience, presumed that Japanese workers were more diligent than U. S. workers, often attributing this to the open and participative treatment by their supervisors and to lifetime employment. Yet several writers have asserted that Japanese workers do not work harder nor are Japanese managers more humanistic than their American counterparts (Kamata, 1980; Luthans, McCaul & Dodd, 1985). Moreover, studies have consistently shown organizational commitment and job satisfaction to be lower for Japanese workers than for the rest of the industrialized world (Cole, 1979; Koike, 1990; Lincoln & Kalleberg, 1985; Luthans, McCaul & Dodd, 1985; Naoi & Schooler, 1985, Wakabayashi & Kido, 1986). On the other hand, survey analyses consistently show positive relationships of organizational commitment and job satisfaction with age and tenure for companies in Japan, Korea, and the United States (Lincoln, 1989; Luthans et al., 1985). The latter finding dictates caution in interpreting studies on Japanese HRM, some of which have targeted employees who had averaged only a few years with their company, and consequently, did not properly allow for the potential effects of lifetime employment (Lincoln, 1989; Luthans et al., 1985). Moreover, the consistent, but puzzling, findings on employee satisfaction, loyalty and commitment in Japan may be reconciled by the research of Lincoln (1989). He found that although Japanese factory executives scored themselves lower in job satisfaction than did their U.S. counterparts, the Japanese tended to evaluate everything pessimistically, with considerable humility and understatement.
Koike (1990) analyzed productivity in 20 Japanese factories, concluding that the real source of Japanese productivity is the expertise of production workers who are flexible and capable of solving complex problems. A number of writers argue that Japanese companies seem to have, in the past, made better use of modern HRM practices such as quality circles, consensus decision making, and cooperative union relationships than do American companies (Hodgetts & Luthans, 1989; Lincoln, 1989), probably because of cultural biases for informal social interaction and collective activities (Kumara et al., 1991). A 1972 data base was analyzed by Hull and Azumi (1988) concluding that Japanese plants during the 1960s and 70s were able to grow in size, automate, improve productivity, and at the same time improve the morale of workers. According to the authors, the findings are “consistent with the idea that, rather than sacrificing human relations for technological advance, major Japanese industries have developed human relations along with technology, and that both factors contribute to improve productivity” (Hull & Azumi, 1988, p. 438). Although the findings of the study are probably not applicable because of the age of the data, the research design may be a useful one for replication (Hull & Azumi, 1988). Another approach to examining human relations and employee treatment in Japan is simply to encourage case writers to accept periods of employment on manufacturing lines in Japanese plants. Kamata (1982) has written extensively about his employment experiences in 1970 and 1980 with Toyota, providing a totally different rationale for the efficiency and productivity gains of this company. He attributes most of Toyotas improvements to line-speed-ups and general inhumane treatment of employees, arguments supported with very convincing personal anecdotes.
One test of the veracity of Japanese human resource practices, separate from the confounding effect of culture and environment, is to examine the success of Japanese management in transplanted operations. Compared with European companies, both the Japanese and the Americans, are rated poor in the implementation of HRM practices in other cultures (Bamber, Shadur, & Howell, 1992; Beechler & Yang, 1993; Maruyama, 1992; Tachiki, 1991). Japanese HRM practices were found to be unsuccessful in the securities industry, characterized by a large number of specialists with little job stability, but quite successful in the auto industry in a soft labor market and with the supportive local government of a small Tennessee community (Beechler & Yang, 1993). Although it is tenuous to draw conclusions on the basis of a few case studies, it appears that Japanese HRM adaptation is more likely to succeed in cultures and under conditions close to those in Japan (Bamber et al., 1992; Beechler & Yang, 1993; Choy & Jain, 1987; Maruyama, 1992).
Lifetime employment (Akira, 1987; Dicle et al., 1988; Choy & Jain, 1987; McCune, 1990; Sullivan, 1992; Wakabayashi & Kido, 1986; Tachiki, 1991) and seniority-based evaluation (Adams et al., 1988; Beatty et al., 1988; Hori, 1993; Mroczkowski & Hanaoka, 1989; Tachiki, 1991) have been declining in Japan due to a rapidly aging work force (Jones, 1988), the increasing cost of manufacturing labor, over-zealous recruiting of white collar employees in the boom of the 1980s (Hori, 1993), and Western styles of thinking by young Japanese managers (Beatty et al., 1988; Mroczkowski & Hanaoka, 1989). Between 1978 and 1987 the seniority portion of pay raises declined from an average of 57.9 percent to 46 percent in Japanese surveyed companies, while pay on the basis of performance increased from 42.1 percent to 54 percent (Mroczkowski & Hanaoka, 1989).
Company union membership, which undergirds both lifetime employment and seniority based systems, has been declining due to the movement of Japanese employees out of unionized manufacturing industries and into service industries (Borrus, 1988; Sullivan, 1992) and by implementation difficulties in foreign labor markets (Beechler & Yang, 1993; Dicle et al., 1988); Tachiki, 1991). Nevertheless, the Japanese seem to operate with more harmonious labor-management relations both at home and abroad than do their U.S. counterparts (Dicle et al., 1988; Mahoney & Deckop, 1993).
From interviews with top managers of Japanese owned businesses in the United States, it appears that Japanese companies are experiencing a behavioral adaptation period and can be characterized as operating with a convergent style of management composed of both Western and Japanese characteristics (Akira, 1987; Dicle et al., 1988; Dunphy, 1987; Choy & Jain, 1987).
P10: Traditional Japanese human resource management practices including lifetime employment, seniority based systems, and company unions are rapidly disappearing and cannot be relied upon to produce future competitive advantage. Transplanted Japanese organizations have had limited success in implementing these practices and will make fewer attempts to do so in the future.
Managerial and Organizational Learning Effectiveness and Change
A competitive advantage that the Japanese possess and which will be difficult to duplicate in the United States is their passion for self-improvement and an unrivaled persistence in educational pursuits (Ohmae, 1987; Vogel, 1979, Warner, 1991; 1992). Most qualitative studies stress the importance of a prestigious university background to career progress, but statistical studies suggest that success in Japan is determined more by management potential and hard work (Subocz, 1984). Since the Japanese usually major in science or engineering and obtain their management training in-house, few Japanese universities include business schools. While Japanese companies value formal education to a point, evidence suggests that postgraduate education, especially leaving a job to return to school, is frequently penalized (Subocz, 1984).
More recently the style of international education of Japanese managers is being questioned. Since the Japanese are no longer able to rely on cultural homogeneity, company specific decision frameworks and in-country jargon in their international subsidiaries, criticisms are emerging about their rule and culture based learning style-often absent of a personal ethical foundation (Wokutch, 1990). For these reasons the Japanese seem to be moving toward more acceptance of Western styles of education such as MBA programs (Langan, 1990; Warner, 1992). However, the MBA has not proven as secure an asset in Japan as in North America (Kimura & Yoshimori, 1989; Suzuki, 1984), perhaps because of the very different cognitive styles of North Americans and Japanese (Abramson et al., 1993).
According to organizational learning theory, each organization utilizes a “theory of action” or particular style of information gathering and processing which is understood, at least implicitly by all managers (Schon, 1987). By means of this process, knowledge that is communicable and consensual about internal action and environmental relationships can be shared (Nonaka & Johansson, 1985). A comparative study of organizational learning with Japanese and American senior managers, concludes that the learning of managers in Japanese firms is characterized by greater variety amplification by the senior managers than by their American counterparts (Sullivan & Nonaka, 1986) and was found by Rehfeld (1990) to be influenced by kaizen, or continuous improvement. Americans tend to terminate their interest in a project or process with the acknowledgement of goal achievement or results while the Japanese continue to reflect on and analyze a process long after the results are concluded (Rehfeld, 1990).
The Japanese have been very effective at negotiating international alliances with U.S. multinational firms (MNCs) and promoting competitive learning advantages by tapping the inherent knowledge vested in foreign technology, customers, suppliers, distributors, governments, and other relationships (Bartlett & Ghoshal, 1992; Baughn & Osborn, 1990; Borrus, 1988; Clegg, 1990; Reich & Mankin, 1986). Accordingly, students of Japanese management have warned of the peril of making alliances with the Japanese (Morgan & Morgan, 1991; Prestowitz, 1988; Rehder, 1990; Reich & Mankin, 1986; Rosenbloom & Cusumano, 1987). These factors have led several theorists to cite organizational learning as a possible explanation for the differential managerial success of the Japanese as compared to Westerners (Sullivan & Nonaka, 1986; Kagono et al., 1985; Nonaka & Johansson, 1985; 1994; Rehfeld, 1990).
P11: Because of the rapidly converging parity of U.S. and Japanese productivity and quality, and diminishing HRM advantages, future competitive advantages of the Japanese, if they persist, will derive largely from managerial and organizational learning excellence, strengthened by structural systems that promote information amplification, and bolstered by even greater reliance on the keiretsu and MITI.
A multitude of research design and measurement problems plague attempts to analyze and conceptualize Japanese management practices. First, management practices in Japan present a moving target, since they are in a period of rapid change. Therefore findings only a few years old are already obsolete, which creates a greater need for longitudinal studies to assist in tracking change (such as Darling & Wood, 1990; Shimbun, 1988; Liebermann, Lau & Williams, 1990; and Wakabayashi et al., 1988). The evolution of the study of Japanese management was the major catalyst for this update.
Second, the majority of the studies about management practices in Japan are based on case research from which generalizations to the larger population are difficult to justify. Accordingly, we have relied primarily on case research based on articles from highly respected practitioner journals and books, often written by experts who have remained for long periods in Japan (for example, Gerlach, 1987; Ohmae, 1987; Sullivan, 1983, 1992; Suzuki, 1984, 1986, 1989). Much of our review of external forces, culture, industrial organization and government is necessarily comprised of this genre of research.
Third, the empirical research dealing with manufacturing or HRM practices has been based largely on data from surveys or interviews (for example, Adams et at., 1988; Dunphy, 1987; Shimbun, 1988). Some studies were strengthened by following surveys with interviews to clarify findings from the samples (Beechler & Taylor, 1993; Beechler & Yang, 1993). Others incorporated comparative samples, usually measuring responses of Japanese managers or employees against U.S. counterparts (for example, Lincoln, 1989; Lincoln & Kalleberg, 1985; 1989). Another higher level of HRM research reviewed utilized comparative transnational samples and obtained responses on standardized assessment instruments (Luthans et al., 1985).
Fourth, most questionnaire and interview-based research about Japanese management suffer from small sample sizes, though a few exceptions were discovered (for example, Darling, 1987; Ebrahimpour & Johnson, 1992; Lincoln, 1989; Sullivan & Nonaka, 1986). A fifth problem inherent in Japanese management, also characteristic of survey and interview based research, is the disinclination of the Japanese to reveal business related information to outside researchers. Information freely shared in the West is often considered confidential in Japan.
Sixth, measures used to study behavior from a cross-cultural perspective suffer from functional and score inequivalence (various authors as discussed in Jaccard & Wan, 1986) and measure unreliability (Davis, Douglas & Silk, 1981), both of which may effect some of the articles which we reviewed. Some of this inequivalency and unreliability can be explained by the fact that in Western culture people are accustomed to discussing their individual opinions in an open, assertive manner; while in most Asian cultures, respondents are more concerned with saving “face,” being courteous, and communicating only generally accepted responses (Liu, 1990). Similarly, the Japanese tend to respond to questionnaires and interviews pessimistically, exhibiting considerable humility and understatement (Lincoln, 1989).
Attempts were made to avoid these problems by reviewing multiple references for every Japanese management practice or external force, by including several types of research in each area reviewed, and by anchoring each part of the model and all of the propositions presented in one or more empirical studies. Case research was used to provide breadth and connecting links to the our model and to our propositions. Some studies utilized nationally reported standard survey data from Japan and other countries (for example, Gerlach, 1987; Herbert, 1990; Hori, 1993; Lieberman et al., 1990; Mroczkowski & Hanaoka, 1989; Porter, 1990; Suzuki & Wright, 1985). Most research related to Japanese management has focused on narrowly defined topics. It is our contention that Japanese management practice can only be interpreted correctly from a holistic perspective. This requires consideration of the influence of culture, industrial organization, and government on management practices in Japanese companies and of the interrelationships of institutions such as company unions, seniority based evaluation systems, and lifetime employment (for a useful, but somewhat incomplete approach, see Culpan & Kucukemiroglu, 1993). Theoretical models, similar but more elaborate than the one presented in Figure 1 are needed. Only with such models can the massive body of research accumulating on Japanese management practice be assimilated.
In conclusion, the most unique characteristic of the traditional Japanese management system is its highly integrated and internally consistent nature (England, 1983; Hatvany & Pucik, 1981). Like a finely tuned machine, external and internal forces have been woven to produce economic outcomes unrivaled in history. In a manner similar to a world class sports team, Japanese managers have taken this highly integrated system and have implemented it with unparalleled excellence.
But it is this highly integrated characteristic that will pose the most difficulty for Japanese management in the next decade. Highly integrated systems require compensatory changes throughout when one component changes or is manipulated significantly. Furthermore, these systems are very difficult to transplant when reliant on a unique cultural, governmental and industrial environment. Japanese management practices are in a state of flux with conflicting pressures being strongly felt. Pressing for change is the heavy movement of young managers into Japanese management, primed by the adaptability and openness promoted by international operations and often prompted by international laws. Restraining change is the powerful pull of the historically homogeneous culture in Japan, braced by an older managerial and political elite and a tradition of nationalism.
Motivated by the impressive economic achievements of Japanese management, analysts have often recommended adoption of Japanese management practices in other countries. Yet frequently, these prescriptions fail to adequately acknowledge the highly complex and integrated nature of the Japanese management system–especially human resource practices–which are difficult or impossible to effectively implement abroad–and which are, in fact, lessening in importance within Japan. Additionally, observers of Japanese management often do not recognize the importance of execution and long-term persistence in determining Japanese success in areas that are more easily transferable, namely manufacturing processes/techniques. Most significantly, many researchers overlook the essential sources of support for the Japanese management structure: culture, government, and industrial alliances. Hopefully, the model presented in Figure 1 and its corresponding propositions will provide guidance for practitioners and researchers as they traverse the Japanese Management Theory Jungle.
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