The Future Global Competitiveness of Japan and Germany

By Kahalas, Harvey | Advances in Competitiveness Research, Annual 2000 | Go to article overview

The Future Global Competitiveness of Japan and Germany


Kahalas, Harvey, Advances in Competitiveness Research


This year (1999) marks the 10th annual conference of the American Society for Competitiveness (ASC)--an organization focused on how firms and countries enhance their competitiveness. Competitiveness is no small matter. It plays a monumental role in the quality of life for those who work in organizations and certainly for the citizens of all countries. We founded this organization to provide insight--insight that is based on sound research - into how competitiveness can be created and strengthened.

Within that context of competitiveness, I think it is particularly appropriate today to discuss Japan and Germany. Just a little more than fifty years ago they were our fiercest enemies on the battlefield. In recent decades they have been our toughest competitors in the global marketplace--the second and third most economically powerful nations in the world, respectively. These are two countries that literally rose from the ashes of World War 11 to be dominant economic forces, much praised and much emulated.

It is no secret, however, that the 90s have not been kind to Japan and Germany. They will enter the new millennium with mammoth economic problems: high unemployment, company failures and huge losses. During the summer of 1999, I had the good fortune of spending six weeks in these two great nations, as part of two different delegations--one of U. S. business school academics, and one of North American academics and practitioners.

The Keizan Koho Center and AACSB sponsored the trip to Japan. It was designed to help business faculty and administrators in the United States gain an understanding of the Japanese economic and social situation.

The Germany trip was sponsored by the German Academic Exchange Service and the University of Bonn and was focused on providing North American faculty and business executives with an understanding of the role of Germany in the European Union. In this essay, I would like to share with you some of my experiences and impressions from those visits and the role that the ASC can play.

I don't plan to dwell on the economic and financial factors that have led to the economic downturn of Japan and Germany, but rather issues that I believe deserve equal attention: the demographic, sociological and cultural aspects. My sense is that a lot of their financial concerns are derivatives of underlying social and cultural problems. In both nations, these aspects are important considerations with regard to competitiveness. While they have been powerful opponents in the global arena, their dominance has come not from innovation and creativity, but really from the ability to take a good idea and make it better.

On my recent trip to Japan, the deputy foreign minister said to me: "Our people are focused on improvement, not innovation." This orientation runs deep in their history, their culture, and their educational system. Their organizational relationships, which are very complex and are very critical for the traditional functioning of Japanese society, really are a hindrance to their ability to move forward. They take a process or a product and expand on it, creating the best possible process or product. But frankly, they don't come up with new innovative paradigms or products, except for a few unusual firms led by corporate mavericks such as Sony's Morita.

Historically, Japanese firms have taken a product, a compact car for instance, and determined how to make it better, safer, more fuel efficient and cheaper than do their counterparts in other parts of the world. However, today's new economy is predicated on innovation--not just innovation in products but innovation in delivery systems such as the Internet. They usually don't practice innovation in Japan and, when they do, they don't do it well. Their corporate culture is one of those aspects that reinforce traditional ways of doing things.

As many of you know, I have spent a considerable amount of my time focused on the automobile industry. …

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