Magazine article CMA - the Management Accounting Magazine

Not Just "Japan Inc." (the Real Reasons for the Competitiveness of Japanese Companies)

Magazine article CMA - the Management Accounting Magazine

Not Just "Japan Inc." (the Real Reasons for the Competitiveness of Japanese Companies)

Article excerpt

The simplistic "business is war" myth that Westerners use to explain Japanese competitiveness is giving way to more thoughtful analysis which suggests that Japan simply has many of its economic and business fundamentals rights.

The Japanese can be tough. "They say business is war." So says John Connor, the Japan expert in Michael Crichton's best-seller, Rising Sun, which was one of the hits of the 1993 summer movie season.

The view that the Japanese treat business as war, and that entire Japanese industrial sectors engage in predatory trade practices, is the latest in a long line of theories used to explain Japanese economic success and the ability of Japanese multinationals to penetrate foreign markets. The "business is war" theory is not, however, the first nor the most sophisticated theory developed to explain Japanese corporate behavior.

The effort to understand and explain Japan's competitiveness has become a cottage industry in North America. During the early 1980s, it seemed as though a different book claiming to unravel the Japanese economic miracle topped the best-seller list each week. Early entries often focused on government institutions and government intervention in the economy. Japanese success was attributed to brilliant industrial and trade policy involving strong government intervention. These theories claimed that Japan's powerful Ministry of International Trade and Industry, MITI, attracted Japan's "best and brightest" and that these bureaucrats were capable of picking winners and, through administrative guidance, ensuring the development and international competitiveness of entire industrial sectors. Other Japan watchers tended to focus on company-level management practices -- quality control circles, just-in-time-delivery, and labor-management cooperation. Still others claim that the key to Japan's productivity and competitiveness can be found in its education system and Japanese corporate commitment to training. These analyses tend to make much of the number of hours or days the average Japanese student spends at school and the high rankings achieved by the Japanese in international comparisons of math or science test scores. More recently, a revisionist school of thinking about Japan has emerged. Proponents claim that Japanese capitalism is fundamentally different from capitalism elsewhere. The revisionists point to certain unique features of Japanese corporate culture, especially the existence of keiretsu, industrial groupings characterized by cross-shareholding. The revisionists also emphasize the tendency of Japanese corporations to focus on market share. The "business as war" perspective is an extension, and a bastardization of the revisionist theories, which places particular emphasis on Japanese corporate activities abroad, and especially in the United States. Japanese multinationals are said to engage in predatory trade practices, in which the only goals are to maximize market share and eliminate competitors

Thankfully, new analyses of Japan's postwar economic performance and Japanese corporate behavior are now emerging. These studies have abandoned the search for a single, simple explanation and tend to take the view that Japan achieved sustained, vigorous economic growth by doing many things right at the microeconomic, macroeconomic and societal levels. By encouraging savings and holding the line on spending, government has created an economic climate that is good for business. Although rarely discussed in analyses of Japanese international competitiveness, the domestic market is very competitive, with the result that companies that survive and thrive in the domestic market are generally in a very strong position to compete outside of Japan. At the company level, the management practices that many firms in Canada have sought to emulate, such as quality control circles or just-in-time delivery, have also been critical factors in the ability of Japanese companies to compete internationally. …

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