The Invention of Enterprise: Entrepreneurship from Ancient Mesopotamia to Modern Times

By David S. Landes; Joel Mokyr et al. | Go to book overview

Chapter 17
Entrepreneurship in Pre-World War II Japan:
The Role and Logic of the Zaibatsu

SEIICHIRO YONEKURA AND HIROSHI SHIMIZU

THIS CHAPTER IS THE STORY of the path followed by an economy that came to be characterized, if not dominated, by a relatively small number of very large firms, the zaibatsu. Part of the story is the burst of growth that followed a long period of isolation, in a country suddenly opened up by the military threat of an invading force—the 1853 incursion of Admiral Perry and his fleet. This was followed by a thorough reconfiguration of the structure of government as a critical step toward elimination of the country's technological lag. The account here will describe the relatively modest entrepreneurial origins that can underlie even formation of such giant enterprises.

The uniqueness of this development process offers a number of significant insights. One illustration is a program undertaken during the Meiji Restoration period, showing how restructuring of the prevailing institutions can affect entrepreneurial activity. There, reformers chose to commute peasant rice payments to the samurai into government bonds and tax the peasants in money to pay the interest on the bonds. The samurai were encouraged to become bankers and investors (with the Tokyo and Osaka Stock Exchanges founded in 1878, almost at the same time as the issue of the bonds). Thereby, the samurai were led to eschew combat and to become entrepreneurs and capitalists.

The growth of the zaibatsu also helps to explain the reputed comparative advantage of Japan in innovation that is incremental rather that radical. For that is also a characteristic of large innovative enterprises in other countries. Their innovation activity tends to be conservative and characterized by effort to minimize risk, presumably because of their relatively complex managerial organizations and the responsibility that is imposed by substantial asset size.

In the history of the zaibatsu, entrepreneurs were the key drivers of development. Under the enormous institutional changes and social upheavals, they developed organizational forms of innovation that enabled young engineers and college graduates to be recruited and assigned to positions of power. Their innovative activity tends to be characterized by efforts to employ new knowledge in their businesses and to make multiple use of scarce resources.

In recent years, entrepreneurship has become a popular and seductive term even in Japan. The word, however, tends to be bandied about somewhat randomly. Some

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