NY Forum on Japanese Culture and Business Globalization in the IT Revolution

Part 2: Japanese Network Culture and the IT Revolution

Speakers:
Shumpei KUMON (Executive Director, GLOCOM)
(See the "Opinions" page for the text of his speech)
Alan WESTIN (President, Institute for Social and Legal Research)
(See the "Opinions" page for the summary of his speech)

Panelists:
Katsuto MOMII (President and CEO, Mitsui & Co., USA, Inc.)
John BUSSEY (Foreign Editor, The Wall Street Journal)

Other participants:
David ISENBERG (President, isen.com)
Hugh PATRICK (Professor, Columbia University)

Moderator:
Takahiro MIYAO (Professor, GLOCOM)

Part 1: Japanse Business Culture and Globalization

Shumpei KUMON (GLOCOM)

I have just one comment on Dr. Westin's presentation. I think there are two main reasons why the level of distrust among Japanese consumers towards corporations and the government is much higher now than American and European counterparts with respect to the handling of their personal information. One is the miserable performance during the last decade or so both in terms of corporate governance and economic growth. Another important reason is what I have defined as the horizontal digital divide. Something new has been happening, and many Japanese consumers really don't know what corporations are going to do using the Internet and their websites. There is no way to estimate the risk you might have by disclosing your credit card number by way of the Internet. So this fear can be expanded and enlarged, especially in Japan, where corporations are yet to make clear their intentions regarding consumers' personal information.

John BUSSEY (Wall Street Journal)

Regarding the digital divide, I very much like Dr. Kumon's notion of intellectual empowerment, and I am probably in the "glasses are half-full" camp. This type of technology leads to enormous sharing of information.

And it is a force behind transparency. This is one reason why China wants so vigorously to control the Internet. It will create distrust when distrust is due perhaps to the environment, like in China, and it will create trust where trust is due as people just get more information. We can see social empowerment following intellectual empowerment. People are connected with each other through the Internet. So, I think the digital divide may be narrower than we might think.

David ISENBERG (President, isen.com)

I would like to add to Professor Kumon's point of two digital divides. I think there is the third digital divide, that is the digital divide between the "past," the established large, old company, and "the future," which is the small, new company. This is the digital divide that we see playing out in a fairly advanced mode in the United States. We need to understand that the Internet, because it reduces transaction costs, makes it possible for small new companies to very rapidly create new kinds of value, especially when they are free of older corporate values fostered by incumbent companies. And it is really important for Japan to set up an environment where small new companies can rapidly come into existence and can attract talent that is necessary to grow these small companies successfully.

Katsuto MOMII (Mitsui & Co., USA, Inc.)

I quite agree with Mr. Isenberg, as it is true that IT will reduce the cost of transactions that will encourage small companies to grow, as is happening in the United States. But at the same time, large companies are not necessarily sleeping. And IT will not solve every sort of logistic problem. Small companies can do many things, but at the same time many things cannot be done by small companies. Therefore, Japanese large corporations must try to incorporate IT into their business.

Alan WESTIN (Institute for Social and Legal Research)

Very interesting in the United States is that many of the small dot.com companies have recently appointed a "chief privacy officer" because they recognize how central that issue is to their company. Good small companies see this issue as so central for their business model and for long-term success that they institutionalize this role now inside their company.

Hugh PATRICK (Professor, Columbia University)

I appreciated the discussion of trust, and I was impressed by Prof. Westin's information about consumer distrust, because I think distrust is a very dominant feature of Japanese behavior to other Japanese, much less to foreigners. And therefore there has been a heavy investment in trying to develop sufficient trust by building relationships, by building brand names, by building corporate reputation, etc. And that has been built up over time.

It seems to me that IT offers an opportunity to reduce sharply the costs of building trust. It seems to me that going along with IT are things like corporate accounting rules, disclosure by companies and a variety of things that are expanding the information basis which allows us to move from tacit trust to explicit trust. I think that is what is happening in Japan and I think the IT revolution is accelerating it.

Takahiro MIYAO (Professor, GLOCOM)

Thank you. I know you have more questions to ask and so many other issues to explore, but I am afraid time is almost up. So I would like to close the session by emphasizing that in this era of the Internet and the IT revolution we really need to build new relationships among individuals, among organizations, and between Japan and the United States, and we have just touched on some of these aspects today. We can continue this discussion on the web, so please join us at our website. I would like to thank all of you for your participation in today's discussion.