Globalization and Japanese-Style Management

Yoichi MORISHITA (Chairman, Matsushita Electric Industrial Co., Ltd)

I believe that people started using the word "globalization" about 10 years ago, when the Berlin wall tumbled down and the post cold-war era arrived. The market economy has now prevailed almost everywhere in the world, and even China has been rushing into a "socialistic market economy." Through the movement of human beings, products, money and information as a lever, the world is steadily changing its structure into a borderless one.

Such a structural change has brought mega-competition to the business world. In the arena of mega-competition as a unified market force, not only competition among businesses has become extremely severe, but also management style has come under intense discussion. And these days Anglo-Saxon rules and styles are in the spotlight. I wonder, then, which direction is to be followed by Japanese corporations that have so far maintained their unique way of doing business.

Characteristics of Japanese-Style Management

Management style is inseparable from cultural uniqueness. Among western countries, American-style management has been developed in the United States, and German-style management has been adopted in Germany. France has its own style. Similarly, in Asia there is diversity, and, needless to say, Japan has developed its own unique style.

In Japanese corporations, especially in manufacturing, there is a sense of unity, which has been fostered beyond the demarcation between employers and employees. This is "participatory management," unifying the efforts of employers and employees who share the same management ideals. Then whose corporation is it, when it is run by everyone through such "participatory management"? To answer this question, we definitely need to use the word "stakeholders" with a certain meaning. Overseas, stakeholders may be identified with shareholders, but in Japan we have a unique view of stakeholders. As manager of a Japanese corporation, I also have a somewhat different understanding of this word.

It is correct to say that shareholders are important stakeholders. However, it would be a mistake to engage in a kind of management only for the sake of shareholders, with a higher priority placed on stock prices than the creation of better goods and services. As the word "corporate citizens" indicates, corporations are expected to create value by utilizing all resources, including not only money but also human resources, land, buildings, etc. that are entrusted to them by society. If we think this way, not just shareholders but employees, trading partners, the community and, of course, customers, that is, everyone who has contact with a corporation must be regarded as stakeholders and be valued equally. I believe this is the kind of interpretation shared by most Japanese corporations, although there may be some slight differences in nuance from corporation to corporation.

Another thing that we must not forget in talking about Japanese corporations is their way of thinking about human beings. The firm is a place where employees do their best to realize their potential capability and skills. This may be a commonly held concept worldwide, but in addition there is a Japanese tradition to regard the firm as a "place to nurture people." It should be noted that such nurturing is going beyond skill development at work to reach the realm of fostering human development. This idea of nurturing people is deep-rooted and clearly reflected in long-term employment as a fundamental practice by Japanese corporations.

The World for Japan and Japan for the World

These are some of the characteristics of Japanese corporations, but we should try to incorporate universally accepted rules and styles into our management in the era of globalization and mega-competition. This does not mean, however, that everything must be changed or anything Japanese must go. Business managers are obliged to think through what should be changed and what are good Japanese practices that must be preserved.

For example, emphasis on the return on capital is consistent with the view that corporations should fulfill the expectations of society, which entrusts management resources to them. From this perspective, return on capital is a kind of global trend that we should adopt in our management. But how about layoffs as a shortcut for business recovery? In view of the developing stage of a mobile labor market in Japan, the layoff practice cannot be regarded as a means to respond to society's expectations. In contrast, many people including myself would consider "participatory management" and "nurturing of people" a good Japanese tradition, which ought to be handed down from generation to generation.

In pursuing a new direction for Japanese-style management, there is one thing that we should not overlook. That is the fact that, just as western-style management cannot be transplanted in Japan without modification, we cannot force our foreign subsidiaries, factories, or affiliated companies overseas to adopt purely Japanese-style management, even if those organizations share the same brand or the same management ideals. This is exactly what overseas business management is all about.

To repeat, corporate management is an embodiment of each country's long-held cultural heritage. If we try to force management styles of different countries and regions into one particular norm, we will only encounter difficulties in various facets of management. Globalization is not to paint the world in one color. Rather, various colors should shine on a canvas that is commonly shared worldwide. That is "globalization" in the true sense of the word.