Carla I. Koen. Comparative International Management

Подождите немного. Документ загружается.

NATIONAL DIVERSITY AND MANAGEMENT 191

Case: The Japanese Keiretsu

he existence and functioning of interorganizational groups or corporate

groups has long been a focus of economic research on Japan. This is unsur-

prising since the basic structure of Japanese business consists of business

groups, the so-called keiretsu. There are two main kinds of corporate grouping in

Japan. The best known of these are the horizontal or financial keiretsu, or groups

of firms organized around a large bank. While member firms may buy and sell to

each other, the glue that holds the group together is argued to be mutual stock-

holding and bank loans to members, supplemented by personnel exchanges and

meetings between the presidents or leaders of the organizations belonging to the

groups. In short, these organizations are linked primarily by finances rather than

products.

The bank at the core of a financial keiretsu, called the ‘main bank’, does much

more than simply make loans available. It is also the central clearing house for

information about group companies and coordinator of group activities. It moni-

tors the performance of its group, holds equity in most of the major companies,

and provides management assistance when it deems this necessary. In the worst

case, if one of the group’s firms is in serious trouble, the main bank is expected

to step in both with financial assistance and with a whole new management team

selected from among the bank’s executives.

Three of the six financial keiretsu (Mitsui, Mitsubishi and Sumitomo) are

direct descendants of the famous pre-Second World War zaibatsu (financial

cliques), while the remaining three (Fuyo, Sanwa and Dai-Ichi Kangyo) have less

direct links to earlier organizations. The connections in all three, however, are

definitely both historical and financial. In contrast to the zaibatsu, however – which

were controlled by a single family, usually through a central holding company –

the contemporary keiretsu are horizontally structured groupings. Stockholding

and influence move in both directions between pairs of firms, although loans and

personnel are likely to come mainly from the commercial banks and the insur-

ance companies within the group and to go to the others.

The driving force behind the re-establishment of the major prewar zaibatsu

and the formation of the new groups was a combination of weak stock markets in

Japan after the war, the stagnant share prices of major Japanese companies and

the resulting vulnerability to take-over threats. In this situation, cross-sharehold-

ings and dependence on group financial institutions formed a protection

mechanism. (See Chapter 6 for an in-depth explanation of the financial aspects.)

In addition, between the 1950s and 1970s, the government made it difficult for

business to raise the funds it needed from any source other than the banking

system, and at the same time encouraged the city banks to lend to important

industries. It rewrote the law to make it legal for the banks to own stocks in their

clients (contrary to the Antimonopoly Law that was put in place by the US occu-

pation right after the Second World War). Moreover, because the government

This case study is based on the following sources: Teranishi (1994), Ostrom (1990), Miyashita and Russell,

(1994) and Miwa (1996).

MG9353 ch04.qxp 10/3/05 8:43 am Page 191

192 COMPARATIVE INTERNATIONAL MANAGEMENT

wanted to control the limited flows of capital in the economy, the Ministry of

Finance (MoF) also devised strict regulations to make sure that the stock market

would not mature and rival the banks. Thus the government helped to build and

shape the new bank-led keiretsu and the banks became the source of funds for

postwar industry. This primacy remained essentially unchallenged until the late

1980s.

Until the late 1970s, the structural paradigm for the zaibatsu descendants as

well as for the new groups was based on the concept of ‘one firm in each major

industrial sector’. Hence, aside from a large bank, the nucleus of the keiretsu

would also include a trading company and a major manufacturer. There would

also be a trust bank, a life insurance firm and a non-life firm, so that, together

with the bank and the trading company (which provides trade credit), most of the

group’s financial needs could be met internally. Then there would ideally be one

key company in each important industrial sector, including chemicals, construc-

tion, steel, electricals, cement, paper, glass, oil, autos, shipping, warehousing

and non-ferrous metals. When a sector became prominent, all keiretsu would

jump into it, whether there was room for six major firms or not. The result was

intense competition, much more than in the prewar days when the zaibatsu could

privately carve up markets among a few strong players and close everyone else

out. After the Second World War, the government – more specifically, the Ministry

of International Trade and Industry (MITI) – decided on the industries to be devel-

oped. As a result, the growth of certain sectors would be assured and all the

keiretsu wanted to be part of it.

However, while the big six financial keiretsu did not simply drift together, they

were not assembled according to some master plan formulated by the govern-

ment. The MITI prepared the ground that allowed the ‘big six’ to emerge, then

nurtured their core companies, steered them, and protected them from outside

competition until the 1970s. The actual formation of the keiretsu and much of their

activities were left up to the groups and the individual companies.

By the 1970s, the big six had achieved the government’s goals of building up

Japan’s heavy industries to internationally competitive levels. By the 1980s, as

calls were going up around the world for Japan to open up to free competition, the

keiretsu no longer needed protection, although the vestiges of it remained for

years in many sectors, and some are still intact today.

A second major type of inter-firm collaboration is the vertically structured

group, or vertical keiretsu. There are two types of vertical keiretsu: production

keiretsu, in which a myriad of parts suppliers and assemblers put together prod-

ucts for a single end-product manufacturer, such as in the auto (i.e. Toyota) or

electronics industries; and distribution keiretsu, in which a single firm, usually a

manufacturer, moves products out to market through a network of wholesalers

and retailers that depend on the parent firm for goods. Most manufacturers have

both types of keiretsu.

Production and distribution keiretsu exist in almost every industry in Japan,

from oil to cosmetics to advertising to broadcasting. Hence, Japan has dozens of

these large independent groups or vertical keiretsu. Stockholding in these groups

MG9353 ch04.qxp 10/3/05 8:43 am Page 192

NATIONAL DIVERSITY AND MANAGEMENT 193

is more pyramidal than in financial keiretsu, strengthening control in the core

firm. Hence, the structure consists of vertical relationships rather than hori-

zontal, which is characteristic of the financial keiretsu. The goods and services

produced by the group are often complementary, but they need not be. Moreover,

the core company has the best-known name, and may or may not lend this to

other members of the group. It owns the largest shareholdings in other group

companies and is also the most likely source of personnel or technical assistance

to other group members, particularly those just beneath it in the group pyramid.

Otherwise, enterprise groups differ considerably. In some groups, such as

the Hitachi Group, member firms have moved into a broad range of businesses,

such as construction, consumer electronics and financial services. Other groups

consist of related companies that produce the same kinds of product as the core

firms. For example, Victor Co. of Japan, Ltd, the developer of the VHS format for

videocassette recorders, and today mainly a manufacturer of that type of product

as well as audio equipment, is 50.8 per cent owned by Matsushita Electric

Industrial Co., Ltd, which is best known to consumers for its Panasonic and

Quasar lines of consumer electronics products.

While not centred around a bank, some large enterprise groups have signifi-

cant holdings in financial services firms. For example, Toyota is the largest

individual stockholder, at 40.6 per cent, in Chiyoda Fire & Marine Insurance Co.,

Ltd, Japan’s tenth largest non-life insurance firm. In addition to being the largest

lender to Nissan Fire & Marine Insurance Co., Ltd, Japan’s 12th largest firm,

Nissan Motor Co., Ltd, has a 7.3 per cent stake in the company, making it the

second largest shareholder.

In general, as noted above, the flow of financial and other resources is mostly

one-way in all the enterprise groups. The list of 20 largest stockholders in

Matsushita Electric Industrial does not include JVC or much other representation

from the Matsushita Group. Only one firm, Matsushita Electric Works Co., Ltd,

ranks 19th, holding 1.1 per cent of the stock. However, until his death in 1989,

Konosuke Matsushita, the group’s founder, ranked eighth, holding 2.1 per cent of

the shares. This illustrates another characteristic of such groups and one that

distinguishes them from financial keiretsu: one family or individual may hold sub-

stantial power. The fact that firms belonging to groups organized around

independent firms are usually much younger than companies associated with zai-

batsu or their descendants explains why company founders still play leading roles

in some relatively independent companies such as Sony.

Some of the core firms of the leading independent groups, however, are

themselves members of the financial keiretsu, at least in name. Toyota is an

example of such a firm, officially a member of the Mitsui keiretsu, but operating at

the periphery of group affairs. Nissan belongs to the Fuyo Group. The companies

to which they are linked may or may not belong to the same financial keiretsu.For

example, despite Toyota’s position as the largest stockholder in Chiyoda Fire &

Marine Insurance, the insurer belongs to the inner circle of the Fuyo Group.

Nissan Fire & Marine Insurance is part of the Dai-Ichi Group, not of the Fuyo

Group with Nissan. Moreover, some companies, while strongly associated

MG9353 ch04.qxp 10/3/05 8:43 am Page 193

194 COMPARATIVE INTERNATIONAL MANAGEMENT

with financial keiretsu, have their own enterprise groups. For example, Mitsubishi

Heavy Industries, Ltd, which plays a major role in the Mitsubishi financial keiretsu,

has dozens of firms under it. And, to make things even more complex, there are a

few very large companies that claim allegiance to more than one group. Hitachi is

the best-known example of a firm that considers itself above the keiretsu and

boldly flies the flag of three different groups.

In short, financial keiretsu and enterprise groups may be related in several

ways. In some situations, the leading members of financial keiretsu themselves

are at the core of other, distinct large groups of firms, a sort of circle within a

circle. In others, industrial firms are more independent, with some group

members linked to a financial keiretsu (intersecting circles) or two or more

financial keiretsu (one circle intersecting with two other circles) or with no strong

ties at all. Even where the circles intersect, members of enterprise groups often

have a high degree of independence from other members of the financial keiretsu.

Consequently, while, as suggested in the above, there is competition between

the member firms of the different keiretsu, there is also cooperation. In general,

one of the most striking characteristics of Japan’s industrial organization is the

predominance of stable, long-term inter-firm relationships, which are non-exclu-

sive. For example, Matsushita, the largest consumer electronics products and

robotics manufacturer in Japan, sells its component-inserting machine to its

rivals, contributing to their high productivity. Another example is Nikon, a firm

that dominates the lithography market. Although Nikon is a core member of the

Mitsubishi Group, it maintains long-term relationships with firms outside it.

Similarly, Toyota has advised its suppliers, even firms of which Toyota is the

largest shareholder, to do business with other manufacturers, even if they are

Toyota’s rivals. As a result, many members of the Toyota suppliers’ association

also belong to another car manufacturer’s association, such as Nissan, Mazda or

Mitsubishi. The long-term relationships are based on trust and reciprocity. Even

when a long-term relationship ends at some point, there is sufficient confidence,

trust and loyalty between partners to avoid the leaking of trade secrets.

Finally, the keiretsu structure expresses the dislike of major Japanese firms

for dealing with ‘independent’ subcontractors. In fact, in the subcontracting

pyramid, Japanese manufacturers effectively control their subcontractors. It is

quite common, for example, for Japanese manufacturers to instruct the subcon-

tractor to invest in new equipment. Over time, this brings the parent firm all the

advantages of state-of-the-art production equipment with little or none of the

cost. In addition to arranging for equipment investment by their affiliated sup-

pliers, the parent companies can push their subcontractors to work extra hours,

deliver parts at the parent’s convenience (part of the famous just-in-time (JIT)

system, which is explained further in Chapter 7), and accept payment when the

parent’s cash flow permits. Most important, the parent firm tells the supplier how

much it will pay for the parts. In addition, the parent firm adjusts these prices –

always downwards – at least twice a year and usually by at least 5 to 10 per cent

each time. In fact, subcontractors are treated as ‘shock absorbers’ by the manu-

facturing firms. In crisis situations, price cuts are passed on to the smallest

MG9353 ch04.qxp 10/3/05 8:43 am Page 194

References

Allen, F. and Gale, D. (1997) Financial markets, intermediaries and intertemporal

smoothing. Journal of Political Economy 105, 523–46.

Amable, B. (2000) Institutional complementarity and diversity of social systems of

innovation and production. Review of International Political Economy 7(4), 645–87.

Aoki, M. (1988) Information, Incentives, and Bargaining in the Japanese Economy.

Cambridge: Cambridge University Press.

Boyer, R. (1996) Elements for an institutional approach to economics. Mimeo, Paris:

CEPREMAP.

Casson, M. and Lundan, S.M. (1999) Explaining international differences in economic

institutions. International Studies of Management and Organization 29(2), 25–42.

Cyert, M. and March, J.G. (1963) A Behavioral Theory of the Firm. Englewood Cliffs,

NJ: Prentice-Hall.

Foss, N.J. (1999) Preface: perspectives on business systems. International Studies of

Management and Organization 29(2), 3–8.

Freeman, R. (2000) Single peaked vs diversified capitalism: the relation between

economic institutions and outcomes. NBER Working Paper No. 7556.

NATIONAL DIVERSITY AND MANAGEMENT 195

bottom-level subcontractors. Often these do not survive the hard times since they

do not have much of a profit margin to work with in the first place.

Questions

1. According to Whitley’s framework, ownership coordination is one of the fea-

tures of a business system. The concept of ownership coordination consists

of owner control, ownership vertical integration and ownership horizontal

integration. Use the information in this case to describe these features for the

dominant business system in Japan – that is, for the keiretsu.

2. The second major feature of a business system is the degree of non-owner-

ship coordination. Non-ownership coordination consists of alliance-based

vertical integration, alliance-based horizontal integration and competitor col-

laboration. Use the information in this case to describe these features for the

Japanese keiretsu.

3. Discuss the institutions that help explain the development of the character-

istics of the Japanese business system that you were asked to describe in

Questions 1 and 2.

4. Explain the main differences and similarities of the patterns of ownership

and non-ownership coordination between the Japanese keiretsu and the

Korean Chaebol.

MG9353 ch04.qxp 10/3/05 8:43 am Page 195

Giddens, A. (1986) The Constitution of Society. Berkeley, CA: UCP.

Jackson, G. (1997) Corporate governance in Germany and Japan: development within

national and international contexts. Mimeo, Max-Planck-Institut für Gesell-

schaftsforschung, Cologne.

Knight, J. (1992) Institutions and Social Conﬂict. Cambridge: Cambridge University

Press.

Kogut, B. (1991) Country capabilities and permeability of borders. Strategic

Management Journal 12, 33–47.

Kogut, B. (ed.) (1993) Country Competitiveness: Technology and the Organizing of Work.

Oxford: Oxford University Press.

Lundvall, B.-A. (1992) National Systems of Innovation. London: Pinter, 1992.

Maurice, M. (2000) The paradoxes of societal analysis: a review of the past and

prospects for the future, in Maurice, M. and Sorge, A. (eds) Embedding

Organizations. Amsterdam: John Benjamins Publishing.

Maurice, M. and Brossard, M. (1976) Is there a universal model of organization struc-

ture? International Journal of Management and Organization 6, 11–45.

Maurice, M., Sellier, F. and Silvestre, J.-J. (1982) Politique d’education et organisation

industrielle en France et en Allemagne. Paris: Presses Universitaires de France.

Maurice, M., Sellier, F. and Silvestre, J.-J. (1976/1986) The Social Foundation of

Industrial Power: a comparison of France and Germany. Cambridge, MA: MIT Press.

Maurice, M. and Sorge, A. (2000) Embedding Organizations. Amsterdam: John

Benjamins Publishing.

Maurice, M., Sorge, A. and Warner, M. (1980) Societal differences in organizing

manufacturing units: a comparison of France, West Germany and Great Britain.

Organization Studies 1, 59–86.

Miwa, Yoshiro (1996) Firms and Industrial Organization in Japan. New York: New York

University Press.

Miyashita, K. and Russell, D. (1994) Keiretsu: Inside the Hidden Japanese

Conglomerates. New York: McGraw-Hill.

North, D. (1994) Institutions matter. Mimeo, Washington University.

Oliver, C. (1992) The antecedents of deinstitutionalization. Organization Studies 13(4),

563–88.

Ostrom, D. (1990) Keiretsu and other large corporate groups in Japan. Japan

Economic Institute Report No. 2A.

Scott, W.R. (2001) Institutions and Organizations. London: Sage.

Scott, W.R., Ruef, M., Mendel, P.J. and Caronna, C.A. (2000) Institutional Change and

Healthcare Organizations: from Professional Dominance to Managed Care. Chicago:

University of Chicago Press.

Sorge, A. (1991) Strategic fit and the societal effect: interpreting cross-national com-

parisons of technology, organization and human resources. Organization Studies

12(2), 161–90.

Sorge, A. (2003) Cross-national differences in human resources and organization.

Draft manuscript.

Sorge, A. and Warner, M. (1986) Comparative Factory Organization: an Anglo-German

Comparison of Management and Manpower in Manufacturing. Aldershot: Gower.

Soskice, D. (1991) The institutional infrastructure for international competitiveness:

196 COMPARATIVE INTERNATIONAL MANAGEMENT

MG9353 ch04.qxp 10/3/05 8:43 am Page 196

a comparative analysis of the UK and Germany, in Atkinson, A.B. and Brunetta, R.

(eds) Economics for the New Europe. London: Macmillan.

Soskice, D. (1994) Innovation strategies of companies: a comparative institutional

approach of some cross-country differences, in Zapf, W. and Dierkens, M. (eds)

Institutionenvergleich und institutionendynamik. Berlin: Sigma.

Teranishi, J. (1994) Loan syndication in war-time Japan and the origins of the main

bank system, in Aoki, M. and Patrick, H. (eds) The Japanese Main Bank System.

Oxford: Clarendon Press.

Whitley, R. (1990) Eastern Asian enterprise structures and comparative analysis of

forms of business organization. Organization Studies 11(1), 47–74.

Whitley, R. (1991) The social construction of business systems in East Asia.

Organization Studies 12(1), 1–28.

Whitley, R. (1992a) European Business Systems: Firms and Markets in their National

Context. London: Sage.

Whitley, R. (1992b) The social construction of organizations and markets: the com-

parative analysis of business recipes, in Reed, M. and Hughes, M. (eds) Rethinking

Organizations: New Directions in Organization Theory and Analysis. Newbury Park,

CA: Sage, 120–43.

Whitley, R. (1999) Divergent Capitalisms: the Social Structuring and Change of Business

Systems. Oxford: Oxford University Press.

NATIONAL DIVERSITY AND MANAGEMENT 197

MG9353 ch04.qxp 10/3/05 8:43 am Page 197

Learning Objectives

By the end of this chapter you will be able to:

understand differences in human resource management practices between

countries

provide a societal explanation for the diversity in human resource practices

between countries

reflect on the differences in human resource systems between advanced and

newly developed nations

analyse the impact of elements of human resource and industrial relations

systems upon firm structure

appreciate the effects of increased competition and globalization on human

resource management systems.

Chapter

Managing Resources:

Human Resource

Management

198 COMPARATIVE INTERNATIONAL MANAGEMENT

MG9353 ch05.qxp 10/3/05 8:44 am Page 198

Chapter Outline

5.1 Introduction

5.2 Work Relationships

Work classification, design and coordination

Functional specialization

Organizational hierarchy and spans of control

5.3 Employment Relationships

Recruitment and selection methods

External recruitment versus promotion

Dismissal procedures

5.4 Reward Structure

Wage systems

Performance-related pay

Case: Human Resource Management in China

5.5 Conclusions

Study Questions