II . Outcome of the Study Groups - Summary

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8A. BUSINESS MANAGEMENT

1. "Japanese management" reconsidered: introduction -- Shigeaki Yasuoka
2. Ownership and management in family business -- Shigeaki Yasuoka
3. Nationalism in business -- Makoto Seoka
4. Values and characteristics of prewar industrialists -- Kenjiro Ishikawa
5. The formation of the employment system: the case of Mitsui -- Akiko Chimoto
6. The family business and inheritance among Kyoto merchants -- Ken Nakamura
7. Prewar local zaibatsu -- Teiichiro Fujita
8. The market-oriented development of the indigenous industry -- Masahiro Iwashita

In his introduction, Yasuoka points out the high absorbability of imported technology as one of the features of Japanese management. Such receptiveness does not mean merely a capacity for the assimilation of new technology, but also a flexible capability on the part of management to switch over to another industry when the industry that it has been engaging in suffers because of the introduction of new advanced technology. For example, the cotton cultivation and hand spinning which thrived throughout Japan in the pre-Meiji period, was almost entirely wiped out in only about twenty years when large-scale imported spinning machines came in around 1883. Cotton cultivators, however, switched to rice, mandarin oranges, sweet potatoes, and other crops. Yasuoka points out that such receptiveness was already cultivated in the Tokugawa period with the increasingly strong competition in the domestic market.

Another feature of Japanese management, according to Yasuoka, is the selective attitude shown in transferring technology. For instance, the Nishijin district of Kyoto, famous for high-quality silk woven goods, introduced the Jacquard in 1873 but not power looms because the latter were not suitable for extremely fine woven goods.

Paternalistic relations between management and labour are a well-known characteristic of Japanese business in general, but at the end of the nineteenth century the system which required blind loyalty to one's master was legally abolished. Nevertheless, the idea of the importance of such loyalty lived on for quite some time as an established social norm until modern labour relations were gradually formed by legislation for the protection of labour.

In his second paper, Yasuoka points out that in order to explain the nature and workings of what is called "Japanese management" it is necessary that an international comparison be made. He suggests that an analysis of the correlation between the mode of ownership in a family business and its style of management serve as the framework for such a comparison. He cites the following as three concepts of ownership in family businesses: (1) collective ownership: joint ownership with a strong group orientation in which rights pertain only to earnings; (2) joint ownership: in which each person has rights to his share of both earnings and control of the business and is free to dispose of his ownership rights as he sees fit; and (3) co-ownership : an intermediate form of joint ownership between the first two in which there is no freedom of disposal of rights as long as the common cause continues to exist. Yasuoka points out that the form of joint ownership of the Japanese zaibatsu was close to the first type in all cases. That of du Pont, Rothschild, and others was of the second type, and that of Tata in India was of the third type. In this paper, he also sets forth the thesis that the more pronounced the group orientation toward accumulating business capital, the stronger the tendency for conservative decisions over the taking of risks for the purpose of expanding. Such a preference manifests itself in the hiring of professional managers rather than in having the owners themselves steer the business's course. This is exactly what characterizes Japanese zaibatsu management.

Seoka discusses how the national sense of crisis in Japan at the end of the nineteenth century gave rise to strong "backlash nationalism" and to "business nationalism" on the part of Japanese industrialists. Management gave the national interest first priority in its operations, but such ambivalence of purpose rather than concentration on the usual goal of making a profit, gave rise to a psychological uneasiness. Therefore, the persons in question sought to overcome such an uneasiness by actively participating in groups of people with common beliefs. These groups included high-ranking bureaucrats, religionists, and social workers, and helped to widen their mental horizons.

Ishikawa says that prewar values in Japan were not much different from those of the Edo period (acceptance of one's status in society and selfless devotion, group identity, traditionalism, etc.) , and that from the 1910s to the 1930s such values were particularly stressed in the business world. He focuses attention on the fact that Japanese industrialists, who had a higher education and had been imbued with economic rationalism, were representative of these distinctive Japanese values and actively sought to incorporate them in the way they ran their businesses.

Chimoto traces the development of the employment system focusing on the Mitsui family, with a history of over three hundred years. In the Edo period the Mitsui family already stressed the importance of training their employees, and on the basis of such training they formed a system of promotion according to not just length of service but also degree of achievement. In the period of drastic social changes during the late Tokugawa and early Meiji years, a reform-minded employee of the family, Rizaemon Minomura (1821-1877), worked his way up to general manager and effected rapid improvement in the position of all the family's employees. For instance, he succeeded in arranging for an equal share representation for managerial employees with the owners themselves in establishing the Mitsui Bank. The Mitsui reforms suffered a setback when Minomura died, but later another reformer appeared on the scene in the person of Hikojiro Nakamigawa (1854-1901), who managed to modernize the family's employment and promotion systems still further.

Nakamura identifies two types of merchant families in Kyoto with long histories. One type was that based on sole inheritance by an adopted son chosen for his ability to keep the family business on a sound footing with the same scale of operations as before, i.e., without attempting to expand. The other type was that based on inheritance by the family's own children, the girls' husbands also assuming the family name, with rapid expansion of the scale of operations. Although the first type was most usual, there was always the possibility of choosing the second type, depending on the external environment and business circumstances within the family.

Fujita traces the history of the Terada zaibatsu as a case study of small local zaibatsu formation. Such local zaibatsu were based on traditional industries such as brewing and distilling and vinegar manufacturing and large landownership, the wealth accumulated being invested in modern industries. Amidst the collapse of restrictions imposed by social status, such enterprises were undertaken in order to vie with the samurai class that had been in control up to then.

Iwashita describes how manufacturers of Japanese silk goods on Amami Oshima (an island between Kyushu and Okinawa) managed, under a declining demand for Japanese attire, to produce high-quality, diversified goods that met with the favour of consumers by working for the revival on a higher plane of traditional techniques that had gone out of use, making the most of local conditions, and by establishing strict quality control in materials and products.