Table Of ContentRESTRUCTURING JAPANESE
BUSINESS FOR GROWTH:
STRATEGY, FINANCE, MANAGEMENT
AND MARKETING PERSPECTIVE
RESTRUCTURING JAPANESE
BUSINESS FOR GROWTH:
STRATEGY, FINANCE, MANAGEMENT
AND MARKETING PERSPECTIVE
Edited by
RAJ AGGARWAL
Mellen Chair and Professor of Business
John Carroll University
Cleveland, Ohio
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SPRINGER SCIENCE+BUSINESS MEDIA, LLC
Library of Congress Cataloging-in-PubIication Data
Restructuring Japanese business for growth : strategy, finance,
management and marketing perspective / edited by Raj Aggarwal.
p. cm.
Includes index.
ISBN 978-1-4613-7075-8 ISBN 978-1-4615-4593-4 (eBook)
DOI 10.1007/978-1-4615-4593-4
1. Industrial policY-Japan. I. Aggarwal, Raj.
HD3616.]33R47 1999 99-35796
338.952-dc21 CIP
Copyright © 1999 Springer Science+Business Media New York
Originally published by Kluwer Academic Publishers, New York in 1999
Softcover reprint ofthe hardcover 1s t edition 1999
AII rights reserved. No part of this publication may be reproduced, stored in a retrieval system or trans
mitted in any form or by any means, mechanical, photo-copying, recording, or otherwise, without the
prior written permission of the publisher, Springer Science+Business Media, LLC.
Prin/ed on acidjree paper.
Dedicated to Sonia's Grandparents,
Nathu and Pushpa Aggarwal
and Roy and Minta Blackburn.
TABLE OF CONTENTS
Foreword by Joseph Gorman ix
Comments by William Clark, Jr. Xl
Preface X111
Contributors and Referees XVll
1. Introduction: The Challenge of Post-Bubble Japanese Business Growth
RAJ AGGARWAL
I. BUSINESS STRATEGIES IN JAPAN
2. The Emerging Nature of Post-Bubble Japanese Business:
Policies for Continuing Economics Growth into the New Millennium 11
RAJ AGGARWAL
3. Education and Competitiveness of Japanese Firms in a
Changing Global Economy 31
HWY-CHANG MOON
4. Globalization Strategies of Japanese Firms 43
GEORGE S. YIP
5. Recent Developments in American and European Direct Investment in
Post-Bubble Japan: Contrasting Perspectives 63
PETER J. BUCKLEY, HAFIZ MIRZA, AND JOHN R. SPARKES
II. JAPANESE FINANCIAL ENVIRONMENT
6. Has Japan Entered a New Era of Financial Constraints? 81
ALLAN D. BRUNNER AND STEVEN B. KAMIN
viii Contents
7. Foreign Firms in Japan's Securities Industry in the 1980's and
Post-Bubble Economy 101
WILLIAM V. RAPP
8. Determinants of Japanese Banks' Expansion in the European Union 145
DAYANAND ARORA
9. U.S. Trade Balance, Protectionism, and Japanese Equity Prices: International
Influence of National Macroeconomic News 161
RAJ AGGARWAL AND DAVID C. SCHIRM
III. MANAGEMENT IN JAPANESE FIRMS
10. Opportunistic Tendencies in International Joint Ventures with the Japanese: The
Effects of Culture, Shared Decision Making, and Relationship Age 179
JEAN L. JOHNSON, JOHN B. CULLEN AND TOMOAKI SAKANO
11. The Challenges to Japan's Labor Market in the Post-Bubble Recession 193
MAY M. L. WONG
12. Japanese Women in the Workplace 209
TERRI R. lITUCHY
13. Linking JIT Strategies and Control Systems: A Comparison of the
U.S. and Japan 221
SHIRLEY J. DANIEL AND WOLF D. REITSPERGER
IV. JAPANESE MARKETING
14. Japanese Marketing in the Post-Bubble Era 243
JOHNY K. JOHANSSON AND MASAAKI HIRANO
15. Entering the Japanese Retail Market: Survival of the Fittest:> 259
G. SCOTT ERICKSON, JAMES M. MASKULKA AND THERESE A. MASKULKA
16. Restructuring Japanese Business through Kyosei: Capitalizing on International
Strategic Alliances at the Consumer Level 275
BERNARD L. SIMONIN AND JULIE A. RUTH
17. Changing Manufactured Imports of Post-Plaza and Post-Bubble Japan 295
NORIATSU MATSUI
18. The "Depth" of the Japanese Market Orientation: A Comparison
Across Ranks and Functions with U.S. Firms 309
MASAAKI KOTABE AND ALDOR R. LANCTOT, JR.
Index 323
FOREWORD
Americans, the American economy and American businesses are very different from
their counterparts in Japan. While Japanese tend to speak with quiet circumspec
tion, we Americans are forcefully direct. Our businesses, even large, modern corpo
rations such as TRW, my company, have been built upon the spirit of individual
entrepreneurial effort; we take an idea and move with it swiftly and decisively.
Japanese businesses, by contrast, value more highly the cohesive cooperation of
everyone in the company, decisions are made with exacting deliberation and only
after a strong consensus of the management team. To the American businessman
change occurs in Japan with painful slowness.
These differences have often caused friction between our two countries over the
five decades that our partnership has grown. From my experience as past chairman
and long-time member of the U.S.-Japan Business Council, I can say that in our
periodic meetings we in the American delegation were eager for action and progress.
At the same time, our Japanese colleagues sought to proceed cautiously. During a
time several years ago when it seemed we were making very little progress toward
more balanced and open trade relations, I said that one of three things had to
happen: The Japanese could make them more open; North American and Europe
could change to match Japan by becoming more closed and protected; or we could
meet somewhere in the middle, which is the most desirable for all parties.
I think it is fair to say now that change and progress in our relationship over the
course of the last decade have been made because of two qualities that our nations
share. We are both very persistent and very adaptable. My own company and many
x Foreword
others from the U.S. have learned to be successful in Japan by sheer doggedness and
by adapting to Japanese culture instead of imposing our own. By the same token,
Japanese companies, coming down from exhilarating heights of the 1980s, have also
adapted to the global economy.
One of the keys to our mutual adaptability has been that we are constantly sizing
each other up. We are always seeking more information about each other-what
works, what doesn't, how can we succeed and get along? This new collection of
scholarly essays is further testament to that fact. This book is about the very process
of adapting to the flux of economic conditions.
Professor Aggarwal has gathered an impressive collect of essays that analyze how
Japanese business has changed since the "bubble" economy of the late 1980s burst,
and led to the country's worst recession since the war. In addition to providing
a useful overview of the economic change taking place in Japan, he has divided
the discourse into three critical areas where Americans and Japanese have taken
distinctly different approaches in the past: risk, management, and marketing.
Students of U.S.-:Japan relations, which should include anyone whose business life
depends upon global business relationships, have much to gain from the thoughtful
analysis contained in these pages. For here we have evidence of our own American
persistence and adaptability. We are constantly seeking new information that will
make us better. And as we enter what is widely touted as the new Information Age,
there is nothing that could be more important to our changed and improved
understanding of our counterparts in Japan than that we be well informed.
Joseph T. Gorman
Chief Executive Officer
TRW, Inc.
SOME COMMENTS
Professor Aggarwal's timing could not be better in bringing out this collection
of papers on doing business with Japan in the current post-bubble atmosphere. Both
in Japan and in the United States there is considerable confusion over the direction
of the Japanese economy and its future focus. With its very low interest rates, still
shaky banking sector, low growth rates, still relatively high land and sky high living
costs, and low levels of consumer confidence, Japan is not a magnet for American
Business. Following five years of near recession, it is also no longer seen as the threat
to American business that was once a major preoccupation in the United States.
This has resulted in Japanese uncertain as to how the American public views their
country. Today a Japanese view of how the United States sees Japan is that, in the
space of about five years, it has gone from "Japan Bashing" to "Japan Passing" to
"Japan Nothing." Much as the Japanese chaffed under the criticism of the period
of Japan bashing, and worried over Japan passing, they are stunned that today Japan
does not even appear to be on the United States' radar screen. This led in January
1997 to the extensive highlight given by the Japanese press to the fact that
President Clinton mentioned China seven times in his State of the Union address
and Japan not once. One sensed almost a nostalgia for the good old days when
criticism of Japan was rampant.
Ambassador William Clark, Jr.
President, Japan Society
New York
PREFACE
Japan has had an extraordinary period of economic growth from the late 1940s to
the late 1980s and is now the second largest economy in the world. Fueled by high
savings and investment rates, Japanese growth was very high until the early 1970s
and remained high for the remainder of the 1970s and the 1980s. In the late 1980s,
by historical and global standards, the Japanese economy was characterized by unusu
ally high prices of land, stocks, and other assets. These high-priced assets powered
an unprecedented wave of foreign investments by the Japanese. However, the burst
ing of this late 1980s bubble in the early 1990s was followed in the rest of the
1990s by one of the deepest recessions in Japan.
Nevertheless, in spite of the recent slowdown in the Japanese economy, Japanese
banks still feature in lists of the largest banks in the world, the yen has demonstrated
renewed strength, and the Japanese continue to have relatively low unemployment
rates, high savings and investment rates and high trade surpluses. However, the Japa
nese political system continues to subsidize large inefficient segments of Japanese
industry and working age population in Japan continues to shrink. While the Japa
nese political system needs change and the economy clearly needs to be deregu
lated, it is not clear what is necessary for the Japanese economy to resume its
historically high growth rates, or even if that is possible.
Japanese business structure continues to be different and difficult to understand
for most non-Japanese. For example, in the past, unlike western industrial countries,
Japanese economic policy has reflected a reliance on increasing returns and positive
feedback loops such as those between high savings and investment rates. Japanese
