Introduction: Japanese Management in the 21st Century

Abstract

Japan’s strong economic growth throughout the 1970s and 1980s was supported partly by its distinctive corporate style, as well as by the environmental factors surrounding the economy at that time. The corporate style was characterized by lifetime employment, seniority, and group orientation, whereas the economic environment was characterized by the protected domestic market and the export-orientated economy. Since the end of the World War II, the government had been deeply involved in reviving and growing the Japanese economy. Government policy focused limited resources on key industries of strategic importance, and protected domestic markets that were vulnerable to foreign competition through regulations. Many industries benefited from this policy, and, in particular, manufacturing and electronics were successful. Other industries, especially service sectors such as banking, insurance, and general construction, however, were left with fewer incentives to innovate, due to little threat from foreign competitors. And these are the industries that have struggled with sudden globalization and deregulation in recent years. Following the burst of the so-called ‘bubble economy’ in the early 1990s, the Japanese economy was in recession for over a decade. With fierce global competition and the oversupply of goods, many Japanese lost confidence in the once successful corporate style. Some advocated that the key to recovery is transforming to Western styles, especially those of the U.S. However, Japan is still Japan, and, as much as Japanese corporations and managers are interested in Western management styles, not all of them are applicable to the Japanese corporate environment.