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IIST e-Magazine (For the Japanese version of this article)

A New Japanese-style Business Management Model that Utilizes the Diverse Abilities and Individualities of a Multinational Work Force Dr. Tomikazu Hiraga Executive Research Fellow & General Manager for Asia NLI Research Institute Professor of International Competitive Strategy Niigata University [Date of Issue: 28/April/2017 No.0266-1040]

Date of Issue: 28/April/2017

A New Japanese-style Business Management Model that Utilizes the Diverse Abilities and Individualities of a Multinational Work Force

Dr. Tomikazu Hiraga
Executive Research Fellow & General Manager for Asia
NLI Research Institute
Professor of International Competitive Strategy
Niigata University

Here I overview human resource challenges facing Japanese companies with international business operations, as well as steps which are being taken to address them, identifying key points and expectations in relation to realizing a new model of Japanese-style business management that utilizes the diverse abilities and individualities of a multinational work force.


The ongoing globalization of Japanese corporate activities has made it increasingly important to develop and utilize top-flight human resources—Japanese and otherwise—to drive these global operations. However, the growing need to localize management, and particularly management personnel, has long been observed to present the following challenges:

(1) The way in which the unique labor practices and introversion of Japanese-style organizations limit their appeal in the eyes of talented human resources in global labor markets; (2) The tendency to basically leave local human resource management to local operations, which also fill most top and senior management positions with Japanese expats, with few cases of local appointments (the so-called “glass ceiling” issue, or, in Chinese, limited “development space”); (3) Insufficient instillation and permeation of companies’ corporate philosophies and policies; (4) Lack of consistency between personnel evaluation standards, compensation systems, and training systems, etc., between the parent company and its offshore operations, with the necessary systems not in place to provide the basis for human resource utilization.

Looking at the results of various surveys and reports, it appears to be true that while many Japanese products and services have become prominent and trusted fixtures throughout Asia, the firms which provide them remain unpopular with local job-seekers. Even among the Asian students in my university lectures in Japan, the stereotype seems to be that Japanese companies are run mainly by expats and offer limited promotion opportunities for local personnel, while wage rises and promotions are slow. My impression is also that while internationally-experienced corporate majors and also many other smaller Japanese firms are actually making progress in addressing these issues, the change is not widely recognized.

Here I will start by overviewing the headway made by Japanese companies in addressing the above issues, and then identify key points and expectations in relation to realizing a new model of Japanese-style business management that utilizes the diverse abilities and individualities of a multinational work force.

1. Personnel localization and utilization of multinational human resources

How much progress have Japanese firms made in addressing the four issues identified above? According to the various years of the Japan Overseas Enterprises Association’s Questionnaire Survey on the Globalization of Management in Japanese Companies and Questionnaire Survey on the Globalization of Management in Japanese Overseas Subsidiaries (the latest being the 2016 versions, published in January 2017), as well as newspaper reports, the current situation and trends seem to be as follows.

<Chart> Overview of the current situation and trends: How Japanese companies have addressed the issues. (25KB)

As the chart above shows, Japanese companies are actively engaging with many of the perceived problems. A random check of Nikkei Shimbun articles from recent years too revealed that many companies—Hitachi, Fujitsu, Panasonic, Denso, LIXIL, Suntory Holdings, Shiseido, Orix, and Advantest among them—are developing common personnel standards and systems for their domestic and offshore operations. While there are differences in the scale and content of their respective efforts, most companies with international operations are clearly instituting improvements. Hopefully, as the front-runners in this area continue to drive ahead, the trend will become even more widespread.

2. Realizing a new model of Japanese-style management that utilizes the diverse abilities and individualities of a multinational work force

Japan’s status as a small, mono-ethnic country has been noted as facilitating teamwork and organizational effectiveness, corporate management included. However, to succeed in global management, Japanese companies need to simultaneously realize the key tasks of global standardization and localization. This will require moving further ahead with the steps noted in the chart to secure and develop talented human resources regardless of their nationality and make maximum use of their abilities, individualities, and ideas.

At the same time, it will also be vital to work to raise international awareness of the outstanding elements of Japanese corporate management. One effective approach would be for government institutions (including embassies and consulates, and JETRO, etc.), Keidanren (Japan Business Federation) and other economic associations, and the various Japanese chambers of commerce and industry in other countries and regions to back corporate efforts by highlighting positive aspects of Japanese-style management, such as Japanese companies’ higher job security, loyalty and long-term commitment to their employees. For example, during the 1997-98 Asian economic crisis, where the bulk of Western companies withdrew from the Thai market and/or restructured their Thai operations, many Japanese companies looked after their staff to the extent of transferring work from Japan over to Thai factories that were sitting idle because of the recession and bringing a lot of local personnel to Japan for long-term training. This information really should be spread more widely than its current limited sphere. The reason that Japanese companies are very popular among job-seekers in Thailand—counter to the situation in many Asian countries which I noted at the outset—appears to be that the Thai people understand the presence of Japanese companies and how much they contribute, the recession experience included. In addition, with lifestyles in China and other Asian countries becoming more affluent in recent years, more people now want their children to work at companies that offer stable employment and skills development rather than just chances for short-term promotions and wage rises. This way of thinking is apparently spreading not only among job-seekers but also their parents.

The corporate management field could also learn a lot from recent examples in the sporting world of athletes from different national, cultural and ethnic backgrounds sharing ideals, approaches and goals to achieve stunning results as a team—the Japanese team which scored an historic victory against the mighty South Africans in the Rugby World Cup, and the 400-meter men’s relay team which took silver in Rio, beating other teams with better individual personal bests thanks to their superb baton-passing, to name just a couple.

I would like to conclude with the fervent hope that we will see many successful examples of a new model of Japanese-style management that takes advantage of the diverse abilities, individualities and ideas of a multinational work force.

(original article : Japanese)
(For the Japanese version of this article)


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