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Japan’s Competitiveness in the Global Economy and Opportunities for Japan- Related Research. James R. Lincoln  Mitsubishi Chair in International Business & Finance Walter A. Haas School of Business University of California, Berkeley. My Japan-related interests.

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japan s competitiveness in the global economy and opportunities for japan related research
Japan’s Competitiveness in the Global Economy and Opportunities for Japan- Related Research

James R. Lincoln Mitsubishi Chair in International Business & Finance

Walter A. Haas School of BusinessUniversity of California, Berkeley

my japan related interests
My Japan-related interests

--Human resource management and employment systems

--Organizational design and management practice

--Business groups (keiretsu) and corporate governance

--Strategic alliance

topics
Topics
  • Why am I here?
    • It’s not the weather
    • International business focus
    • Inter-university consortium
  • My topic: Japan’s competitiveness
    • Japan’s liabilities and strengths
    • How it’s changed
  • Opportunities for Japan-related business
  • Opportunities for Japan-related research
before the earthquake japan was getting back on track
Before the earthquake Japan was getting back on track
  • 4% GDP growth in 2010, unemployment at 5%
    • Following 6% drop in 09 & 1.5% drop in 08
      • But Japanese financials untouched by 08 meltdown
    • Strong performance in late 2010 by export industries (mostly autos and electronics)
      • Toyota quality problems a distraction
        • But shake-up good for Toyota
this follows 20 years of weak growth
This follows 20 years of weak growth
  • Averaged .5% GDP growth since 1990
    • 18% of the global economy in 1994. Now ~9%.
  • Shrinking and aging of population a factor
    • Since early 90’s growth of GDP/working age population has surpassed U. S.
    • GDP p. c. growth equal to U. S. last 10 yrs
  • GDP may understate Japan’s strengths
    • “Market value of final goods and services produced within a country in a given period”
old japan inc model 1950 1988
Old Japan Inc. model (~1950-1988)
  • Corporate strategy: growth, quality, cust. service
  • Lifetime commitment HRM model:
    • High skill, stability, discipline, teamwork, flexibility
  • Highest manufacturing performance
    • JIT and keiretsu supply chains
  • Strange but effective (?) corporate governance
    • Large insider boards
    • Monitoring and risk-sharing by banks & keiretsu
  • Ministry “industrial policy” guidance
  • Nontariff barriers to imports & foreign investment

Fell apart in the “bubble” era (88-92) & aftermath

performance enhancing adjustments to japan s economy since the mid 90 s
Performance-enhancing adjustments to Japan’s economy since the mid-90’s
  • Cost-saving corporate restructurings
  • Improved strategic focus by large firms
  • Fading of legacy networks (main bank, keiretsu)
  • Decline of lifetime commitment HRM model
  • Corporate governance & accounting reform
    • But retreat from U. S. model after 2001
  • Better universities
    • And less rigid primary and secondary ed (good?)
japan mostly made the right changes
Japan mostly made the right changes
  • Kept good parts of old system
    • Long term employment for regular workers
      • Training, discipline, flexibility
    • Networking capabilities
    • Strong corporate cultures
  • Changes in the right places
    • Greater performance focus (less seniority)
    • Greater strategic focus
      • Capacity reductions
      • Move up value chain
    • Efficiency enhancing restructurings
      • Both firm and group
    • Greater financial transparency
    • Corporate governance reforms
japan s ongoing strengths
Japan’s ongoing strengths
  • Well-trained, disciplined workforce
    • Strong work ethic and teamwork
    • HRM model for blue collar that travels well
  • Strong & cohesive management teams
  • Long-term orientation
    • Lack of investor pressure
    • High R&D investment
  • Strong manufacturing/supply chain mgt skills
  • Better universities
japan s ongoing weaknesses
Japan’s ongoing weaknesses
  • Uncompetitive in many industries
    • Software, pc’s, smart phones
    • Chemicals and pharmaceuticals
    • Services
  • Complacency– people too comfortable
    • Forget #1 or even #2; OK to be # 3, 4, whatever…
  • Insufficient entrepreneurship
    • Lack of venture capital
    • Excessive risk aversion?
more liabilities
More liabilities
  • Weak political leadership
    • Which is no longer offset by strong ministries
  • Weak CEO’s & slow corp decision-making
  • Insufficient M&A (still coddling “zombies”?)
  • Lack of entrepreneurship
  • Labor market (including ILM) rigidities
    • Underutilization of women, immigrants
    • Few mid-career job opportunities
    • Problems integrating foreign white-collar employees
  • Still wedded to “closed innovation” model
  • Aging and shrinking of population
  • High government debt (200% of GDP)
what will be the economic impact of the quake tsunami
What will be the economic impact of the quake/tsunami?
  • $300B estimated reconstruction cost
    • To be deficit-financed
    • Repatriation of yen (and shedding of US debt?)
  • Loss of GDP growth 1.5 - 2%
  • Impact on global supply chains- significant short term, longer term hard to say
  • Impact on psychology?
    • New seriousness - drive to rebuild & contribute
    • Or “gaman” – fatalistic resignation, muddle through
should us firms be looking at japan for markets partners etc
Should US firms be looking at Japan– for markets, partners, etc.
  • Already are, at least indirectly, for sourcing
  • Probably not in terms of markets
    • Affluent but tight-fisted & shrinking consumer base
    • Continuing consumer resistance
      • Still concerns about US quality & service
      • Japanese tastes – iphone example
    • Deflation erodes profitability
  • Maybe
    • For acquisitions (tough)
    • Alliances (better). Bad reputation outdated.

Patience still required!

topics for research
Topics for research
  • How do Japanese companies differ from other countries (US, EU, Korea) and are they better or worse?
    • Employee commitment, etc.
    • Teamwork and rotations
    • Training and mentoring
    • Interfirm alliances and networking
    • Manufacturing and supply chain
    • Innovation: (is ‘open’ really better than closed’?)
    • Corporate culture and socialization
      • Strategic value: knowledge kept tacit and inside
    • Corporate governance (incl. family firms)
japan related research opportunities
Japan-related research opportunities
  • Positives
    • Japanese scholars want foreign collaboration
    • More trained in Western styles/standards
    • Funding by Japanese funding agencies
    • Relative ease of access to Japanese firms
    • Vast data-gathering by government agencies
  • Negatives :
    • Language barrier
    • Gaps in research styles/standards persist
    • Lack of interest by funders, journals, audiences