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Studying Japan from the Inside
Masako Egawa (MBA 86), executive director of Harvard Business Schools Japan Research Office in Tokyo, answers questions about business changes in Japan and the Schools research there.
Q: Tell us about an interesting recent case in Japan that your office worked on.
A: The auto manufacturer Nissan Motor was turned around by Carlos Ghosn. Ghosn was sent from Renault, the French auto company, which acquired management control of the financially distressed Nissan in March 1999. Ghosn motivated Nissans middle management and transformed the culture of the company, leading to a dramatic recovery in its performance. The case illustrates the power of a great leader. All of the reforms Ghosn implemented were originally proposed by middle managers who had been working for Nissan for twenty years; they were instrumental in the transformation process. The same group of people who have been working for an underperforming company can produce outstanding results if they have the right leader.
Q: What are some of the challenges that Japanese managers face today?
A: Globalization. When U.S., European, or Latin American companies go abroad, they can find many countries where they share similar cultures and languages. When Japanese companies send their managers overseas, however, they have to face completely different cultures and languages. Other Asian companies may face the same issue, but in Asia, outside Japan, there are only a small number of companies operating globally, while in Japan quite a few companies face this issue.
Another challenge is corporate governance. Historically, banks acted as monitors for Japanese companies, and the boards of Japanese companies were dominated by insiders. Last April, however, the commercial code was revised, and now Japanese companies may choose between two types of governance systems: the traditional Japanese system and one similar to the U.S. system. We are already seeing companies divided into two camps: Toyota, Canon, and Matsushita are saying that the Japanese system is better, while Sony, Hitachi, and Nomura Securities are opting for the U.S. style. Companies adopting the U.S.-style of governance, however, are in the minority.
Q: How do you see business in Japan developing in the years ahead?
A: Major changes are currently taking place in the Japanese economy, politics, and society. The qualities that brought success to Japanese business during the 1970s and 1980s such as lifetime employment, cross-shareholding, and keiretsu (Japanese corporate groupings) are going through fundamental changes. There is ongoing debate as to where Japanese companies are headed and whether they will adopt U.S. business practices or will maintain their uniqueness. Those changes present very interesting research opportunities for HBS.
Cynthia Churchwell
Excerpted from HBS Working Knowledge. For the full article, visit http://hbsworkingknowledge.hbs.edu/item.jhtml?id=3638&t=globalization.
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