Tradition versus Modernity in Japanese Enterprise Management Human
Capitalism: The Japanese Enterprise System as World Model.
By Robert Ozaki. Tokyo: Kodansha International, 1991 228pages. $19.95
Reviewed by Gregory Clark
Is it possible there could be two people called Robert Ozaki?
One is clearly the author of the book ‘Human Capitalism: The Japanese Enterprise
System as World Model.’ In it, Ozaki, professor of economics at California State
University at Hayward, says the excellence of Japanese management has little to do
with traditional Japanese culture. Rather, it is due to the care and intelligence
that Japan’s modern-minded managers use in handling their employees.
Indeed, and according to Ozaki, the approach taken in Japan amounts to a new form
of capitalism — something that he describes as ‘ human capitalism.’ It is a model
for the rest of the world, he says. Claims that it owes much to Japan’s unique culture
and is therefore exclusive to Japan are false, he insists.
Now I do not want to seem to detract from any of these conclusions, but there also
happens to be another book written by Robert Ozaki. Entitled ‘The Japanese: A Cultural
Portrait’ and published in 1978, it is among one of the better outlines of how Japanese
culture differs from other cultures. Indeed, it is so good and readable that I have
long used it as a textbook in comparative culture classes.
This probably accounts for my shock on discovering that in his new book Ozaki not
only rules out cultural factors entirely as an explanation for Japanese management;
he even seems to pour scorn on people (some influenced perhaps by his earlier book)
who do take a more cultural approach.
In the 1978 book, two chapters are devoted to groupism in Japan, described appropriately
as the "longing for belonging" (P. 7). He points out that "Japanese
culture has long viewed the intricate web of interdependencies as a fundamental fact
of human relations," and that "in Japanese cultural tradition, once a master-follower
relation- ship is established, it is presumed to remain harmonious for good"
(Pp. 182 and 201).
He leaves us in no doubt that these deep-seated cultural traits are the result of
Japan's unique history and are crucial to the understanding of modern Japan. Explaining
what he sees as the unusual nature of the Japanese enterprise, he says: "According
to the moral code of traditional Japan, all problems-personal and otherwise-are expected
to be solved within one's group" (P. 205).
In the final chapter, titled "From Onda to Honda," Ozaki goes out of his
way to emphasize the links between traditional Japan and modern Japanese management.
It begins: "Impressed by the dynamism of Japanese corporations, many Westerners
have wondered, 'What is the secret of their managerial system?' The secret is found
in an obscure little book, Higurashi Suzui, written in the 18th century [which] tells
the story of Onda Moku (1717-1762) who saved his provincial government from financial
and moral bankruptcy" (P. 287). Japan’s major car maker, Honda, is given as
an example of Onda’s philosophy at work.
Elsewhere Ozaki says that "while radical historical events, such as the fall
of the Tokugawa regime and the total defeat in World War II, may alter the exterior
of social organizations, the pattern of group behavior in Japan stays essentially
the same" (P. 204).
That was Ozaki in 1978. But if we Westerners today were to seek the secret of Japanese
management in Ozaki’s latest book, we would receive a very different message. Right
at the beginning, Ozaki goes out of his way to tell us that: "It has been
fashionable for Western observers to adopt a 'cultural' approach to Japan. The culture
model alleges that Japanese culture is significantly different from Western culture,
and that the Japanese economy that functions in the context of Japanese culture must
be interpreted accordingly" (P. 2). Then, after accusing those who take this
cultural approach of laxity, confusion, tautology, and overemphasis, he states boldly:
"The truth of the matter is that human capitalism has little to do with traditional
Japanese culture" (P. 2). He lists some of the companies in Japan that practice
human capitalism. Strangely, Honda is included.
This is not to suggest that Ozaki's extraordinary and unexplained volte-face on the
origins of Japanese-style capitalism discredits the rest of his book. On the contrary,
he has given us what is probably the most detailed and persuasive outline to date
of the many positive elements involved in Japanese-style management. True, Ozaki's
claim that what we see in Japan amounts to a totally new form of capitalism, quite
different from traditional capitalism, can be disputed. Japanese companies seek profits
just as relentlessly as Western firms do and will manipulate the market just as ruthlessly
if necessary to gain those profits.
That said, there is no doubt that there are important differences between the management
of the Japanese enterprise and the typical Western enterprise. For as Ozaki points
out, the strong emphasis today in Japan on employee cooperation and loyalty, on reinvestment
and profit sharing rather than dividends for shareholders, and on employee training
are all elements badly lacking in the Western company today.
Even so, I am bothered by the persistence and even vehemence with which Ozaki keeps
coming back to the theme that Japanese culture has nothing to do with modern Japanese
management. True, the Ozaki approach gains support from the many others — ‘revisionists’
they are often called - who today also want to deny the role of culture in explaining
Japan’s behaviour. And when it comes to explaining Japanese management behaviour,
the ‘revisionists’ provide several important and interesting reasons for believing
that culture is not relevant.
Reason number one is the fact that so much that today is labeled Japanese management
is obviously plain common sense: thinking long term; emphasizing market share over
quarterly profits and dividends; giving priority to the welfare of one's work force
and quality control; and so on. One would not normally have to look to bushido, or
Zen, or Onda Moku, for an explanation of such commonsensical policies.
Second is the fact that many so-called unique aspects of Japanese management today
used to flourish in U.S. and other Western enterprises - quality control circles,
company songs, and greater emphasis on seniority or lifetime employment, for example.
Ozaki and others argue that Japan simply borrowed these elements of U.S. managerial
technology in much the same way as it borrowed engineering technology.
But the clinching argument for Ozaki and other ‘revisionists’ is the fact that the
prewar Japanese enterprise did not have lifetime employment, emphasis on quality,
or the other aspects that characterize it today. Normal logic would say that prewar
Japan was closer to the culture of traditional Japan than postwar Japan. From this
it follows that the management systems we see in Japan owe little to traditional
To quote Ozaki: "JSMS [Japanese-style management system] as such did not exist
in prewar Japan" (P. 97). Or: "Human capitalism actually has American origins:
The United States served as midwife at the birth" (P. 67).
Maybe. But in that case are we supposed to assume the differences between U.S. and
Japanese management today are just an accident, that somewhere along the line Japanese
managers became smart and adopted the good elements of former US management just
when U.S. managers became stupid and began to reject or forget about those elements?
And what are we to say about the seemingly convincing arguments Ozaki put forward
in his 1978 book?
There is a way to get around all this confusion, and it is this: When we use the
word ‘culture’ we need to distinguish between the surface aspects — lifestyle, religion,
language etc — and the underlying value system. At the surface level, Japanese
culture has many unusual aspects - bushido, Zen, and so on . But if we are talking
about values, then the key elements in the past at least were not very different
from those of the Anglo-Saxon, Germanic and other north European value systems, which
also developed in relative isolation and which also passed through a prolonged period
of full feudalism. As in Japan, here too we found a liking for group activities,
diligence, pragmatism and so on.
So when the Anglo-Saxons began to take enterprise management seriously, as the basis
of our emerging industrial society, they too came naturally to emphasize collectivism,
quality control (pride in making things is a feature common to all advanced feudal
societies), the long-term welfare of the enterprise group etc. , just as Japan does
today. For all its faults, the feudal ethic can and does encourage sensible attitudes
to production — group cooperation and an emphasis on quality in particular.
If prewar Japan had a much sloppier attitude toward enterprise management, it was
for the same reasons that caused the poor enterprise management we Anglo-Saxons had
in the early stages of our industrialization, namely, that it took our managers some
time to realize that good collectivist management contributed more to profits than
worker exploitation did. When we realized that, we had little trouble introducing
the values of our former feudalistic societies — values that still existed and were
respected in other areas of our societies. Today, our management systems may differ
greatly from those of Japan. But only a few generations ago we were able to rely
on our residual feudal legacy to create management systems very similar to what we
see in Japan today.
So instead of having to explain Japan, we need to explain the rest of us. Why did
we move away from what Ozaki calls humanistic management to embrace what I call the
more rationalistic style of management — hire and fire. short-term profits etc? .
And here the main reasons, surely, has to be the shift in our value systems away
from feudalistic, collectivist values. This in turn was partly due to the passage
of time. Another factor was the influence of the strong rationalistic tradition
in Western civilization. While initially this may not have done much to influence
things on the factory floor, it has long had a strong impact on our elites, and they
in turn have come to have a strong impact on management systems. The shift from more
instinctive management to more rationalistic management was inevitable.
By comparison, Japan's island isolation was more complete. Its feudalism was both
more recent and more intense, and its elite was less influenced by the rationalism
of east Asian civilization. Or to put it another way, Japan started with a stronger
collectivist culture than we did and has been able to retain it longer. Germany,
whose feudalism was also strong and only recently ended, remains somewhat closer
to the Japanese model in some areas.
Ozaki seems to see culture at the more superficial level of everyday lifestyle, rather
than value systems. He cites the rapid change in U.S. sexual mores as proof that
culture changes quickly and therefore is not very important in determining things
like management style.
Here Ozaki is being rather superficial in his approach. If we are trying to explain
shifts in U.S. sexual mores, then we need to note the strong emphasis on logic and
principles in the U.S. value system. In the past, religious and other conservative
principles called for chastity. Today those principles have been replaced by more
liberal principles, which allow much greater sexual freedom. So while the sexual
mores may have changed greatly, the emphasis on principles remains the same as before.
In this sense the value system has not changed.
We could go further and suggest that the fairly balanced attitudes that the Japanese
have always managed to maintain in sexual mores is due to the lack of emphasis on
principles within the value system.
Ozaki's other problem is to confuse the human with the humane. There is no doubt
about the emphasis on the human factor in Japan. And often it is a good emphasis.
The collegial atmosphere found in many enterprises, or between the workers in enterprises,
can be very attractive. But another and more negative side also exists, and at times
it can be rather inhumane.
As it happened, on the very day I began reading Human Capitalism, NHK (Japan Broadcasting
Corp.), in connection with the recent financial scandals, ran an in-depth account
of how one of Japan's leading banks forced its employees to fulfill their monthly
quotas (norma) for new deposits. Those who failed by more than a certain percent
had to remove much of their clothing and prostrate themselves on a desk in front
of their colleagues in abject apology.
Admittedly, the bank concerned has a reputation for extreme pressure on employees.
But the problem of quota fulfillment exists in many other companies. So, too, do
the much publicized problems of severe, even brutal, indoctrination for new employees,
the undue stress of maintaining relationships in the workplace, overwork leading
to premature death (karoshi), and the posting of employees without their families
being able to accompany them (tanshin-funin).
In his enthusiasm for the many and undoubtedly highly attractive aspects of Japanese
management, Ozaki tends to ignore this less attractive side.