Japanese Corporate Governance for Employees: New Architecture, Persistent Practices?

Abstract

Does the model of corporate governance that a nation adopts have fundamental economic and social outcomes? Does it, for example, affect notions as basic as competitive advantage or social harmony? Japan has been an incubator for observing these types of phenomena. It is a modern, Western economy; a member of the G8 and the world's second largest economy with a GDP in 2002 of nearly four trillion dollars (which was 40% as large as the US and more than twice as large as Germany, the world's third largest economy.) At the same time, it has lurched through a prolonged recession for most of the 1990s and the early years of the new Millennium. During this period it has reinvented its financial and banking systems and opened its markets to greater trade liberalization. It has, in so doing, embraced some of the key drivers of globalization, and yet, there are signs that its national system of corporate governance has proved remarkably resilient. What can the lessons from Japan teach us about national systems and their inherent hallmarks and qualities? Are national systems of corporate governance more durable than globalizing effects would have us believe? Is Japan's stakeholder model of governance particularly immune from US-Anglo shareholder governance? This paper examines the above issues through the historical prism of Japanese corporate governance development and, in particular, the provision made by Japanese corporate governance for employees. How irreducible is a nation's corporate governance? This ultimately pits legal, surface changes against deeper underlying cultural forces.