Are companies for sale? The Japanese say “iie” (no)

Abstract

Mergers and acquisitions are a major fact of corporate life in Britain and the US: not so in Japan. The reason is a very different approach to human resource management. Businesses, to the British, are something to be bought and sold like commodities. To the Japanese they are places for people to work together. As a result hostile takeovers are virtually unknown in Japan. Mergers and acquisitions are however, used when internal expansion is found to be inefficient, in particular to diversify into new areas of business. The threat of hostile takeover—the so‐called “market for corporate control”—is often regarded as an important spur to corporate efficiency in Britain and the US. The Japanese management system provides incentives of a different nature. Thus the Japanese emphasise a long term view of companies’ growth. They value internal expansion through innovation and capital investment. And they undertake extensive training as part of a long term company worker relationship.