Does the Japanese employment system harm productivity performance?

Abstract

Purpose – The purpose of this paper is to examine the impact of employment systems on productivity performance in Japanese companies from the perspective of data envelopment analysis (DEA) and sustainable human resource management (HRM). Design/methodology/approach – In all, three employment models including employment indicators in addition to financial indicators are examined between 2006 and 2012 with 2,738 listed Japanese companies. This study verifies robustness of the results by testing multiple DEA measurements and conducting industrial analysis. Findings – The results indicate employment systems influence productivity performance in Japanese companies and the characteristics of Japanese employment systems harm productivity performance. In particular, higher liquidity of human resource is essential contrary to the philosophy of long-term employment. Furthermore, new initiatives such as promotion opportunities for women have not been successful up to now. Research limitations/implications – This study investigates limited aspects of HRM practices and employment systems in Japanese companies due to data availability. This study is designed to investigate mainly organizational outcome considering sustainability. More research is needed to identify comprehensive influence from Japanese employment system not only on corporate performance but also reduction of harm on a variety of stakeholders such as employee, community and government. Practical implications – These findings suggest that it is necessary for executives in Japanese companies to pay attention to their HRM practices under Japanese employment system, in particular, entry and exit of human resource and support systems for female employees. Originality/value – There are few studies that investigate the relationship between employment system and productivity performance in Japanese companies. This research provides empirical evidence for potential influence of the Japanese employment system.