The Invisible Link: Japan's Sogo Shosha and the Organization of Trade

Abstract

A sogo shosha is like no other type of company. Invisible Link provides a systematic and well-balanced description that covers virtually all aspects of sogo shosha operations, finance to personnel.The sogo shosha is not defined by the products it handles or even by the services it performs, for it offers a broad and changing array of goods and functions. Its business goals are equally elusive, for maximization of profits each transaction is clearly not the major goal, at either the operating or philosophical level. The sogo shosha could be broadly defined as a large, diversified, multinational enterprise engaged primarily in trading. Yet it is a uniquely Japanese business operation whose structural and strategic dynamics have no close counterparts in North America and Europe.There are only nine sogo shosha in Japan - six of them of major significance - and the largest employs fewer than 15,000. Among them, they handle about one-half of all of exports and imports. The sogo shosha typically deal in bulk in products that are highly standardized and technologically unsophisticated - raw materials, commodities, intermediary products. A large sogo shosha will finance, develop, manufacture and/or carry over 20,000 different items, from noodles to missiles as one slogan has it.The Invisible Link gives detailed coverage to such topics as historical evolution of the sogo shosha, strategic responses and competitive dynamics, culture and organization, administrative structures and processes, human resource systems, career outcomes, interunit and interfirm coordination, sectional and network organization, and emerging challenges as the nature of the Japanese economy changes.M. Y Yoshino is Professor of Business Administration at the Harvard Business School. Two of his books, Japan's Managerial System and Japanese Marketing System, were published by The MIT Press. Thomas B. Lifson is an Associate in the Program on US-Japan Relations at Harvard University.