Why Do Japanese Companies Exploit Many Expatriates?

Abstract

Abstract: A cross table was created to classify 25 overseas subsidiaries of Japanese companies. They were classified under overseas subsidiaries with many expatriates and overseas subsidiaries with few expatriates, as well as overseas subsidiaries with sophisticated functions and overseas subsidiaries with non-sophisticated functions. From the results, it was evident that almost all overseas subsidiaries with sophisticated functions had many expatriates. Japanese companies are often singled out for their tendency to send many expatriates abroad in comparison to the multinational corporations of Europe and the USA. The sophisticated functions of those overseas subsidiaries of Japanese companies were one cause for this tendency.Keywords: Japanese companies, expatriates, overseas subsidiaries, functions of overseas subsidiaries1. IntroductionJapanese companies tend to send more expatriates abroad from the home headquarters in comparison to the multinational corporations of Europe and the USA (Bartlett & Yoshihara, 1988; Kopp, 1994a, 1994b).1 However, it has been shown that the numbers of expatriates in overseas subsidiaries of Japanese companies decreased in the first half of the 1990s (Beamish & Inkpen, 1998). Have the numbers of expatriates in overseas subsidiaries of Japanese companies further decreased in the 21st century?Data from the Ministry of Economy, Trade and Industry's Survey of Overseas Business Activities show the numbers of expatriates in overseas subsidiaries for 2004 and 2007. From this data, only Japanese companies in the manufacturing industry were selected, and the number of expatriates per subsidiary for 2004 was compared with that for 2007 (Table 1).2Table 1 shows that the number of expatriates per subsidiary of Japanese companies increased from 5.81 to 6.56 from 2004 to 2007. This suggests that Japanese companies are still relying on expatriates for overseas development.Prior research has explained the reasons for Japanese companies to utilize many expatriates from the perspective of corporate culture and historical background (Bartlett & Ghoshal, 1989; Bartlett & Yoshihara, 1988; Beamish & Inkpen, 1998; Kopp, 1994a, 1994b). Some research has criticized the tendency of Japanese companies to utilize many expatriates with the premise that this tendency is a unique characteristic of Japanese companies (Bartlett & Yoshihara, 1988; Kopp, 1994a, 1994b; Legewie, 2002). It has also been reported that Americans working in Japanese companies in the US feel dissatisfaction with Japanese expatriates due to communication issues (Kopp, 1994b). Thus some researches have argued that Japanese companies should decrease the numbers of expatriates in overseas subsidiaries (Bartlett & Yoshihara, 1988; Beamish & Inkpen, 1998; Kopp, 1994a, 1994b; Legewie, 2002).However, is it possible that in recent years Japanese companies use many expatriates in overseas subsidiaries for a different reason? Former overseas development of Japanese companies has centered on the transfer of manufacturing activities (Abo, 1994; Bartlett & Ghoshal, 1989). However, in recent years, Japanese companies have tended to bring sophisticated functions such as RD Frost, Birkinshaw, & Ensign, 2002). As overseas functions become more enhanced, the need for sophisticated skills increases. Have Japanese companies in recent years used more expatriates in overseas subsidiaries to supplement the sophisticated skill? Existing research, however, has not discussed the relationship between the enhancement of functions in overseas subsidiaries and the large numbers of expatriates in overseas subsidiaries of Japanese companies.Based on this question, this paper shows that there is a relationship between the enhancement of functions in overseas subsidiaries and the large number of expatriates from data obtained through field surveys at 25 overseas subsidiaries of Japanese companies. …