Japanese Corporations Research Articles

Balancing Equity and Innovation of Japanese Corporate Governance

This paper critically examines Japanese corporate governance, evaluating its role as a benefit or constraint in achieving equity and efficiency. It contrasts Japan's stakeholder-oriented model, characterized by long-term stability and employee-centric management, with the shareholder-focused frameworks of the United States and the United Kingdom. The analysis focuses on the unique roles of CEOs in Japan, emphasizing their responsibility toward employee welfare over short-term financial gains. It further explores Japan's historical business structures, including Zaibatsu and Keiretsu, which foster interconnected corporate networks but limit flexibility and innovation. The relationship between firms and main banks within Keiretsu is analyzed, highlighting their role in financial oversight and stability. Additionally, the study addresses Japan's "Three Sacred Treasures" of labor-management relations—lifetime employment, seniority-based wages, and enterprise unions—as integral to its governance approach. Despite its strengths, Japan’s model faces challenges, including limited board independence and slow decision-making processes. Recent reforms aimed at increasing transparency and aligning with global governance standards are discussed, suggesting a shift toward a hybrid model that blends traditional stability with market responsiveness. This paper provides a comprehensive analysis of the evolving dynamics of Japanese corporate governance, offering insights into its impact on Japan’s global economic competitiveness.

Environmental greenwashing in Japan: the roles of corporate governance and assurance

PurposeGreenwashing is defined as the overstatement of companies’ environmental disclosures relative to their performance. This paper aims to develop a greenwashing measure, examines its relationship with environmental performance and investigates the mitigating effects of Japanese firm-level corporate governance characteristics (corporate structure, board leadership, foreign share ownership, ratio of independent directors and ratio of directors’ variable compensation) and third-party assurance of environmental information on the extent of greenwashing.Design/methodology/approachThis paper analyzes a sample of 420 firm-year observations from the period between 2018 and 2019 from Japanese listed companies that responded to the CDP Climate Change survey via probit/logit and multivariate panel data regression models.FindingsThis paper finds that the probability of engaging in greenwashing is negatively associated with environmental performance, which supports the reliability of the study’s greenwashing measure. Japanese firm-level corporate governance characteristics are ineffective at mitigating greenwashing. This paper also finds that assurance carries a significant risk of being exploited by companies involved in greenwashing to increase the degree of their overstatement.Practical implicationsThe findings have significant implications for investors, who should increase scrutiny and skepticism of environmental disclosures, particularly from companies with poor environmental track records. Japanese companies should consider strengthening their corporate governance to ensure the effective oversight of environmental disclosure and performance. Regulators and standard setters should implement stricter guidelines for and oversight of environmental information assurance.Originality/valueNo empirical study has examined the effectiveness of Japanese corporate governance characteristics and environmental disclosure assurance on the mitigation of greenwashing.

The Effect of Cultural Norms on Group Decision-Making in Japanese Corporations

This paper explores the impact of cultural norms, particularly collectivism and social harmony, on group decision-making practices in Japanese corporations. Focusing on consensus-building mechanisms such as nemawashi and ringi-sho, the study examines how these practices foster inclusivity, mitigate conflict, and promote long-term organizational stability. It also highlights the challenges posed by slow decision-making processes and the risk of groupthink, which can stifle innovation and agility in a fast-paced global market. While consensus-building leads to more widely supported and risk-averse decisions, the paper suggests that balancing these traditional practices with more agile decision-making models is essential for Japanese corporations to remain competitive. The findings provide valuable insights into how Japanese firms might integrate global business practices while preserving their cultural identity.

Unveiling risk factors influencing the selection of the Northern Sea Route: A conjoint analysis approach for Japanese shippers

This paper explores how Japanese corporations assess risks associated with using the Northern Sea Route (NSR) as a new maritime transport route in Asia and identifies measures to promote its usage. We address two key questions: (1) What risks influence shippers' route choices in maritime transport? (2) Does risk evaluation vary by cargo type and company size? Using choice-based conjoint analysis and a conditional logit model with online survey data, we identified five main risk factors influencing shippers: route unavailability rate, delay probability, piracy probability, transport costs, and war conditions, ranked in importance from highest to lowest as war conditions, delay probability, transport costs, route unavailability rate, and piracy probability. Additionally, the risk factors significantly influencing route selection were found to be robust, showing minimal variation across company size, type of trade (import/export), and the nature of the goods transported. Our findings suggest several policy implications. Diplomatic efforts are crucial for safe vessel navigation on the NSR. Government initiatives should focus on reducing transport delays through technology investments and implementing strategies to decrease NSR delay rates without increasing shippers' costs. Additionally, emphasizing the lower piracy risks on the NSR compared to Suez Canal Route could boost its attractiveness.

Digital Communication in Japanese Companies: The Corporate Blog. Current Trends, Challenges, and Future Perspectives

The present article examines the digital communication patterns exerted by domestic Japanese companies through Japanese-language blogging practices: main characteristics, current trends, challenges, and future tendencies at the intersection of Japanese corporate culture, communication, and the digital realm. After a concise literature review of Japanese corporate identity and predominant cultural features of Japanese management, we will conduct a qualitative content analysis on a selected corpus of Japanese language corporate blogs to investigate the digital corporate discourse (content, types of public, communication strategies, and techniques) on a national level and to inquire into the extent of the impact exerted by the digital evolution of media platforms and the emergence of new AI tools. The implications of the present research are twofold. First, the database we manually compiled contains only Japanese language sources, thus surpassing the linguistic barrier many Western academics confront when researching Asian countries and media content in Asian languages. Examining the Japanese language digital discourse of domestic companies in a post-pandemic globalized context bridges the unceasing gap between the West and the East, thus decentring the focal point from the Western companies and shifting the attention from English-language digital communication. Second, connecting the Japanese-language business discourse with domestic blogging platforms represents another aspect of particular importance neglected by previous research.

Split bond ratings: Evidence from Japanese credit rating agencies

This study examines why split bond ratings occur between credit rating agencies with different reputations in Japan. Using a sample of Japanese corporate bonds newly issued during the 2006–2021 period, I find that the ratings assigned by a less reputable Japanese rating agency (JCR) are significantly higher than those by a more reputable Japanese rating agency (R&I) for the same bonds because JCR is likely to rate the creditworthiness of bond issuers more highly than R&I. The disagreement between JCR and R&I over the creditworthiness of issuers causes split bond ratings. Moreover, bonds with multiple split ratings have higher yield spreads.

Wrapping: an artistic device used in the integration of corporate reporting

PurposeThis study explores the integration of corporate reporting by Mitsubishi, a large Japanese company, using a culturally sensitive narrative that combines and reconciles Japanese and Western corporate values in one story.Design/methodology/approachWe use an analytical framework drawing on insights borrowed from narratology and the notion of wrapping – the traditional art of packaging as communication.FindingsWe find that Mitsubishi is a survivor company that uses different corporate reporting frameworks during its reporting journey to construct a bespoke narrative of its value creation and cultural values. It emplots narratives to convey a story presenting the impression that Mitsubishi is a Japanese corporation but is compatible with Western neo-liberal ideology, making bad news palatable to its stakeholders and instilling confidence in the future.Research limitations/implicationsWrapping is a culturally sensitive form of impression management used in the integration of corporate reporting. Therefore, rather than assuming that companies blatantly manipulate their image in corporate reports, we suggest that future research should focus on how narratives are constructed and made sense of, situating them in the context of local culture and traditions.Practical implicationsThe findings should interest scholars, report preparers, policymakers, and the IFRS, considering the recent release of the IFRS Sustainability Disclosure Standards designed to reduce the so-called alphabet soup of corporate reporting. By following Mitsubishi’s journey, we learn how and why the notion of integrated reporting was adopted and integrated with other reporting frameworks to create narratives that together convey a story of a global corporation compliant with Western neoliberal ideology. It highlights how Mitsubishi used integrated reporting to tell its story rather than as a rigid reporting framework, and the same fate may apply to the new IFRS Sustainability Reporting Standards that now include integrated reporting.Originality/valueThe study offers a new perspective on corporate reporting, showing how the local societal discourses of cultural heritage and modernity can shape the journey of the integration of corporate reporting over time.

How Low-Code Tools Contribute to Diversity, Equity, and Inclusion (DEI) in the Workplace: A Case Study of a Large Japanese Corporation

Learning and using technology in the workplace are essential for a company’s commitment to the sustainable development of its resources. Finding competent engineers who can handle information communication technologies (ICTs) is a challenge for companies. Currently, however, the ability to use these technologies is limited to technicians with specialized training, and not everyone can engage in development. Therefore, it is safe to conclude that equity in the use of technology has not yet been realized. This study aims to analyze, based on actual cases, the necessary conditions and mechanisms for people with diverse experiences and circumstances, not limited to engineers, to participate in ICT development to address human resource diversity. The use of technology such as low-code platforms (LCPs) that have recently emerged on the market has shown that nonprofessional engineers without programming training can participate in development projects. This research will be useful to managers in advancing Diversity, Equity, and Inclusion (DEI) strategies in their workplaces and contribute to organizational research regarding new trends in technology use by individuals: low codability. The findings of this study are of significant relevance to the Sustainable Development Goals (SDGs) of decent work and economic growth, as well as gender equality.

Effects of Shareholdings on the Relationship between Accounting Quality and Trade Credit: Evidence from Japan

ABSTRACT This study investigates the effects of cross- and stable shareholdings on the relationship between accounting quality and trade credit in Japan. Cross- and stable shareholdings are well-known features of Japanese corporate governance, as a private information-sharing system. The results indicate that the trade credit of customers without either cross- or stable shareholdings increases with accounting quality, and in most cases, such shareholdings weaken the relationship between accounting quality and trade credit. These findings suggest that close ties to cross- and stable shareholders reduce the importance of accounting information through sharing private information. The findings will enhance the understanding of ownership structure’s potential impact. Overall, this study contributes to the literature by demonstrating the role of accounting quality in financing and the factors that reduce this role. In addition, this study highlights policy implications for the regulatory initiatives to unwind cross-shareholdings, which may affect private information sharing. Data Availability: Data are available from sources indicated in the text. JEL Classifications: G34; M41.

The role of Japanese corporate governance features in explaining rating differences between global and Japanese rating agencies

Many Japanese bond issuers believe that global credit rating agencies (CRAs)—Moody's and S&P—do not consider the unique corporate governance structure in Japan and assign lower credit ratings even though the “main bank” relationship in Japan can significantly reduce the default risk of these companies. Using 5,814 rated corporate bonds issued by 558 non-financial firms in Japan from 2003 to 2021, we find that local CRAs (R&I and JCR) weigh unique Japanese corporate governance features more heavily and assign higher ratings to Japanese corporate bonds relative to global CRAs. Our results further suggest that the degree of rating differences between local and global CRAs for individual issuers results from systematically different assessments of company-specific risk by these CRAs. Our data also reveal that the importance of main bank ties in Japanese corporate governance remains intact in more recent years, contrary to previous findings.

Governance dynamics and the human capital disclosure-engagement paradox: a Japanese perspective

Purpose This paper aims to delve into the nuanced relationship between corporate governance dynamics, human capital disclosure and their impact on the competitive positioning of Japanese listed companies. The study primarily examines how these factors influence employee engagement, a critical determinant of overall business competitiveness. Design/methodology/approach Panel data for Japanese listed companies for FY 2019 to FY 2021 were analysed using multiple regression analyses with two models. Findings The results indicate that the presence of independent and female board members has a positive impact on human capital disclosure. Surprisingly, employee engagement was found to be negatively related with human capital disclosure, signifying a potential trade-off between transparency and engagement. Originality/value Amidst the escalating emphasis on non-financial information and corporate social responsibility, this paper unveils a previously underexplored aspect of Japanese corporate competitiveness. Specifically, this study offers a fresh empirical perspective on the relationship between corporate governance, human capital disclosure and employee engagement in Japanese listed companies, a topic with limited academic research and no legal regulations in Japan. The findings have significant implications for companies seeking to enhance their human capital disclosure and employee engagement practices, especially in light of the growing focus on non-financial information and social responsibility.

Peningkatan Kompetensi dan Etika Bekerja Melalui Pelatihan Bahasa Jepang di PT Toray International Matsuoka Winner

Work ethics and foreign language skills are essential for the professional, especially in a multinational corporate environment, where people who work have different cultures, languages, and nationalities. That is confirmed by observations at PT Toray International Matsuoka Winner Industries Semarang (PT TIMW). With daily interactions with Japanese clients and college, an understanding of the work ethics of Japanese corporations and proficiency in Japanese is necessary. The participants first studied Japanese corporate work ethics to improve PT TIMW staff's professional skills. Furthermore, ethical knowledge is covered by studying Japanese, which correlates to the office and business activities carried out by PT TIMW. The Japanese class training was attended by related department staff with the highest intensity of interacting with Japanese colleges and clients. Pair conversation activities were carried out to support the simulation of work situations related to production quantities and activities that indicate time. The tricky part was when the participants communicated by using numbers because there were differences in how to count between Indonesian and Japanese. The training showed good results where the participants could answer the mini-tests in each session. Pictures in textbook show an excellent impact in helping participants to imagine concepts and assist conversational activities in Japanese.

Varieties of engagement: Japanese corporate leaders’ strategic relations with foreign shareholders and institutional change

PurposeApplying the concept of “entrepreneur managers” from dynamic capabilities theory to the question of how some Japanese managers develop and use their relationships with foreign investors, this article explores organizational contexts in which Japanese managers use foreign shareholders as resources to enhance firm capabilities in the global marketplace, deploy assets effectively and implement changes to traditional organizational customs. The article asks why and how some top managers implemented institutional changes and adopted customs that are common in the shareholder-based system while others did not.Design/methodology/approachWe conducted qualitative interviews with 11 inverstor relations (IR) managers of large, listed Japanese firms in Kyoto and Tokyo.FindingsFirst, by inviting a hedge fund partner and using their human capital and social capital, a Japanese CEO committed to strengthening his firm’s competencies in the global market and introduced changes that are common in the shareholder-based system. Second, a CEO with an MBA degree and exceptional communication skills in English and Japanese dedicated himself to executing much of the strategic advice suggested to him by foreign shareholders and altered some of his firm’s traditional Japanese management practices. Third, even though many Japanese firms welcomed and used foreign shareholders as advisors to help them streamline and/or acquire firm assets, their top leaders’ implementation of organizational changes was limited. Fourth, the top leaders of family-owned firms were reluctant to initiate dialogue with foreign investors.Originality/valueThis article adds some useful organizational context to existing scholarship on institutional theory by examining Japanese leaders’ strategic management in their relations with foreign investors. Using the concept of dynamic capabilities, it addresses the role of innovative strategic managers in firms’ institutional changes.

A data set of Japanese corporates’ green transformation technologies patents

Abstract* In 2020, the Government of Japan declared 2050 “carbon neutral” and launched a long-term strategy to create a “virtuous cycle of economy and environment.” Japanese corporations possess many technologies that contribute to decarbonization, which is important for expanding investments in green transformation technology inventory (GXTI) development. Patent data are the most reliable measure of business performance for applied research and development activities when investigating knowledge domains or technological evolution. Our paper describes a Japanese patent dataset of Japanese corporations’ green transformation (GX) patent applications on the Japan Platform for Patent Information, using a search method of bombinating International Patent Classification (IPC) codes and keywords. The dataset contains 37,476 GX patent applications from 298 corporations during the period 1999–2022.

JAPANESE CORPORATE CULTURE IN “FEAR AND TREMBLING” BY AMÉLIE NOTHOMB

Amélie Nothomb is a phenomenon in contemporary literature, particularly in Frenchspeaking countries. She has gradually won over readers with her autobiographical narrative style, her romantic humor that reveals her inner self, and her wealth of cultural knowledge about where she lived before returning to Belgium at the age of seventeen. This study focuses on how Japanese corporate culture is depicted in "Fear and Trembling" by Amélie Nothomb, first published in 1999. As she witnessed the hierarchal systems, long-term commitment, and daily behaviors of her company's employees at the beginning of her professional career as an interpreter in a company in Tokyo after graduating from university in Belgium, Amélie Nothomb’s thoughts about Japan were greatly influenced.

Childcare Balancing Policy in Japanese Corporations and Women’s Fertility Intention

This study aimed to investigate the relationship between the childcare balancing policy and women’s fertility intention in Japanese corporations. This paper constructed two logistic regression models based on data from the 2010 Japanese Life Course Survey of Youth to analyze the correlation between childcare balancing policies and women’s fertility intentions. The binary logistic regression method was used. The results showed that women’s fertility intention is negatively associated with the childcare balancing policy in Japanese corporations. This may be because the research object already had a child or children. The results indicate that the fertility intention of women who had a child or children was lower than those without children. This paper discovered that regular employees had higher fertility intentions than non-regular staff. This paper provides policymakers with valuable insights on establishing effective childcare policies to enhance women’s fertility intentions.

Japan’s quest for a sustainable, virtuous circle of growth and innovation

ABSTRACT Large Japanese corporations which have accumulated substantial reserves are now under pressure to spend them, but on what, or on whom? Should they increase their (domestic) capital and R&D expenditure, which languished between 2000 and 2020; or invest more in their employees, whose wages have stagnated; or increase their shareholder returns, which have already surged; or raise executive remuneration closer to overseas counterparts? This article examines tensions in recent developments in Japan’s political economy, from Society 5.0 to Kishida’s ‘new form of capitalism’ and Keidanren’s ‘rebuilding the middle class’, from the perspective of these dilemmas.

Integrated Multi-Income Stream Performance Dashboard: a Japanese Corporate Banking Case

In response to the complex operational challenges faced by Japanese Corporate Banking (JCB), arising from the coexistence of disparate core banking systems post-merger, this study aims to address inherent issues affecting marketing performance monitoring. The existing condition at JCB is characterized by data inconsistency, limited system interoperability, and fragmented income tracking through multiple Excel reports and management systems. Recognizing the gaps in the current setup, the research question revolves around how to enhance marketing performance monitoring effectively. The research objectives, therefore, encompass the development and implementation of a tailored integrated report utilizing the CRISP-DM methodology. This innovative performance dashboard harmoniously consolidates data from diverse sources, presenting a cohesive representation crucial for comprehensive marketing performance assessment. Leveraging advanced methodologies like data normalization and cross-platform integration, the research approach ensures streamlined income tracking, mitigating existing limitations. The data, drawn from various product applications, undergoes meticulous processing to facilitate a unified view on the integrated dashboard. The anticipated result is a significant improvement in monitoring efficiency, heightened data accuracy, and an empowered decision-making process within JCB's operations. The business implication of this initiative is the tangible enhancement of the bank's ability to comprehensively assess income performance, thereby elevating the quality of strategic decision-making and reinforcing JCB's competitive positioning in the banking sector.

Sanpo-yoshi, top management personal values, and ESG performance

While ESG is a relatively recent concept, the traditional Japanese business philosophy of Sanpo-yoshi, which prioritizes harmonious relationships with stakeholders over profitability, has been deeply ingrained in Japan's corporate culture for more than three centuries and has contributed to the longevity of Japanese businesses. Despite the lasting impact of Sanpo-yoshi on Japanese corporate culture and its similarities to the ESG framework, there is a notable absence of literature examining its influence on the ESG performance of Japanese companies. With a sample of Japanese listed companies from 2001 to 2018, this study reveals that top management born in regions heavily influenced by Sanpo-yoshi are more likely to exhibit better ESG performance. The importance of national culture in elucidating the variations observed in ESG performance is highlighted by our findings, which carry significant policy implications.

Humanistic corporate accounts on social media: exploring identity construction and authenticity management

PurposeThis study aims to clarify identity building and authenticity management in human brand research, focusing on inside operators managing corporate accounts on social media. Conventional human brand research analyzes online influencers, and there is a research gap in whether these previous findings apply to corporate accounts.Design/methodology/approachUsing netnography and interview data, this study analyzes Japanese corporate accounts on Twitter.FindingsA corporate account’s identity is constructed under the influence of not only the brand but also the actual inside operator, called naka-no-hito, and other accounts that interact on social media. Corporate accounts are able to exhibit humanistic passion through the inside operator’s personality and maintain a distance from commerciality – to manage their authenticity. These activities attract general and other corporate and media accounts, and interactions with them re-create promotion effects.Originality/valueThis study observed that corporate accounts’ authenticity is not a trade-off between passion and commercial transparency but a compatibility achieved by coordinating interests among actors, together with the presence of inside operators.