Japanese Firms Research Articles

Does ESG performance improve firm creditworthiness?

This study examines whether ESG performance improves a firm’s creditworthiness. To this end, we develop two methodologies for logistic regression with or without two-stage least squares for selecting default risk factors pertaining to Japanese firms given their ESG scores. The results show that ESG performance contributes more to the prediction of a firm’s default risk for longer risk horizons. Notably, ESG-related activities do not necessarily contribute to a firm’s default risk reduction. Overall, this study provides effective credit risk analysis methodologies for related entities, such as ESG management firms, lenders, and investors.

Expatriate management in Japanese firms: paradox of the HR system for Thai self-initiated expatriates

PurposeThis research aims to see whether replication occurs with the focus on the Japanese HR system, following the latest studies on expatriate management in Japan. Whereas the total number of self-initiated expatriates has hugely increased in Japan, the high turnover rate is a big issue. Can this also be evidenced with new data? How does the Japanese HR system, with its notorious reputation for unique people management methods, relate to the expats' reasons for staying in the long or short term?Design/methodology/approachReplication of research is adopted here with an interview-based qualitative method using the same research design as previous literature. The previous research focused on Chinese and Vietnamese self-initiated expatriates, who occupy the majority of expatriate positions in Japan. This study has a new target group of Thai expatriates, who have a relatively higher educational background than some other expatriates and are expected by the Japanese firms to stay over the long term.FindingsReplication of the findings of the latest studies occurs in this research. The turnover rate is as high as other national expatiates, with similar reasons, related to the Japanese HR system. However, there are also different issues. The main reasons they give for not staying in the long-term are unhealthy work habits, followed by slower promotion and ambiguous work content/role. The Japanese HR system is a dehumanising mechanism leading to a stressful work environment, which is the most critical concern for them and the main reason they choose not to remain in the long term.Originality/valuePast studies indicate an expectation gap between Japanese firms and expatriates, which is also found in this study. Additionally, an assumption gap between them about security under the HR system is also confirmed. Security means working healthily for expatriates while it means long-term employment for Japanese firms.

Impact of International Investment Agreements on Japanese FDI: A firm‐level analysis†

AbstractIn this study, we examine the impact of Japan's International Investment Agreements (IIAs) on the locational choice of Japanese firms' foreign direct investment (FDI) by considering the quality of IIAs. We estimate the conditional logit model covering 12,435 FDI cases by 3838 Japanese companies in 92 host countries, 16 manufacturing sectors and 12 non‐manufacturing sectors from 2000 to 2019. We found that the presence of IIAs, particularly comprehensive and high‐level ones, has a positive impact on Japan's FDI. On the contrary, the past incidence of investor–state disputes has a negative impact. These effects are found to be particularly strong for FDI by small‐ and medium‐sized enterprises. High regulatory quality is found to attract FDI, whereas the positive impact of IIAs in attracting FDI is strong in a country with a low regulatory quality.

The nexus of top executives’ attributes, firm strategies, and outcomes: Large firms versus SMEs

Based on a unique and extensive dataset of top executives, this study explores the effect of top executives’ attributes on firm performance through strategic choices for capital structure and investments. The big five personalities and top executives’ other four essential personal attributes are identified from over 970,000 observations in Japanese firms. We applied structural equational modeling to test the hypothesized mediation models and the differences across large, medium, and small-sized firms. The results show that top executives in small and medium-sized enterprises (SMEs) present stronger linkages with strategic choices, significantly mediating the relationship between top executives’ attributes and firm performance. Specifically, top executives with higher conscientiousness, decisiveness, and financial prudence tend to choose conservative strategies, while those with higher neuroticism, openness, and agreeableness tend to adopt risky and innovative strategies. In contrast, top executives’ attributes can hardly predict firm strategies and outcomes for large firms, and neither fails to predict firm outcomes in SMEs given the inconsistent mediation.

Stock price reactions to corporate cash holdings in mitigating predictable and unpredictable negative shocks

This paper explores how cash mitigates predictable and unpredictable adverse cash flow shocks to firms using the financial data of Japanese firms. We find that (i) cash had a positive impact on stock prices, and the impact was thoroughly reflected in stock prices before a predictable shock, (ii) after an unpredicted shock, the value of cash for the financially constrained firms is larger than that for the unconstrained firms, and (iii) the value of cash is similar between the two shocks for the unconstrained firms whereas the value is larger when the unpredicted shock occurs than when the predicted shock occurs for the constrained firms.

Effects of shareholder proposals on the market value of Japanese firms

This study investigates the effect of shareholder proposals on the market value of Japanese firms in the second wave of activism from 2017 to 2021. While announcements of receiving a shareholder proposal positively affect stock prices of investee companies, rejection of a shareholder's proposal has a negative impact. Unlike the first wave of activism, proposals related to the election and dismissal of directors are no different from those of other proposals, which may become more important as shareholder proposals diversify. Similar to the first wave, market responses become larger when the large shareholders made the proposals.

Impact of Patent Signal on Firm’s Performance at IPO: An Empirical Analysis of Japanese Firms

This study investigates whether patents can be a useful signaling tool for the IPO performances among high- and low-tech firms. Literature has provided a wealth of evidence confirming a significant relationship between patent signal and capital-raising success for US and EU venture capital-backed firms and start-ups in specific industries. Therefore, this paper focuses on the IPO firms from a more risk-averse market, Japan, to fill in the gaps in the literature, examining the signaling effect of patent applications prior to initial public offering (IPO) to the amount raised at IPO. Moreover, we examine whether patent applications prior to IPO from high-tech have relatively weaker signaling effects to compare with low-tech IPOs. Using the OLS model for 338 Japanese IPOs listed between 2000 and 2015, the result shows a robust and positive association between the number of patents before an IPO and the amount of cash raised during the IPO. The finding confirms that patents are a reliable signal for IPOs in the Japanese context. Using OECD industry categorization to classify high-tech and low-tech IPOs, our OLS result found that the interaction impact between the high-tech dummy and the quantity of patent applications before IPO is significantly negative to the amount of cash generated at IPO. The findings hold for a new set of high-tech and low-tech firms when we used a new industrial categorization proposed by Thomson Reuters, leading us to conclude that for the Japanese companies that belong to the high-tech industry sector, patenting activities fail to have a positive signal for the IPO.

Effects of talent status and leader-member exchange on innovative work behaviour in talent management in Japan

ABSTRACT This study examined the effects of talent status (TS) on innovative work behaviour (IWB) and the moderating effects of leader-member relationship quality (LMX) on the relationship between TS and IWB among white-collar workers in Japanese firms. We analysed data from 876 participants. The results indicate that LMX positively affects IWB in the relationship between TS and IWB, and that it may be effective for organizations and innovation to recognize and identify the TS of workers to promote IWB. LMX quality is essential for promoting IWB.

Fundamental research on Japanese language education and career path connectivity in ASEAN countries

Although Japan is a major powerhouse, it is experiencing issues with a low birth rate and ageing population. The impact of these issues on the workforce could be significant. There are other ASEAN countries that are still considered developing nations and there is potential that Japan could bolster its workforce by employing students and workers from these countries. For this to be feasible, these individuals would need to be good Japanese language speakers. Associate Professor Tatsuya Niimi and his team at the Faculty of Economics, Nagoya Gakuin University, Japan, are conducting fundamental research on Japanese language education and career path connectivity in ASEAN countries. The researchers are seeking to understand how to improve teaching programmes that are geared towards resolving the shortage of local higher educated human resources for Japanese firms, especially small-to-medium enterprises. They want to establish exactly how Japanese language teachers can ensure that their lessons are adequate and what Japanese firms require of their employees in order to make language students an adequate fit. The research involves using computing technology to conduct remote interviews, web questionnaires and analyses. It will ascertain the requirements of Japanese business and then use this information to inform how students in ASEAN countries learn the Japanese language.

Predictors of subjective wellbeing at work for regular employees in Japan

Japan has been experiencing a long decline in its workforce. Companies in Japan are eager to retain their existing employees and diversify their recruitment. Employees with long-term and open-ended employment are also switching companies at a greater rate. Consequently, Japanese firms have started paying attention to employee subjective wellbeing, now recognized as a source of higher job performance. This study empirically explores the predictors of subjective wellbeing at work for Japanese regular employees beyond those already identified in Europe and U.S.-centric research. We applied a two-stage design, consisting of interviews and a questionnaire survey to identify those factors that promote subjective wellbeing in Japanese corporations where long-time employment and group cohesiveness and achievement are valued over individual achievement. We identified eight factors affecting subjective wellbeing at work for Japanese regular employees: meaningful work, relationships, culture, workspace, evaluation, time off, financial benefits, and diversity at work. Consequent regression analyses highlighted the discriminant importance of work relationships, evaluation, diversity, workspace, and meaningful work. Eudaimonic and hedonic happiness were found to be caused by different factors. As expected, meaningful work led to eudaimonic satisfaction of life at work in Japan. In contrast hedonic happiness was affected by factors external to work itself, such as work relationships, work evaluation and diversity. Interestingly, diversity at work was found to have an ambivalent effect as it was related to both positive and negative affects at work. These findings will help Japanese companies create a work environment that can maximize regular employees’ wellbeing, job performance, and retention.

Productivity and wages of firms using COVID‐19‐related support policies

Objective This study analyzes the performance over the past several years of firms that have taken advantage of various COVID-19-related support policies. Methods This study uses survey data on Japanese firms linked with official firm statistics to analyze the productivity and wages over the past several years of firms. Results The results indicate that the firms that used support policies had lower productivity and wages long before the pandemic. Firms that used multiple policy measures and those that repeatedly used support policies tended to show additionally lower performance. Conclusions Firm support policies may have the side effect of preserving inherently inefficient firms and such a problem may increase in severity as support policies become prolonged.

The effect of dividend smoothing on bond spreads: Evidence from Japan

This study investigates the impact of dividend smoothing on bond spreads, using data on Japanese bond-issuing firms. The regression results show that, although dividend smoothing is not systematically associated with bond spreads, it moderates the relationship between target payout ratios and bond spreads for firms facing serious conflicts of interest between shareholders and bondholders over dividends. Specifically, when the level of dividend smoothing is low, the relationship between target payout ratios and bond spreads is positive. However, when the level of dividend smoothing is high, target payout ratios are unrelated to bond spreads.

What institutional characteristics determine and mitigate gender inequality in the workplace? An empirical analysis of Japanese firms

The purpose of this study is to clarify why gender inequality in the workplace has remained intractable and how it will be mitigated in Japanese firms. To this end, we analyze gender inequality in the workplace and its mitigation in terms of institutional characteristics (i.e., the Japanese employment system and its institutional complementarity with corporate governance, as well as the Sustainable Development Goals), using data on Japanese firms listed on the first section of the Tokyo Stock Exchange in 2019. Our findings reveal that these institutional factors influence gender (in)equality in the workplace by balancing the interdependent social and economic values of firms to maximize their overall value.

Inheriting the DNA of emergingness: Strategies of advanced market firms under emerging market ownership

AbstractDespite growing concerns about emerging market firms (EMFs)' acquisitions in advanced markets, the influences of emerging market ownership on advanced market firms (AMFs) as targets remain largely underexplored. This study aims to conceptually advance our understanding of the environmental adaptation strategies of AMFs under emerging market ownership, focusing on the strategic implications of the “emergingness” encapsulated in the resource transfer from EMF acquirers to AMF targets. Drawing on the institution‐based view and resource‐based view, this conceptual piece develops an Institution‐Resource‐Strategy framework and proposes two types of strategies for AMFs under emerging market ownership, namely arbitrage and avoidance, each comprising three varying tactics. We illustrate our propositions using three cases of Japanese firms under Chinese ownership. This study adds to the literature on internationalizing EMFs, the institution‐based view of global strategies, and cross‐border mergers and acquisitions and offers managerial implications for emerging and advanced market stakeholders.

How Japanese firms address the issues of environment, society, and governance: a corporate governance perspective

How Japanese firms address the issues of environment, society, and governance: a corporate governance perspective

‘Framing’ and ‘packaging’ of foreign skilled workers: diversity of the intermediary actors in the cross-border labour market between Japan and Vietnam

ABSTRACT Intermediaries are indispensable for processing the mobility of international migrants. In the absence of an official migration policy in Japan, this requirement of intermediaries is not an exception. This paper examines the different approaches of Japanese intermediaries towards Japanese client firms and Vietnamese early-career professionals employed in the information technology sector in the cross-border labour market between Japan and Vietnam. Two major results are derived based on data from semi-structured interviews. First, recruitment companies instruct labour users, and recruitment organizations seek to ‘frame’ a job post for migrant workers for a successful visa application. Second, temporary staffing firms ‘package’ multiple Vietnamese workers to provide the necessary labour to clients. This study argues that different types of intermediaries are present in the employment process of early-career foreign skilled labourers and that a temporary staffing firm intervenes the most actively in the employment process of skilled migrants among other intermediaries.

Technical inefficiency and firm behavior: A panel study of small and medium Japanese manufacturing firms

This study examines the technical inefficiency of small and medium Japanese manufacturing firms by using panel data from the Basic Survey on Small and Medium Enterprises (2009–2018). We estimate the stochastic frontier production function with four production factors (regular workers, nonregular workers, capital stock and materials) and calculate the technical inefficiency of individual firms by applying a true random effects model that can distinguish technical inefficiency from firm heterogeneity.We find that inefficient firms are smaller, rely more on nonregular workers, exhibit poorer firm performance, have a higher debt-asset ratio, pay a lower interest rate and are inactive in capital investment and R&D investment. We also find that inactive capital investment and a high debt-asset ratio are mainly responsible for causing technical inefficiency.

How general is managerial human capital?: Evidence from the Retention of Managers after M&As

Abstract This paper investigates the transferability of managerial human capital by examining how managers’ tenures in target firms influence their probability of retention as board members after mergers or acquisitions in Japanese firms. It develops a general equilibrium model that distinguishes several hypotheses on managerial human capital based on the coefficients of tenure on separation, given several data limitations. In particular, the paper provides a novel method to correct for selection biases by utilizing the timing of selection in a selected sample, which does not require a random sample from the population. Our results suggest that Japanese firms value both target firm-specific and general human capital after M&As and that experience as an employee increases firm-specific skills, but at the expense of the accumulation of general skills. However, managerial experience does not have this effect.

Organization Structure Analysis by Network Analysis of Innovative Japanese Firms

In this paper, we will examine how innovation, which is the source of competitiveness of good companies, is managed in their organizational structure by combining patent-based network analysis, the Business Model Canvas, one of the tools for practical activities for new businesses, and the perspective of ISO 56000, and by analyzing Fujifilm's The analysis was conducted focusing on the period when Fujifilm underwent a major corporate transformation. As a result, we could distinguish between the organizational structure of the genus-based approach and the organizational structure of the organization-based approach based on the network diagram and the relationship between proximity centrality and eigenvector centrality. It was also suggested that a deeper analysis of new business development activities, e.g., "What aspects should be improved?" would be possible by overlaying the analysis results from the perspective of the Business Model Canvas and the ISO 56000 innovation management system.

The determinants of foreign investment size: the role of parent firm advantage and cross-national distance

This study investigates the determinants of foreign investment size by considering the role of both parent firm advantage and cross-national distance. We first develop an economic model of foreign investment size. Building on this model and theories in international business, we derive hypotheses on the determinants of foreign investment size: it is positively related to parent firm-specific advantage, while it follows an inverted U-shape relationship with different dimensions of cross-national distances. Moreover, parent firm advantage and cross-national distance interact with each other to influence investment size. Our empirical analysis of Japanese firms' foreign direct investment (FDI) data from 1990 to 2009 supports our hypotheses. Our study contributes to the literature on FDI by examining an overlooked aspect of FDI: investment size. We also integrate economic model and international business theories to explain firm-level and country-level determinants of foreign investment size.