Japanese Manufacturing Firms Research Articles

Artificial intelligent technologies in Japanese manufacturing firms: an empirical survey study

ABSTRACT Motivated by conflicting arguments/claims in the AI literature on its implementation, motivations, and practical impact, we combine interview data from a case company with questionnaire data from eighty-five Japanese manufacturing firms to examine seven AI technologies at firm, function, and technology levels. We find that one-third of the sample firms did not employ any of the seven AI technologies. Over 50% of the remaining firms implemented one or two technologies only. Visual recognition, machine learning and natural written language processing were the most commonly implemented technologies. AI implementation was the highest in production and research and development compared to other functions. The main motivations for implementing AI were to enhance operational efficiency, improve defects detection and prediction, automate processes, and reduce labour hours/costs. Among the firms that implemented AI, improvements in operational efficiency were more frequently reported, followed by reductions in labour hours/costs and enhancements in product/process quality. Lack of business needs, suitability to the business, expertise in implementation, and confidence in generating significant benefits were the main reasons for not experimenting with AI technologies. Our detailed analysis improves our understanding of the current state of AI adoption in manufacturing firms, its practical impact and highlights avenues for future research.

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.

Impact of the corporate response to climate risk on financial leverage and systematic risk

ABSTRACT This study examines how firms’ responses to climate risk affect the financial leverage through an impact on the asset beta. Considering the 2015 Paris Agreement about greenhouse gas reduction as a natural experiment on Japanese manufacturing firms, we observe that the asset beta increased and financial leverage decreased for high emission firms after the agreement was signed. Further, a significant decline was observed for the leverage of high emission firms experiencing a sharp rise in the asset beta.

Impacts of firm's GVC participation on productivity: A case of Japanese firms

This article examined the effect of participation in global value chains (GVCs) on productivity for Japanese manufacturing firms by using firm-level data obtained from the Basic Survey of Japanese Business Structure and Activities [Kigyo Katsudo Kihon Chosa], Ministry of Economy, Trade and Industry. We define a firm engaged in both importing and exporting as a GVC firm. Our analysis is conducted for the period 1994–2018, and it covers approximately 10,000 firms for each year with some variations during the period. We combine the Propensity Score Matching (PSM) and Difference in Differences (DID) estimation methods, in order to examine the impact of a shift from non-GVC firm to GVC firm, or participation in GVC by a non-GVC firm, on its productivity. To test the importance of experiences in GVC participation on productivity (learning effect), we estimated the impact not only for the first year of GVC participation but also for subsequent five years. Our analysis showed the impact of GVC participation on productivity is positive for our 110 estimations with few exceptions, and the estimated coefficients are statistically significant for approximately 35 percent of the cases. These findings indicate that the impact of GVC participation on productivity for Japanese manufacturing firms is generally positive, but the impact is not very strong. We also found that the magnitude of positive coefficient increased over time, indicating that it takes GVC participating firms time and experiences to assimilate new technology and management know-how they acquired through GVC participation.

Employee‐oriented corporate social responsibility, innovation, and firm value

AbstractThis study investigates whether and how non‐pecuniary employee rewards based on corporate social responsibility (CSR) in association with human resource management (HRM) affect firm value. In the context of Japanese manufacturing firms for the 2006–2019 period, the regression results provide several important findings. Non‐pecuniary rewards work individually and synergistically with pecuniary rewards to enhance employee motivations for innovation, through which the CSR‐HRM nexus increases firm value. However, non‐employee perception of employee‐oriented CSR negatively moderates the relationship between innovation and firm market value. In the Japanese market, investors are fully aware about the CSR‐HRM effect on employee motivations and highly concerned with risk due to conflicts of interest between employees and non‐employee stakeholders. This suggests the importance of stakeholder engagement to link organizational innovation capability with firm value. These findings provide useful implications for the alignment of CSR strategies with HRM policies for optimizing innovation performance for corporate sustainable development.

Impact of foreign ownership on firm productivity: evidence from Japanese manufacturing firms

This article presents the methodology to examine the impact of foreign ownership on firm productivity using firm-level data of Japanese manufacturing firms from 2000 to 2016, which include 1,458 listed companies in Japan. Firm productivity is represented by total factor productivity (TFP), which is estimated by the Olley–Pakes semiparametric estimation method to minimize the simultaneity problem in production function estimation. In the estimation of the impact of foreign ownership on firm productivity, system GMM estimation is applied to address a possible reversal causality problem between foreign ownership and firm productivity. Based on the case of the manufacturing firms in Japan, this article shows that 1 percentage point increase in foreign ownership increases the firm productivity by 0.06 percent. The evidence of this article supports the positive impact of foreign ownership on firm productivity and further implies that the promotion of foreign investment could be a policy option to improve firm productivity. Highlights This study analyzes the impact of foreign ownership on firm productivity. Firm-level data of the Japanese manufacturing firms from 2000 to 2016 are analyzed. The result supports the positive impact of foreign ownership on firm productivity.

Sources of variation in growth rate distribution: evidence from Korean, Japanese, and Chinese manufacturing firms

ABSTRACT This study provides a detailed analysis of the growth rate distribution of firms and examines sources of variation in distributional properties. Exploring a large sample of manufacturing firms in Korea, Japan, and China over the period 2010–2017, this study observes heterogeneous properties in the growth rate distribution of groups of firms belonging to the same country, sector, year, and firm size class. Country effects are a major source of variation in distributional properties, particularly determining the growth rate variance and left width of the distribution. The central tendency and tail behaviour of the distribution mainly change over time. Size effects explain the right width of the distribution. However, inter-sectoral distributions do not differ significantly in terms of their distributional properties. This study contributes to understanding underlying growth dynamics of groups of firms, determined by a combination of various factors at different levels, and provides policy implications.

Comments on Total Factor Productivity Changes in Japanese Small and Medium-Sized Enterprises in 1982–2016: Suggestive Indications of an IT Revolution?

October 01 2020 Comments on Total Factor Productivity Changes in Japanese Small and Medium-Sized Enterprises in 1982–2016: Suggestive Indications of an IT Revolution? Author and Article Information Online Issn: 1536-0083 Print Issn: 1535-3516 © 2020 by the Asian Economic Panel and the Massachusetts Institute of Technology2020Asian Economic Panel and the Massachusetts Institute of Technology Asian Economic Papers (2020) 19 (3): 38–39. https://doi.org/10.1162/asep_a_00782 Cite Icon Cite Permissions Share Icon Share Twitter LinkedIn Views Icon Views Article contents Figures & tables Video Audio Supplementary Data Peer Review Search Site Citation Comments on Total Factor Productivity Changes in Japanese Small and Medium-Sized Enterprises in 1982–2016: Suggestive Indications of an IT Revolution?. Asian Economic Papers 2020; 19 (3): 38–39. doi: https://doi.org/10.1162/asep_a_00782 Download citation file: Ris (Zotero) Reference Manager EasyBib Bookends Mendeley Papers EndNote RefWorks BibTex toolbar search Search Dropdown Menu nav search search input Search input auto suggest search filter All ContentAll JournalsAsian Economic Papers Search Advanced Search Somkiat Tangkitvanich, Thailand Development Research Institute: The paper measures total factor productivity (TFP) of Japanese manufacturing and service firms, most of which were small and medium-sized enterprises (SMEs), before and after the year 2000. The year was chosen as it was the timing around the implementation of the Basic Law for the Formation of an Advanced Information and Communication Network Society (2000), the launch of the e-Japan initiative (2001) and the rapid rise in information and communications technology (ICT) adoption among Japanese households and SMEs. By dividing the time around the year, the paper aims to measure the impacts of “ICT revolution” on productivity of Japanese firms. The paper finds that TFP rose across the studied sectors, although there was only slight improvement in some, such as finance and insurance, and leasing. It also found that ICT product manufacturing firms achieved much more productivity growth than those in the ICT... You do not currently have access to this content.

한 · 미 · 일 제조업체의 집단주의 성향이 유통업체에 대한 영향전략과 장기지향성에 미치는 영향

한 · 미 · 일 제조업체의 집단주의 성향이 유통업체에 대한 영향전략과 장기지향성에 미치는 영향

Can firms enhance economic performance by contributing to sustainable consumption and production? Analyzing the patterns of influence of environmental performance in Japanese manufacturing firms

The purpose of this study is to clarify the patterns of influence of a firm’s environmental performance on its economic performance, with consideration of sustainable consumption and production (SCP). It is well known that environmental performance generally influences economic performance through an improvement in the production process and an increase in demand. Thus, it is expected that firms can enhance economic performance much more than previously thought by contributing to SCP. However, because consumers/customers cannot directly observe a firm’s environmental performance, its environmental performance should influence economic performance by improving the production process directly and increasing demand indirectly via disclosed environmental information. Furthermore, the influence of environmental performance on economic performance should depend on the assumption of the nature (linear or nonlinear) of the relationship between them. This study develops a simple theoretical economic model to identify how a firm’s environmental performance influences economic performance and empirically tests the model using data on Japanese manufacturing firms from 2008 to 2015. Our regression results prove that environmental performance enhances economic performance by improving the production process directly and increasing demand indirectly via disclosed environmental information. Specifically, the former is a positive linear relationship, and the latter is a U-shaped relationship. Because these results support the view that firms can enhance economic performance by contributing to the SCP, this study provides new insight into the ongoing debate about whether a firm’s environmental performance enhances its economic performance, especially in the era of sustainable development goals.

Does the stock market value corporate environmental performance? Some perils of static regression models

AbstractIntangible assets not only help firms gain competitive advantages but also enable such advantages to persist when firms are not subject to imitation. Given that expenditure on environmental practices is a part of intangible assets, the absence of a dynamic perspective is a major impediment to the further development of the empirical economics of management. By exploiting fine‐grained measures of research and development assets and patent citations, this study isolates the value‐creating effect of corporate environmental performance through a dynamic lens. Using data from a balanced panel of Japanese manufacturing firms, a positive relationship between corporate environmental performance and firm value is observed even after addressing endogeneity. However, this relationship becomes statistically insignificant once dynamic panel data models are used to control for profit persistence. The results suggest that the use of static regression models can lead to the premature conclusion that it pays to be “green.”

Leadership style required for the transition to servitization in Japan

PurposeGiven the emergence of servitization as a viable strategy for manufacturers to gain a competitive advantage, determining what factors influence effective servitization is imperative. Drawing on organizational change and leadership theories, the purpose of this paper is to identify the leadership styles required for successfully implementing servitization in Japan.Design/methodology/approachVia stratified sampling method, 5,000 Japanese manufacturers registered in the Tokyo Chamber of Commerce and Industry were selected for participation in a mail survey. Survey data from 187 responding CEOs were matched with firm-level archival data, after which the matched data were analyzed.FindingsThe findings indicated that industry type is important in implementing servitization, but firm size and performance are not. The results also revealed that charismatic leadership style is especially critical in implementing and elevating servitization, whereas autocratic and autonomous leadership styles impede this process.Research limitations/implicationsThe study fills a gap in the literature by identifying a notable relationship between leadership style and servitization. Because the study was conducted in an Asian economic context, which has received less attention in servitization research, it advances the existing body of research on servitization by breaking the former geographical constraints in this field of studies.Practical implicationsThis study presents practical implications for Japanese manufacturers who wish to devise a strategic leadership plan in the servitization process. CEOs of the firms can initiate the transition to servitization by employing charismatic leadership skills and convincing employees of the benefits of the change.Originality/valueThe research is distinguished from existing studies in that it provides the first empirical evidence on effective CEO leadership styles for servitization in Japanese manufacturing firms.

Transfer of Japanese-style management to the Czech Republic: the case of Japanese manufacturing firms

This study examines the level of application of Japanese-style management to the Czech Republic from the perspective of hybridization, by employing a survey of Japanese manufacturing firms based in this country. The survey reveals that the Japanese system of production control is strictly enforced, while work organization, labour relations and group consciousness have been—despite targeted practices used by Japanese companies to facilitate application of the Japanese system—largely adapted to the local conditions. Furthermore, this study identifies the transitional process from relying upon Japanese expatriates towards engaging local human resources in the parent-subsidiary relationship. In addition, even though the Japanese-style procurement method is applied with a large number of local suppliers, the local content ratio nevertheless remains relatively low in the Czech Republic. Overall, Japanese manufacturing firms, via their vigorous effort to transfer their distinctive management style, are challenging European business practices and Czech socio-cultural traditions, even though the level of hybridization is strongly variegated according to particular management spheres.

The Impacts of Reporting Choice on Asymmetric Cost Behavior - Focused on Korean and Japanese Manufacturing Firms -

The Impacts of Reporting Choice on Asymmetric Cost Behavior - Focused on Korean and Japanese Manufacturing Firms -

The Effect of Bank Recapitalization Policy on Corporate Investment: Evidence from a Banking Crisis in Japan

This study examines the effect of government capital injections into financially troubled banks on corporate investment during the Japanese banking crisis of the late 1990s. By helping them to meet the capital requirements imposed by Japanese banking regulation, recapitalization enables banks to respond to loan demands. This, in turn, helps firms to increase their investment, especially for high-productivity firms, for which the return from investment is high. To test this mechanism empirically, combining the balance sheet data of Japanese manufacturing firms with that of banks, we examine how the impact of bank regulatory capital ratios and capital injections on bank loans and firm's investments vary across firms, depending on their total factor productivity (TFP) and financial health status. We find that the estimated interaction of a firm's TFP with a bank's capital ratio or capital injection is positive and significant, implying that the effect of capital injections on bank loans and investments is larger for high-productive firms than it is for low-productive firms. Counterfactual policy experiments suggest that capital injections made in March of 1998 and 1999 had a substantial reallocation effect, shifting investments from low- to high-productivity firms.

Decomposition analysis of corporate carbon dioxide and greenhouse gas emissions in Japan: Integrating corporate environmental and financial performances

AbstractRecent empirical studies often support the positive relationship between corporate environmental performance (CEP) in terms of carbon dioxide (CO2) and greenhouse gas (GHG) emissions and corporate financial performance (CFP). However, this depends on the measurements of CEP (the absolute and relative CEP) and CFP (accounting‐based and market‐based CFP). To understand the relationship structurally, based on the literature, this study proposes identity models that integrate CO2 and GHG emissions and financial factors. The models decompose CO2 (GHG) emissions into carbon intensity (GHG intensity), energy intensity, the cost‐to‐sales ratio, the total‐assets‐turnover ratio (TATR), leverage, and equity. The model of supply‐chain GHG emissions additionally adopts supply‐chain GHG intensity. As a decomposition method, this study uses the log‐mean Divisia index. As an application example of the CO2 model, this study targets Japanese manufacturing firms in 16 sectors from fiscal years (FY) 2011 to 2015. Results show that the change in CO2 emissions as of 2015 (−802.1 kilotonnes [kt]) is decomposed into 2922.5 kt for carbon intensity, −26036.3 kt for energy intensity, −6350.5 kt for the cost‐to‐sales ratio, −8495.6 kt for the TATR, −7912.3 kt for leverage, and 45070.1 kt for equity. Average values of relative contribution ratios are 20.6% for carbon intensity, 19.1% for energy intensity, and the remaining approximately 60% for financial factors. Among the 16 sectors, as of 2015, the change in total CO2 emission is statistically significantly positive for equity and significantly negative for the TATR and leverage.

Firm heterogeneity in sources of total factor productivity growth for Japanese manufacturing firms

ABSTRACTWe investigate firm heterogeneity in productivity sources across technology sectors for Japanese manufacturers. Firm heterogeneity in productivity sources conveys more information about firm-specific differences in productivity. In this regard, large firms are more productive, largely because they are more innovative, despite being slow to catch up during booms or operating at a less-than-efficient scale. We find that the beneficial impact of exports on productivity is most evident when firms become exporters, and intrafirm trade causes enough inefficiency to offset the salutary effects of trade after a certain threshold. Notably, firm heterogeneity in productivity varies considerably across the technology sectors.

Repeat market entries in the internationalization process: The impact of investment motives and corporate capabilities

Research Summary: This study examines strategic and resource contingencies that shape MNEs’ country location choices. Our analysis of overseas production investments by Japanese firms (1971–2006) finds that differences in investment motives (i.e., horizontal and vertical investment) and corporate capabilities (i.e., marketing and production capabilities) moderate how prior entries into a host country affect subsequent entry decisions. In general, the positive impact of prior entries on investment in a country is weaker for horizontal investments and stronger for vertical investments. A more nuanced relationship emerges when entry decisions are analyzed in conjunction with heterogeneous corporate marketing and production capabilities. The study illustrates the novel insights to be gained from analyzing the joint impact of path dependence, managerial intentions, and corporate capabilities on country location decisions. Managerial Summary: Multinational firms often make multiple investments over time in a concentrated set of countries, accumulating superior knowledge and capabilities in these environments. Researchers have nonetheless uncovered factors that can lead firms to deviate from strategic trajectories defined by their prior investments. In a statistical analysis of country entry decisions by Japanese manufacturing firms over a 35‐year period, we found that firms’ tendencies to reinvest in the same host countries were smaller for horizontal (i.e., market‐seeking) investments but greater for vertical (i.e., efficiency‐seeking) investments. We also found that organizational capabilities influence the geographic trajectory of international expansion: firms with stronger marketing and production capabilities were less likely to be influenced by the locations of prior entries and were more likely to invest in new countries.

The Interfirm Contracting Value of Management Accounting Information

ABSTRACTWe examine how firms' management accounting information influences interfirm contract design. We theorize that comprehensive accounting information enables firms to design more complete contracts with suppliers, as indicated by increased issue inclusiveness and clause specificity. Survey data of Japanese manufacturing firms about the management of supplier relationships support the expectation that comprehensive management accounting information enables the development of more inclusive and specific contracts with suppliers. These contracts are also less subject to additional informal agreements between exchange partners. These results are consistent with the idea that better accounting information enables more complete contracting.

The performance effect of inter-firm adaptation in channel relationships: The roles of relationship-specific resources and tailored activities

This study aims to investigate the effects of relationship-specific resources and tailored activities on relationship performance. Based on the Industrial Marketing and Purchasing group's actors–resources–activities (ARA) model, this paper critically reviews the transaction-cost and organization-design literature emphasizing a negative aspect of firms' resources or activities customized to relationship counterparts that cause transaction or coordination difficulties. This paper presents the results of a quantitative study by using survey data collected from 375 business units of Japanese manufacturing firms. The results show resource specificity and activity tailoredness positively influence relationship performance. We investigated the role of vertical integration as a moderator, in order to examine the performance effects more precisely. In contrast to a proposition of the transaction-cost and organization-design literature that low (high) specificity and tailoredness fit a low (high) vertical-integration level, one of the results suggests that even under a low integration level, performance increases as relationship-specific resources increase. We explored another moderator, as per the ARA model's assumption that the nature of complementarity among heterogenic resources and between the resources and activities of different firms will significantly influence relationship performance. We found that the performance effect of wholesalers' activity tailoredness increases as manufacturers' exploitation capacities as a knowledge-based resource increase.