Small And Medium-sized Enterprises In Japan Research Articles

Does trade credit absorb adverse shocks? Evidence on SMEs in Japan

The aim of this paper is to examine whether trade credit can help absorb adverse shocks to firms. When firms encounter exogenous adverse shocks, if relaxation of terms of credit payment to suppliers can hold back the level of firms' real activities, then they do not need to reduce their purchases from suppliers. We test this hypothesis by using data of SMEs (small- and medium-sized enterprises) from two corporate surveys taken in Japan after the Global Financial Crisis and COVID-19. We find that firms with extended payment periods are still likely to reduce their purchases from suppliers that indicates trade credit does not help to absorb adverse shocks.

Bank credit to SMEs in Japan: Evidence from normal times, the global financial crisis, and the COVID-19 crisis

We investigate what types of small and medium-sized enterprises (SMEs) use bank loans during crisis periods, focusing on the global financial crisis (GFC) and the economic crisis caused by the coronavirus disease 2019 (COVID-19) pandemic. Using comprehensive data on SMEs in Japan, we obtain the following results. First, during these two crisis periods, SMEs with low cash flow, high credit risk, and low sales growth borrowed more from banks. Second, these firms borrowed more during the COVID-19 crisis than during the GFC. Furthermore, the ex post profitability of these firms was lower during the COVID-19 crisis, which was special in that vulnerable firms borrowed more from banks. Third, the increases in probability of default were not large during the early stages of the COVID-19 crisis, but were economically significant in 2021. These results imply that massive financial support during the COVID-19 crisis delayed firm defaults.

Workplace innovation and work value ethics: The mediating role of leadership in Asian SMEs

Research on the correlations between design leadership, work values and ethics, and workplace innovation is lacking, especially in non-Western regions. This study aimed to investigate the mediating role of design leadership in the relationship of work values and ethics with workplace innovation in Asian small- and medium-sized enterprises (SMEs). Five hypotheses were established to explore the proposed model. Data were obtained from 995 SMEs in Japan, Thailand, China, and Vietnam and were examined using partial least squares analysis. The findings indicated a correlation between work values and ethics and design leadership, with the latter influencing workplace innovation across its four dimensions. This demonstrated the significant association between work values and ethics and workplace innovation. Design leadership was also shown to fully mediate the relationship between work values and ethics and workplace innovation in Asian SMEs. This study provides a deeper understanding of the emerging literature on the associations of design leadership, work values and ethics, and workplace innovation. It emphasizes the importance of design leadership and its correlations with various aspects of workplace innovation and work values and ethics, which have not received adequate attention in the existing literature. Asian SME entrepreneurs can improve the innovation capabilities of their organizations by focusing on and implementing design leadership behaviors, which may thereby help their organizations establish a competitive advantage and promote long-term sustainability.

THE ANTECEDENT FACTOR AND OUTCOME OF MANAGEMENT INNOVATION IN SMALL- AND MEDIUM-SIZED ENTERPRISES: A CUSTOMER RELATION CONTEXT

As the major business environment changes, there is a growing need for management innovation to strengthen the organisation. Large enterprises such as GE, which promoted Six Sigma, and Toyota, which installed innovative production systems using the Kanban method, have rooted management innovation in their corporate cultures. However, although there are precedent cases limited to some high-tech ventures, the actual state of management innovation in low-tech small- and medium-sized enterprises (SMEs) is not well understood. Therefore, we investigated the SMEs in Japan’s relatively low-tech industrial areas using structural equation modelling. This study found that collaboration with customers is an important antecedent factor for management innovation. Moreover, management innovation mediates the relationship between the collaboration with customers and technological innovation activities and between the former and firm performance. The explanatory power of management innovation on firm performance is weak. This paper provides deep insights into the role of management innovation in SMEs.

Using implementation mapping to develop strategies for preventing non-communicable diseases in Japanese small- and medium-sized enterprises.

IntroductionWorkplace programs to prevent non-communicable diseases (NCDs) in the workplace can help prevent the incidence of chronic diseases among employees, provide health benefits, and reduce the risk of financial loss. Nevertheless, these programs are not fully implemented, particularly in small- and medium-sized enterprises (SMEs). The purpose of this study was to develop implementation strategies for health promotion activities to prevent NCDs in Japanese SMEs using Implementation Mapping (IM) to present the process in a systematic, transparent, and replicable manner.MethodsQualitative methods using interviews and focus group discussions with 15 SMEs and 20 public health nurses were conducted in a previous study. This study applied the Consolidated Framework for Implementation Research and IM to analyze this dataset to develop implementation strategies suitable for SMEs in Japan.ResultsIn task 2 of the IM, we identified performance objectives, determinants, and change objectives for each implementation stage: adoption, implementation, and maintenance; to identify the required actors and actions necessary to enhance implementation effectiveness. Twenty-two performance objectives were identified in each implementation stage. In task 3 of the IM, the planning group matched behavioral change methods (e.g., modeling and setting of graded tasks, framing, self-re-evaluation, and environmental re-evaluation) with determinants to address the performance objectives. We used a consolidated framework for implementation research to select the optimal behavioral change technique for performance objectives and determinants and designed a practical application. The planning team agreed on the inclusion of sixteen strategies from the final strategies list compiled and presented to it for consensus, for the overall implementation plan design.DiscussionThis paper provides the implementation strategies for NCDs prevention for SMEs in Japan following an IM protocol. Although the identified implementation strategies might not be generalizable to all SMEs planning implementation of health promotion activities, because they were tailored to contextual factors identified in a formative research. However, identified performance objectives and implementation strategies can help direct the next steps in launching preventive programs against NCDs in SMEs.

Institutional measures and desired supports regarding COVID-19 pandemic among small and medium-sized enterprises: An interview study in Japan

Owing to the spread of COVID-19, many companies are likely to experience a significant impact on not only the safety and health of employees, but also on their businesses. The impact may be more severe for small and medium-sized enterprises (SMEs) than large enterprises, given their limited management resources. This study aims to clarify the good practices of institutional measures, the challenges in implementing these measures, and the required supports among SMEs. The authors conducted an interview survey in August-October 2020 covering 27 SMEs in Japan regarding the infection control measures implemented and the desired supports in the future. Based on the content analysis, four researchers, comprising two occupational physicians and occupational health nurses each, extracted small categories by focusing on the commonality of codes, and gradually increased the degree of abstraction, subsequently extracting large categories. The study consolidated the implemented institutional measures into four categories: "making immediate decisions," "obtaining accurate information and sharing it with all employees," "strengthening infection control measures," and " launching efforts to continue business." In addition, challenges in implementing institutional measures were classified into five categories: "information gathering," "counter measures against unknown virus," "poor accessibility to Polymerase Chain Reaction (PCR) test," "consensus building," and "balancing business continuity and infection control." Furthermore, desired support in the future was classified into three categories: "information gathering," "accessibility to PCR test," and "compensation and subsidy." With taking the advantage of the characteristics of SMEs, not a few companies implemented the four categories of institutional measures. Therefore, it is imperative for SMEs to provide accurate information to employers for appropriately recognizing the risks. Accordingly, it is desirable for occupational health professionals at SMEs to provide support to employers to help them identify appropriate information.

Research on the disclosure of intangible information to help the improvement of the evaluation criteria of businesses loans by financial institutions

Corporate growth can be achieved through innovation, which involves maximising a company's 'intangible' elements, such as the skills and knowledge of employees. The 'business appraisal' lending model, which is a new financial business model based on mid- to long-term growth, is based around these intangible elements and, as such, helps companies to promote and nurture innovation. Professor Chitoshi Koga, School of Business Management, Tokaigakuen University, Japan, is working with Dr Xin Fu, Kyoto University of Advanced Science, Japan, and Dr Jun Yao, Meiji University, Japan, to investigate how intangible information can be useful in making economic decisions, with a particular focus on loans decisions for small-and-medium-sized enterprises (SMEs) and ventures. The team is developing a business appraisal model called the 'Koga/Sakakibara/Takahashi (KST)' model that is based on the 2009 Earnings Capability Index of Wulf, Pfiefer and Kivikas from Germany but has been transformed to make it relevant to SMEs in Japan. Using the model, a company's growth potential can be assessed, and it will prove particularly useful for Japanese SMEs as their evaluation relies on looking at intangible assets. Ultimately, Koga and the team hope the model will assist with financing and borrowing and, on a larger scale, reap regional economic benefits.

Proactive environmental and social strategies in a small‐ to medium‐sized company: A case study of a Japanese SME

AbstractThere has been on‐going attention paid to small‐ and medium‐sized enterprises (SMEs) regarding how the sector manages their environmental and social impacts. This study examines the application of environmental and social sustainability practices in a Japanese SME because research on sustainability practices of such SMEs has been limited although SMEs in Japan contribute 70% of total employment and 20% of the gross national product. This study employed a qualitative case study approach based on responses from the CEO/owner of the case company and 123 employees. Using managerial discretion theory, this study found that the case company CEO/owner's decision‐making process, motivation, philosophy and determination to adapt sustainability practices played a major role in influencing employees' support for the company sustainability initiatives and contributed to positive staff turnover. This study found that if sustainability initiatives and practices are embedded into SMEs' business activities from the outset, their negative environmental and social impacts can be greatly reduced.

Unfinished business: Zombie firms among SME in Japan’s lost decades

The “soft budget problem,” by which banks loosen their lending stances toward long-term client firms despite worsening business conditions, has been widely discussed in the field of financial studies. In Japan, this problem has attracted attention particularly in connection to so-called “zombie firms,” financially weak firms sustained by discounted interest rates and evergreen lending which have become a major research and political interest in recent years. In this article, we focus on zombie firms among small and medium-sized enterprises (SME), a corporate category that has hitherto received less consideration in the discussion about Japan’s zombie firms. We find that: (1) many zombie firms exist among SME and that the zombie firm ratio increases as firm size decreases; and (2) some zombie firms eventually emerge from zombie status among SME. In other words, zombie firms are likely problematic from the view of the efficiency of the industries to which they belong. But when one considers that many zombie firms achieve revival, it would seem inappropriate to uniformly promote their elimination. Since ending zombie status seems to directly imply market exit for many SME, it is important to conduct preliminary screening to prevent the creation of zombie firms in the first place.

Management control systems and corporate social responsibility: perspectives from a Japanese small company

PurposeCorporate social responsibility (CSR) has become part of daily business for small- and medium-sized enterprises (SMEs) in Japan. The purpose of this study is to explore how management control systems (MCSs) can support the translation of activities into CSR actions using a case study of a SME in Japan.Design/methodology/approachThe case is based on an interview with a CEO of a SME in Japan. The paper contributes to the discussion on CSR and MCSs and investigates the integration of CSR activities in SMEs in Japan through MCSs.FindingsThe case company’s formal control systems incorporate environmental and social aspects that are reflected in its top-down, stakeholder-centered approach into CSR through a formal CSR policy. An informal control system is evident and reflected in the CEO’s emphasis on creating shared value by implementing CSR. An interactive control system, a type of formal control system, is useful in the interactions between CEOs and employees and in translating the opinions of stakeholders into CSR actions. Formal control systems can be supported by informal control systems in the implementation of CSR activities.Originality/valueThis research contributes to the management accounting literature by showing that formal and informal control systems can support the motivation of employees and the integration of stakeholders’ opinions on the implementation of SMEs CSR activities in Japan. The MCS approach also contributes to SMEs in Japan that seek to address the demographic and economic challenges.

Thailand's SME Participation in ASEAN and East Asian Regional Economic Integration

Closer economic integration in ASEAN and East Asia presents many export opportunities for firms in economies such as Thailand. At the same time, it also presents them with many challenges. Small and medium-sized enterprises (SMEs) dominate the business landscape in Thailand but — like the country — are caught in a sort of middle-income trap. They face intense competition from SMEs in low labour cost, low value-add production locations in the region (such as Cambodia, China and Vietnam), yet they also are unable to transition into innovation, intensive higher value-adding activities (such as SMEs in Japan, Korea and Taiwan). Can Thai SMEs take advantage of the potential benefits arising from closer regional integration? This paper: assesses the role, contribution and significance of manufacturing SMEs to the Thai economy; examines the major challenges that they face and likely factors affecting their export participation; and identifies the policy framework environment in which they operate. An empirical analysis is then conducted identifying critical factors associated with Thai manufacturing SME exports. This uses Probit and Logit models based on data compiled for the 2015 ERIA-ISEAS Enterprise Survey of Thailand. Key results obtained suggest that foreign ownership of local enterprises, membership of an FTA, awareness of ASEAN and the ASEAN Economic Community and appropriately targeted government business support policies can most effectively increase the export participation of Thai small manufacturing firms.

A panel study of zombie SMEs in Japan: Identification, borrowing and investment behavior

Utilizing a panel dataset of firms for the period 1999–2008, we estimated the prevalence of zombies among Japanese Small- and Medium-sized enterprises (SMEs) and their borrowing and investment behaviors. We observe that 4–13% of SMEs were zombie firms during the period 1999–2008. The estimation of the borrowing function reveals that SME zombie firms did not change their loans in response to a change in land values due to evergreening. We also observe that the profitability of investment, measured by marginal q, did not have positive effects on investments of zombie firms. This indicates that investment increase resulting from evergreen loans was not necessarily productive or profitable.

Role of the Credit Risk Database in Developing SMEs in Japan: Lessons for the Rest of Asia

Small and medium-sized enterprises (SMEs) play a significant role in Asian economies as they contribute to high shares of employment and output. However, SMEs generally have limited access to finance compared to large enterprises. Given the bank-dominated financial systems in Asia, banks are the main source of financing for SMEs. For financial institutions, it is crucial to distinguish sound SMEs from non-healthy ones in order to avoid the accumulation of non-performing loans. Information asymmetry in this sector can be reduced by using accumulated data on SMEs and by employing credit analysis techniques, allowing lending institutions to recognize healthy SMEs. It is crucial for governments to collect SME data and prepare rich databases, such as the Credit Risk Database (CRD) of Japan. This will also help governments to formulate economic policies. In this paper we define and describe in detail the role and characteristics of Japan’s CRD in SME development and explain how it can be an example for other Asian economies to establish similar soft infrastructure that can make important contributions to SME development and boost economic growth.

Regulating abuse of superior bargaining position under the Japanese competition law: an anomaly or a necessity?

Abuse of superior bargaining position has long been a controversial area of Japanese competition law. Even though it is by no means unique to Japan—Korea, Taiwan, France, and Germany among others also have similar regulation—Japan’s abuse regulation has tended to attract more attention globally. One of the main sources of controversy for abuse regulation is whether it is consistent with competition law, and whether it serves any useful economic purpose. This article attempts to address this long-standing debate by examining whether abuse regulation is consistent with the various objectives of competition law and other economic rationales. Having determined that these objectives and rationales provide at best tenuous justifications for abuse regulation, or are inconsistent with the Japan Fair Trade Commission’s current enforcement practices, it proceeds to argue that abuse regulation can be best justified as a supplement to deficient contract law enforcement, which many commentators have noted is particularly serious for smalland medium-sized enterprises in Japan.

Effect of R&D tax credits for SMEs in Japan: a microeconometric analysis focused on liquidity constraints

This article estimates the effect of research and development (R&D) tax credits for small- and medium-sized enterprises (SMEs) by utilizing the propensity score matching method to correct any possible selection bias. This study also examines whether the impact of tax credits differs with firms’ characteristics such as their industry, size, and liquidity constraints. Empirical results show that R&D tax credits induce an increase in SMEs’ R&D expenditures. Moreover, we find that the effect of R&D tax credits on liquidity-constrained firms is much greater than on unconstrained firms.

Determinants of Training and Development Practices in SMEs: A Case of Japanese Manufacturing Firms

Small and Medium-sized Enterprises (SMEs) constitute a large proportion of the overall business population of industrially developed and developing nations. Despite the growing importance of SME research during the last decade, very little attention has been paid to the study of training and development practices in SMEs. This article sets out to redress this imbalance in current SME research. It outlines the preliminary results of a recent study that focused on determinants of training & development practices in manufacturing SMEs in Japan. The results of the analysis indicate that the attitude of owner/manager and organizational support towards training & development are the key determinants of training intensity in SMEs in Japan. DOI: http://dx.doi.org/10.4038/sljhrm.v2i1.5104 Sri Lankan Journal of Human Resource Management Vol.2(1) 2008 pp.46-61

Development and Process Evaluation of the Participatory and Action-Oriented Empowerment Model Facilitated by Occupational Health Nurses for Workplace Health Promotion in Small and Medium-Sized Enterprises

The objective of this study is to develop an available empowerment model for workplace health promotion (WHP) in small and medium-sized enterprises (SMEs) and to evaluate its applicability and feasibility. Semi-structured interviews with employers and workers in SMEs were conducted to assess their actual requirements for support. The structure of our new empowerment model was discussed and established through several rounds of focus group meetings with occupational safety and health researchers and practitioners on the basis of results of our interviews. We developed a new participatory and action-oriented empowerment model based on needs for support of employers and workers in SMEs. This new model consists of three originally developed tools: an action checklist, an information guidebook, and a book of good practices. As the facilitators, occupational health nurses (OHNs) from health insurance associations were trained to empower employers and workers using these tools. Approximately 80 SMEs (with less than 300 employees) were invited to participate in the model project. With these tools and continued empowerment by OHNs, employers and workers were able to smoothly work on WHP. This newly developed participatory and action-oriented empowerment model that was facilitated by trained OHNs appears to be both applicable and feasible for WHP in SMEs in Japan.

Impact of Public Policy on Innovative SMEs in Japan

Public policy on innovative small and medium-sized enterprises (SMEs) is regarded as an important issue throughout the world. Japan is not an exception. In 1995, a new policy to revitalize the Japanese economy was implemented. There has been, however, little empirical research conducted on SMEs in Japan. This paper challenges this research gap and evaluates the Japanese public policy program. Research was conducted with a questionnaire sent to all program awardees. In addition, matching firms that did not receive any program awards and closely resembled awardees were identified. It is found that program awardees grew faster than matching firms; however, firms that received multiple awards did not show better performance than firms receiving single awards. High-growth SMEs contribute to social wealth through the creation of new businesses and jobs (Phillips and Kirchhoff 1989; Storey 1994; Gavron et al. 1998; Acs 1999). In recent years, many governments have increased their attention regarding public policy toward SMEs (OECD 1994, 1997, 1998). Economic literature suggests that there are two rationales for a government to support innovative SMEs. First is the generation of positive externalities. Government subsidies such as research and development (RD Greenwald, Stiglitz, and Weiss 1984). This public certification to the quality of firms helps SMEs receive external management and financial resources and helps them grow faster (Pfeffer and Salancik 1978). As a response to market failure, government subsidies can be justified (De Long, Bradford, and Summers 1991). Public policy toward innovative SMEs has been monitored and assessed in Organization for Economic Cooperation and Development (OECD) countries (Storey 1994; OECD 1995; Gavron et al. 1998; Lerner 1999). However, very few studies of public policy toward innovative SMEs have been conducted in Japan. This paper confronts this research gap. Research Background When the bubble economy collapsed in Japan, the growth rate of the gross domestic product (GDP) declined from 2.9 percent in 1990 to 0.4 percent in 1991 and continued at the same level for another two years. In addition, the economic climate for new business creation in Japan was not good even before the collapse of the economy. The business startup rate for all types of business in Japan had been declining, and the rate of business closings gradually had been increasing (Hawkins 1993). Furthermore, a high level of unemployment persisted. Under such serious economic circumstances, the first policy initiative was taken in 1995 to support innovative SMEs in Japan. Formally known as the Temporary Law Concerning Measures for the Promotion of the Creative Business Activities of Small and Medium Enterprises, it was the first legal foundation in Japan to support innovative SMEs and venture firms. Based on the United States' experience, the Japanese government introduced this new public policy program towards inno vative SMEs and expected innovative SMEs to revitalize the Japanese economy. This law was a symbolic sign of a shift in Japanese government policy on SMEs, which was followed by the amendment of the Small and Medium Enterprise Basic Law. This 1963 law, which determines the objectives and targets of public policy regarding SMEs in Japan, was amended in 1999. The amended law clearly states that the mission of government assistance is to develop and support a wide range of independent SMEs for greater economic vitality, whereas the previous law stated that the mission was to rectify the gap between large enterprises and SMEs in terms of productivity. …

Regional Networking of Small and Medium-Sized Enterprises in Japan and Germany: Evidence from a Comparative Study

In this paper we compare the regional network relationships of small and medium-sized enterprises (SMEs) in the mechanical engineering and related metal manufacturing industries in Japan and Germany. We show that the structure of network relationships is still largely determined by traditional forms of the organization of production, despite convergent developments. The network relationships of SMEs in Japan are thus very largely determined by a hierarchically organized system of production. By contrast, the German SMEs almost always have far more scope for strategic action than their Japanese counterparts because they are less dependent on large companies and have their own distinctive images in the final markets. In both countries, cooperative network relationships are on the increase. However, reregionalization as postulated in the flexible specialization hypothesis does not appear to be a dominant trend in either Japan or Germany.

Public testing and research centres in japan: Control and nurturing of small and medium-sized enterprises in the automobile industry

Many industrialized economies have seen a relative increase in the number of small and medium-sized enterprises (SMEs) compared with large companies since the 1980s. To foster the rise of SMEs, many governmenls have established Innovation and Diffusion Institutes. This paper examines the role of the Japanese public testing and research (PTR) centres (kosetsu shiken kenkyu kikan), which have been proposed as a model for other countries: The paper traces the backgrounds and general activities of the PTR centers, and subsequently focuses on how PTR centres have assisted SMEs in the vicinity of Japan's five large car makers. It is found that in 1986 the PTR centre near Toyata's main assembly facilities performed the largest number of test inspections of SMEs in Japan, indicating that the Toyata production system relies to an extraordinary degree upon certification by a PTR centre. Technical consultations played a greater role at PTR centres in the vicinity of other Japanese auto producers, indicating that sup...