Small Firms In Japan Research Articles

Deviance Residual Moran's I Test and Its Application to Spatial Clusters of Small Manufacturing Firms in Japan

It is proposed that when data exhibit local clusters, a logit local association model coupled with deviance residual Moran's I can be an alternative to the global Poisson autoregressive model because the former can explicitly reveal local clusters and remove residual clustering. Because small firms in Japan traditionally exhibit local clusters, they are a good illustration. In this article, the authors introduce the deviance residual Moran's I to capture local cluster tendencies in a set of logit models and then evaluate their performance by simulation and case study. Results show that IDR can effectively serve as a global measure of a clustering tendency for logit models and can complement other autoregressive logistic regressions for local cluster modeling when a significant IDR is contributed by local clusters. In addition, ecological covariates identified in the previous literature were sufficient to account for the spatial clustering of small firms in 1990 but not in 2000.

Bank information monopoly and trade credit: do only banks have information about small businesses?

According to previous studies, a bank can set a higher interest rate for small firms by establishing a lending relationship since information asymmetry limits competition between banks. Therefore, the bank can acquire monopoly rent from small firms. However, if small firms can use trade credit which is another financial source, the bank cannot extract monopoly rent. In this article, we examine whether small firms can use trade credit if the bank sets a higher interest rate. Using panel data of small firms in Japan, our analysis shows that when the interest rate the bank sets is too severe or worsened for the borrower, the ratio of trade payables increases and the bank loses its amount of loans. This result implies that trade creditors alleviate the problems of bank information monopolies in Japan.

Does the Agency Cost Model Explain Business Fluctuations in Japan?: a Bayesian Approach to Estimate Agency Cost for Firms Classified by Size

We attempt to estimate a state space model of investment and borrowing in a Bayesian framework, and to extract the unobservable agency costs of Japanese firms, which we differentiate by firm size.Our estimates suggest that agency cost exhibited a declining trend in the late 1980s, which changed to an increasing trend in the 1990s. We pinned down the driving force of fluctuations in agency cost as the market value of land.Furthermore, we found that the investment and borrowing behavior of small firms was very much affected by their agency costs in the late 1980s and early 1990s. Our evidence suggests that imperfections in the capital market were important for small firms in Japan.

Comparative Study of Technology-based Small Firms in Japan and US

Comparative Study of Technology-based Small Firms in Japan and US

Characteristics of Knowledge Interactions between Universities and Small Firms in Japan

Based on university-level data, characteristics of industry-university linkages in Japan were examined. The results of statistical analysis present a contrasting picture regarding the characteristics of knowledge interactions according to the size of industrial partners. On the one hand, on the basis of direct connections, university-based scientists with high research potential are linked with large firms in broad areas through highly interactive spillover channels such as joint research. On the other hand, through the intermediation of liaison offices, university-based scientists with low research potential are linked with small firms, through less interactive spillover channels such as technical consultation.

Determinants of Innovative Activity in Japanese Technology-based Start-up Firms

Very few, if any, empirical studies have been conducted on innovation in technology-based start-up firms in Japan, mainly because there has been little up-to-date data on such firms, and because small firms in Japan have been viewed as being of minor economic importance. The purpose of this article is to fill this gap in the literature by examining the determinants of innovation, measured by patent applications and new products, in Japanese technology-based start-up firms, using original firm-level data. We examine these determinants from the viewpoint of both firm-leveland managerial-levelcharacteristics. Our findings indicate that technological capability, the availability of internal funds, venture capital funding, and university–industry linkages are important firm-level determinants of innovation. We find also that a CEO’s educational background and capacity for networking with researchers are important managerial characteristics. The article includes an overview of the general business context for start-up firms in Japan and it concludes with some considerations for future policy based on our findings.

Business Ownership and Unemployment in Japan

The influence of industrial structure, more specifically of business ownership, is investigated on the level of unemployment in Japan. The question is to what extent business ownership, i.e., entrepreneurship, can reduce the level of unemployment. It will be concluded that Japan is hardly an outlier when using a simple model of the relationship between unemployment and the rate of business ownership. The model is calibrated using recent data of 23 OECD countries. It shows a minor underestimation of the rise in unemployment in Japan in the period 1984-2002. Arguments are brought forward why this might be the case. We argue that small firms in Japan have benefitted in the past from the protective environment of the keiretsu structure. In the current process of industrial restructuring, keiretsu support is dissipating, but has not yet been adequatly replaced with a market environment conducive to the establishment and growth of entrepreneurial firms. The underestimation of the rise in unemployment is a reflection of the limited access of small firms to the market in Japan.

Does Agency Cost Model Explain Business Fluctuations in Japan?: An Empirical Attempt to Estimate Agency Cost by Firm Size

An attempt is made to estimate a state space model of investment and borrowing in a Bayesian framework and extract the unobservable agency cost of Japanese firms by firm size. Our estimates of the agency cost exhibited a declining trend in the late 80s and then switched to an increasing trend in the 90s. We pin down the driving force of agency cost to be the market value of land. Furthermore, we find that investment and borrowing behavior of small firms is very much affected by their agency cost in the late 80s and the 90s. Our evidence demonstrates that imperfection of capital market is notable for small firms in Japan.

Ecological modernisation of small firms in Japan

This research explores the environmental practices of small-firm owners in Japan using the ecological modernisation (EM) theory as an analytical tool. In-depth interviews were conducted with 20 small firm owners from the restaurant and mechanical engineering sectors of Tokyo, and 10 “key informants” in relevant industrial organisations and local governments. The EM theory states that firms in industrialized nations are restructuring along ecological lines in response to market signals, that business actors are increasingly viewing economic and environmental interests as harmonious, and that environmental governance structures are becoming increasingly negotiated and participative. The findings suggest that although some environmental reform is occurring in the sample market dynamics and changing ideologies are not pushing this reform in the way we might have expected under the EM theory. There is little pressure from customers or suppliers to restructure ecologically; economic and environmental interests are often perceived as conflicting; and there is little evidence that business agendas are being refashioned to reflect sustainability objectives. Moreover, small firms are perceived to be marginalized from environmental policy networks dominated by political, bureaucratic, and business elites. The article concludes by questioning whether it is this lack of institutional disenfranchisement that is hampering processes of ecological modernisation among small firms in Japan.

Subcontracting and the Performance of Small and Medium Firms in Japan

This paper provides an empirical analysis of the choices made by Japanese firms with respect to subcontracting status, that is, whether to take in work as subcontractor, to outsource work to subcontractors, to do both or to do neither. It shows that the probability of working as a subcontractor, a choice made by many small firms in Japan, is negatively related to size, foreign sales and technological capability. Furthermore, profits do not appear to be higher for subcontracting firms; indeed, they are highest for the group that does not get involved in any type of subcontracting, whether as a supplier or as an outsourcer.

Small Firms in the Japanese Economy

Now in paperback, this book considers the role of small firms in the Japanese economy and challenges established views of the Japanese economy, society and political economy. Japan's giant corporations are household names, and dominate our views of the Japanese economy. But surprisingly, Japan also ranks alongside Italy as having the highest proportion of small firms - and employment in them - amongst the OECD countries. These small firms have either been ignored, or they have been treated as appendages of large firms. This book paints a balanced picture based on a unique and statistically rich survey. It looks at small firms in Japan's leading machine industries, their relations with each other as well as with large firms, and their internal management, employment and technology dynamics. Paradoxically, in contrast to the 'resurgence' of small firms in other industrialised countries, their number and employment share in Japan are now in decline.

Strategies for competitiveness in production – an East Asian approach

Small enterprises in Japan have achieved competitiveness in their production and high wages for their employees by upgrading their production methods and manufacturing technologically advanced parts and components for large-scale industry. The strong links between large industries and their small-scale suppliers of components are based on sub-contracts and require a high degree of trust on both sides. The advantages to large industry include a scaling down of capacity and improvements in efficiency, and small businesses have benefited from considerable technical and sometimes financial help from the large firms. Small firms in Japan, following in the footsteps of large industries, are now able to export some of their operations overseas to take advantage of cheaper labour markets.

The Subcontracting System in Japan: A Critical Survey

The public's interest in medium and small firms in Japan has recently been raised, owing to the industrial success of the Japanese economy, which parallels the "spreading awareness that there is a vast group of medium and small firms in Japan that support the rapid industrial development in Japan" (Sato 1986, p. 152). Since the industrial success of Japan depends, more than anything else, on the success of the fabrication and assembly-type industries, the rise in interest in medium and small firms is, above all, an interest in medium and small firms in the "subcontracting relationship" or under the "subcontracting system."

Small firms, new technology and the division of labour in Japan

Here the author examines the problems, in adopting new technology, faced by small firms in Japan's machinery industry. A significant part of the concern about the technology gap between large and small firms is attributed to their respective capacities to recruit and train skilled labour.

Strategies for innovation and productivity in Japan and America

The purpose of this paper is to describe the types of organizational settings in the West that have been especially conducive for innovation and productivity. Then the same predictive factors are tested for a sample of 44 Japanese factories in order to investigate the extent to which similar relationships are found in both nations. The results suggest that R&D and the innovation function is handled somewhat differently in Japan, but that the consequences of the scale of operations for innovation and productivity are basically similar. In general, large scale operations are more productive, but less innovative in both nations. However, emphasis on specialized R&D seems to be more characteristic of U.S. industry. Many small firms in Japan achieve innovative performances with relatively little expenditure on R&D per se. However, to what extent the Japanese formula which has worked in the past will continue to work in the high technology era of the 1980s remains an open question.