18041263 japanese corporate culture in comparison with the united states corporate culture and implications for vietnam = văn hóa doanh nghiệp nhật bản trong sự so sánh với văn hóa doanh nghiệp hoa kỳ và một số kiến nghị cho việt nam
INTRODUCTION
Reason for Choosing the Study
When it comes to economic superpowers, it's difficult to avoid mentioning the United States and Japan, with the world's top and third-largest economies.
The Japanese economy is a developed free market economy Japan is the world's third-largest economy by GDP In 2018, Japan was the fourth-largest exporter in the world This is the second-ranked country in terms of foreign exchange reserves with a value of about 1.3 trillion USD (Ministry of Finance Japan, 2022) Japan ranks 29th in the ease of doing business index and fifth in the global competitiveness index (The Global Competitiveness Report 2018, 2018) In addition, this country also ranks first in the economic complexity index (Economic Complexity Ranking of Countries, 2020) and third in the consumer market in the world (Household final consumption expenditure (current US$), 2018) Japan is the largest creditor country in the world (Obe & Mitsuru, 2013) Japan is often in the group of countries with annual trade surpluses and has a substantial net international investment surplus Japan holds the world's third most valuable asset with 15.200 billion USD, accounting for 9% of total global wealth as of 2017 (Allianz, 2017).
Japan is the third-largest automobile producer (2013 Production Statistics – First 6 Months,
2013) as well as the country with the largest electronics manufacturing industry in the world and regularly ranks among the world's most advanced countries in hosting global patent pools.
Figure 1.1 The ten largest economies in the world by GDP (2020)
Source: :https://vietstock.vn/2021/04/bang-xep-hang-top-10-nen-kinh-te-the-gioi-thay-doi-nhu-the-nao- sau-dai-dich-775-849178.htm
The country with the leading economy in the world is the United States of America The American economy is a mixed capitalist economy with a high level of industry, industrialization, and development It is not only a developed economy but also the largest economy in the world in terms of GDP The US economy develops thanks to rich natural resources, a synchronously developed infrastructure system and high labor productivity (Daniel Lederman & William F. Maloney, 2006) The United States is one of the largest and most influential financial markets globally.
The New York Stock Exchange (NYSE) is currently the largest stock market by market capitalization The U.S direct investment abroad position, or cumulative level of investment, increased $244.9 billion to $6.15 trillion at the end of 2020 from $5.91 trillion at the end of 2019 (Bureau of Economic Analysis, 2020) The foreign direct investment in the United States position increased $187.2 billion to $4.63 trillion at the end of 2020 from $4.44 trillion at the end of 2019 (Bureau of Economic Analysis, 2020).
Figure 1.2 The ten largest stock markets (2021)
Source: World Federation of Exchanges
The United States was home to 59 firms, accounting for 65 percent of the top 100's total market capitalisation.
Figure 1.3 The world’s 100 biggest companies
Source:https://www.visualcapitalist.com/the-biggest-companies-in-the-world-in-2021/
Contributing to the growing economy is a series of companies and businesses built If a business wants to be sustainable, it needs to develop continuously.
There are many factors affecting the development of a business such as assets in the business, business location, business reputation, business administration capacity, and human resources. However, when these factors are developing too quickly, businesses want to find their own core and identity The factor for an organization to develop prosperously and steadily is culture. Corporate culture is formed and developed in parallel with the development process of the business.
Currently, corporate culture is receiving attention from businesses themselves as well as from researchers (Edgar H Schein, 2016; Daniel Coyle, 2018; Chris Dyer, 2019) Business leaders are aware that, to be able to stand firm in the current wave of saturation and integration, it is important to create a separate and strong corporate culture for themselves.
When the business has a separate and healthy corporate culture, the employees can understand the value they bring to the company, promote their dedication and long-term commitment, and help the business build trust with partners.
When wanting to become a useful part of society, a family needs to have habits that are regulated into rules and ordained so that each generation can keep its warmth and happiness. This is the foundation for each individual's development and harmony In the same way in the economy, a business that wants to survive sustainably needs to have distinct cultural values, which are widely shared among the members of the business, which is a guideline for each member to strive to rise together and reap many successes for the organization Corporate culture sets a business apart from all others.
In Japanese businesses, cultural factors are more interested and noticed because the Japanese focus on behavior and communication Many Japanese companies have built a culture of discipline and rules that help the company succeed and thrive This is also a factor contributing to making Japanese companies become one of the world's leading companies Meanwhile, the United States is a country that values equality, the American people have always believed that everyone has the same rights Therefore, in business, Americans are not too formal but focus on the natural Many American businessmen think that rituals are not really necessary.
Digging a little deeper, it is easy to see that although the United States and Japan are both economic superpowers in the world, these two countries have two almost completely opposite corporate cultures What are the differences between Japanese and American corporate cultures?
Do they have any similarities? And from these two cultures, what implications can be drawn to apply to Vietnamese businesses? To answer those questions, I decided to choose the study
"Japanese Corporate Culture in Comparison with the United States Corporate Culture andImplications for Vietnam" for research.
Research Purpose
Although Japan and the US have two almost opposite corporate cultures, it is undeniable that these two countries both have extremely powerful developed economies The study of the corporate culture of these two countries will give an answer to the question of why two different cultures and two different ways of operating businesses in the two countries both come up with such powerful economies?
In this thesis, I will divide the corporate culture of each country into small parts such as concepts, constitutive factors, influencing factors, and characteristics and analyze them in turn. Based on those foundations, I will point out the similarities and differences in the corporate culture of the two countries, Japan and the United States.
This thesis will achieve the goal of extracting understanding, and implications that may be applied to the Vietnamese corporate culture From there, it is possible to promote the strong and sustainable development of domestic enterprises, helping the economy of Vietnam to go up.
Research Objects and Research Scope
Overview of the corporate culture of two countries (Japan, America), the characteristics of Japanese and US corporate culture (history of formation, constitutive elements, models), the role of corporate culture entrepreneurship in the development of each business.
Research Methodology
To achieve the research objectives, in this thesis, I use two main research methods, namely: analysis and synthesis.
First, I divide the object of corporate culture into many small parts such as concepts, constitutive factors, influencing factors, and characteristics for analysis and research.
From there, I can summarize the similarities and differences between the two countries' corporate cultures from the study of those small parts Finally, I analyze the current situation of Vietnamese corporate culture and from there, I synthesize and recommend appropriate knowledge and features of Japanese and US corporate culture to apply to Vietnamese corporate culture.
There are studies that have used similar methods when comparing corporate culture betweenJapan and China such as Strategy implications of business culture differences between Japan andChina (Xinjian Li & Martin Putterill, 2007), Business Etiquette Basics in China and Japan(Susannah Nevison, 2009) Therefore, these are the most suitable methods to be able to both analyze the characteristics of each culture and then synthesize the similarities and differences,thereby drawing valuable implications.
Structure of the Thesis
In addition to the references, the thesis is divided into seven chapters
OVERVIEW OF CORPORATE CULTURE
What is Culture?
Culture is a concept with broad connotations with many different interpretations, related to all aspects of human’s material and spiritual life Culture is inclusive of all human products, and as such, culture includes both the immaterial aspects of society such as language, ideas, values, and the material aspects Such as houses, clothes, and vehicles Both aspects are necessary to make the product and it is part of the culture.
There are many different definitions of culture, each of which reflects a different perspective and assessment As early as 1952, two American anthropologists, Alfred Kroeber and Clyde Kluckhohn counted 164 different definitions of culture in world-famous works The classic anthropological definition of culture is “that complex whole which includes knowledge, belief, art, law, morals, custom, and any other capabilities and habits acquired by man as a member of society” (E B Tylor, 1871) The Cambridge British Dictionary defines culture as “the way of life, especially the general customs and beliefs, of a particular group of people at a particular time” It can also be understood as “the attitudes, behavior, opinions, etc of a particular group of people within society” In 2001, UNESCO defined “culture as the set of distinctive spiritual, material, intellectual and emotional features of society or a social group, that not only art and literature but lifestyles, ways of living together, value systems, traditions, and beliefs”.
In the Japanese Goo dictionary, culture is defined as “The whole human lifestyle A total of intangible and intangible achievements that mankind has built up with their own hands Each ethnic group, region, and society has its own unique culture, which has been taught through learning and developed through a mutual exchange”.
What is Business?
A business or a corporation is defined as an organization or enterprising entity engaged in commercial, industrial, or professional activities Businesses can be for-profit entities or non- profit organizations Business types range from limited liability companies, sole proprietorships, corporations, and partnerships There are businesses that run as small operations in a single industry while others are large operations that spread across many industries around the world (Adam Hayes, 2021).
In the Japanese Goo dictionary, a business is defined as “An organization that continuously engages in economic activities such as production, sales, and services for the purpose of profit.Also, that business can be under a capitalist economy, it usually refers to a private company”.
What is Corporate Culture?
According to the Cambridge dictionary, corporate culture is the beliefs and ideas that a company has and the way in which they affect how it does business and how its employees behave.
Corporate culture refers to the beliefs and behaviors that determine how a company's employees and management interact and handle outside business transactions Often, corporate culture is implied, not expressly defined, and develops organically over time from the cumulative traits of the people the company hires Corporate culture is an organization’s values, ethics, vision, behaviors, and work environment It is what makes each company unique, and it impacts everything from public image to employee engagement and retention If employees share a company’s ethics, vision, and other cultural elements, it can positively affect a company’s bottom line Companies with good corporate culture often have high workplace morale, and highly engaged, productive staff.
As Edgar Schein, a famous American manager said: “Corporate culture is associated with social culture, is a step forward of social culture, is a deep layer of social culture Corporate culture requires paying attention to both productivity and production efficiency, while also paying attention to the employer-employee relationship and the relationship between people. Broadly speaking, if the whole production is built on a high-level corporate culture, the production will have both national identity and adaptability to the current era”.
According to Jaques (1951): “The culture of an enterprise is the daily way of thinking and acting of its members It's something that members have to learn and more or less follow in order to be accepted into that business Culture in this sense encompasses a wide range of behaviors, production methods, skills and technical knowledge, disciplinary attitudes, management practices and habits, goals of people relevance, pay, views on different jobs, belief in democracy in discussions and conventions and taboos”.
Corporate culture can be formed spontaneously or voluntarily Over time, these habits will gradually become clearer and shape the personality of the organization Therefore, a business,whether like it or not, will gradually form the culture of its organization Corporate culture, when formed spontaneously, may or may not be in line with the organization's desires and development goals Actively creating desired cultural values is essential if businesses want their culture to truly serve the general development direction and contribute to their competitive strength There is no good and bad corporate culture, just like personality, no good and bad personality There is only a culture that is suitable or not suitable for the development orientation of the business In fact, people often impose their own values, of their organization on other people and units, so it is easy to have right and wrong judgments about the culture of a certain business.
The first characteristic feature of the culture in the business is innovation or another name that is risk-taking orientation A company that builds a corporate culture that focuses on continuous improvement and development values will motivate and encourage its employees to find more methods and ways to improve results and work efficiency.
At that time, businesses accept the risks in that process while some companies just want to maintain the current work results and minimize the risks that may be encountered These companies often have different operating methods and product characteristics than companies that emphasize innovation in corporate culture They just need employees to meet the job requirements that have been studied and trained in the recruitment process without needing to look for new things.
The next characteristic of corporate culture is the focus on detail This property digs into the exact level of work an employee is required to do Attention to detail has another, and easier understanding name that is accuracy orientation.
A business building a culture of high accuracy will find it difficult to tolerate mistakes in the work of employees, possibly because mistakes will cause great losses and damage to the entire job and state of affairs Meanwhile, some businesses allow mistakes to be made within a certain margin without affecting or insignificantly affecting the overall performance of the company.
In addition, corporate culture has an emphasis on results This characteristic is also known as achievement orientation That is, if a business tends to build a culture that focuses on results, the way they manage will be carried out across work items They only focus on the work results achieved by the employee, not the process of doing the job or how the task is completed For example, a business company demonstrates its achievement orientation by instructing and requiring its sales staff to do anything as long as it generates growth in sales They just need a final figure of work without considering the other factors that make up that result.
In addition to the focus on results, the human-centered ethos is also an important factor in creating a culture in a business This is a measure of the extent to which an organization makes joint decisions when it comes to considering the positive and negative effects on its employees.
Often, businesses that promote human-oriented in their corporate culture will show individual care and respect for them.
Teamwork will be the next characteristic to consider when assessing a company's culture. This characteristic is reflected in the division of departments within the company and the organization of work in groups instead of encouraging individual activities in cultures that promote cooperation for mutual development Some studies show that the tendency to promote teamwork in corporate culture will create cohesion and good relationships between employees and their colleagues and managers This will not happen in companies with independent, individual working styles.
Competitiveness in corporate culture is often misunderstood as an internal competition between departments and employees, however, this explanation is not accurate with this characteristic of the corporate culture This aspect refers to whether a member of the company has an aggressive or friendly attitude when dealing with problems related to rival companies that are competing with their business in the market Companies that build a highly competitive culture will often demonstrate a desire to outperform their competitors Sometimes, this will be the driving force for the business to grow better and better, but in a way, focusing too much on the competition can lead to undesirable consequences.
Finally, corporate culture is characterized by stability This is a factor that is spelled out in the internal rules of the company For businesses with a culture that values stability, they are often oriented to set out laws that employees must follow, along with established procedures, documents, and work processes that are quite mechanical and inflexible Such a culture is often found in companies that require a stable and predictable level of output, which best serves the business in the event that the market as a whole is free of fluctuations a lot of Conversely, when the market changes, an agile culture that does not emphasize stability will adapt better Over time, the different activities of business members will help beliefs and values to be accumulated and form a culture The accumulation of values creates the stability of culture.
3.2 Types of Corporate Culture Models
People refer to their coworkers as their family That’s an indication that they’re working in a clan culture (also called a “collaborate culture”), where there’s a lot of emphases placed on teamwork and togetherness.
JAPANESE CORPORATE CULTURE
General
1.1 Some Features of Japanese Culture
Japanese culture since ancient times has brought many unique and distinctive features. Currently, many countries have mixed cultures in the process of world integration Although Japan has a great exchange of cultures, the Japanese people with national pride always keep traditional cultural features Traditional culture and festivals are still preserved and promoted by Japanese people They always believe that "integrating but not dissolving".
Japan is a country with cultural unity among regions The reason is said to be because Japan is surrounded by sea and islands and has never had a war of aggression, so no other ethnicity or cultural identity can be imported Besides, there are also other opinions that it is the harsh natural conditions with many natural disasters such as earthquakes and tsunamis that have created a strong will, determination and, above all, a spirit of solidarity against natural disasters of the Japanese.
Japan is a country of ethnic and cultural homogeneity According to the latest United Nations figures (November 26, 2021), the Japanese account for 99% of the total Japanese population. Japan is one of the countries with a long history The Japanese have always attached great importance to education because it creates the necessary human resources for economic, scientific and technological development Regarding the Japanese education system, Japan implemented elementary, middle, and university schools as one of the reforms during the Meiji era Since 1947, Japan has implemented a nine-year compulsory education system for students from six to 15 years old.
Isolated from the rest of Asia for hundreds of years until its opening in 1868, Japan has its own distinctive features in terms of customs, practices and culture Family plays an important role in this Before World War II, most Japanese lived in a family of three generations Family relations followed a strict caste system and fathers were respected and authoritative When a woman returns to her husband's house, she must obey her husband and in-law's family, but after the Civil Law of 1947 was promulgated, women enjoyed many equal rights with men in all aspects of women's life and character The patriarchal character of the family is abolished.
Today, although Japan is already an advanced country, in Japanese society the roles and relationships of men and women are clearly defined In ancient times, Japan was matrilineal, with women having a larger role than men Since the feudal period developed, men have occupied a unique role Although the spirit of women's liberation was introduced into Japan at the end of the 19th century, today in public life, women are still in a lower position than men and in society, men still hold a larger role In the past, unmarried women over the age of 25 were often considered by men as "having some defect" But now Japan is a country where women get married very late, even living alone without a husband.
In the modern lifestyle, the Japanese still retain the traditional features, they attach great importance to cultural identity and uphold education Especially the tradition of filial piety to parents, ancestors, loyalty to husband and wife, loyalty to friends, respect teachers, obey leaders. Japanese society has special features of communication The Japanese usually bow by bending down (Ojigi) and the degree of lowering depends on the social status of both people This is an important sign of respect Another custom is the exchange of business cards Every introduction or meeting requires a business card and accepting it with two hands is a polite gesture The business card is clearly printed and has no handwriting on it In addition, in Japanese there is a complex system of honorifics called "Keigo", depending on the person being spoken to, which honorifics are used appropriately.
1.1.3 The Word 和 in Japanese Culture
Harmony can be found everywhere in Japan Whether it is the lines on the architecture or the orderly arrangement of a meal or the dish on the plate, there is a focus on harmony It is shaped by its rich history and long traditions, which are also all aspects of Japanese law and customs.The Japanese still maintain harmony in the family, school or workplace In order for society to work in harmony, people need to care, love and respect others and vice versa The Japanese respect a collective culture, in other words, they will prioritize the wants and needs of the group over the individual.
The Japanese, to a certain extent, will follow this concept to "keep up appearance", not only for themselves but also for those they love such as family and friends It is also to show respect for the reputation of the company where they work Disruption can put an individual at a disadvantage and lead to embarrassing and stressful things not only for one person but for many. And that's that Japanese people often avoid.
Festivals and customs contribute significantly to the culture of Japan It's no wonder that Japan is a country of festivals Japanese festivals are held throughout the year and are held all over Japan Currently, Japan is very developed but still retains its traditional cultural features. Japanese festivals often mean wishing for happiness, peace, and bountiful crops.
Japan has many arts such as Tea Ceremony (茶 道), Calligraphy (書 道), Judo (儒 道) contributing to the diversity and uniqueness of Japanese culture Not only impressing with its traditional culture and customs, but Japan is also known as the land of famous comics, animated series, and anime in the world.
Japanese cuisine does not abuse too many spices but focuses on the pure freshness of the dish.
In the culinary features of the land of cherry blossoms, since ancient times, sushi has gone deep into the culinary tradition here and cannot be erased In addition, soybeans, sake, and green tea powder are also featured in Japanese food culture.
1.2 Some Features of the Japanese
It can be said that there is no other nation that is more sensitive to new things than the Japanese They are constantly monitoring the changes in the world, assessing and weighing the effects of major current trends and trends on Japan When they identify the prevailing trend, they are willing to accept, research and learn to catch up with that trend, not to lose the opportunity. The Japanese succeeded in combining modern and traditional elements to create a colorful Japanese culture They are willing to accept new and modern things but still retain their identity.
Japan is resource-poor, except for one special resource that is not poor: humans The education system is seen as the key to politically stable economic growth Investing in education means a lot to the country The state by all means over the past centuries has created a system that can train a highly efficient workforce, leading the country towards modernization One of the most remarkable characteristics of the Japanese people is their boundless desire for personality development Moreover, the pursuit of learning is not to satisfy some immediate need but simply they deeply believe that education should be a lifelong endeavor Most Japanese people want to improve themselves and learning is the best way to achieve that goal.
The spirit of teamwork is an outstanding characteristic that cannot be found in other eastern countries In Japanese life, the collective plays a very important role Success or failure in the eyes of the Japanese is all common to the group, and every member of the group, no matter what he has done, shares in the bitterness or glory that the group has achieved In working, Japanese people often put their ego aside to promote the common, find harmony between themselves and other members of the collective In meetings, Japanese people rarely argue or use words that can offend others The collectives can compete with each other fiercely, but depending on the circumstances and circumstances, the collectives can also link together to achieve a common goal The Japanese are never late for an appointment They usually arrive for appointments half an hour before or exactly the same time in every appointment.
The Japanese do not like confrontation, especially personal confrontation They are so focused on preserving harmony that they often ignore the truth, because in the eyes of the Japanese, preserving unity, face and prestige is the core issue That is why in Japanese society, there is very little room for individual ideas While individualism is highly valued in Western countries, in Japan self-assertion of any kind is discouraged.
Features of Japanese Corporate Culture
It can be said that it is rare for Japanese businesses to have no business philosophy The business philosophy is the ideal, the action motto, the value system and the common goal of the enterprise It guides the business operations of the business to achieve high efficiency The business philosophy is also the core of corporate culture, it sets out goals and methods of action that all employees in the business must achieve One of the most important elements constituting the corporate culture is the business philosophy It is a system of core values that act as a guideline to guide the activities of each business Business philosophy lies in a system that creates business culture, it holds the first place as well as the most important position in determining the value of each organization Japanese businesses soon became aware of the increasing socialization of production and business activities, so the business philosophy is as meaningful as a brand, the identity of the business.
In Japan, each company will have its own business philosophy However, no matter what the philosophy is, it will almost all come down to one term, which is "hospitality - Omotenashi". This is extremely clear, for example, with Nichia group, it is “Customer first”, meaning that the customer is the first priority This philosophical sentence is printed loud and clear right in the Nichia Museum If there is a problem, the first thing they will do is admit the error and then find a solution All for the biggest reason, which is to make the customer as comfortable as possible.The Japanese divide customer service into five levels including Moral (Ethical) - Manner (Polite behavior) - Service (Professional Service) - Hospitality (Hospitality) - Omotenashi, in whichOmotenashi is the pinnacle According to research by historians, the origin of the Omotenashi culture dates back to the Japanese tea ceremony During tea parties, the owner of the house will always try to bring the most comfortable and relaxing feeling for guests to feel The owner brings relaxation through attentive service so that guests can feel comfortable behind the tea- table It can be said that at present, the spirit of Omotenashi service in Japan has crept into every small corner of the people's lifes in this country They even affect other countries including
Vietnam The standard behavior as a habit has made the whole world admire it Omotenashi philosophy brings many benefits in business Customers feel that they love services and products, so they visit the store more, the revenue, therefore, increases strongly and sustainably.
“If you want eggs, take care of the hens Once you torture or kill it, it won't be possible Do business with nepotism Can you sacrifice yourself and give your best for your employees? If you are a father and mother, you will definitely think of your children first, right? This is the same case!” (Inamori Kazuo) He is the founder of the electronics giant Kyocera, the most powerful advisor of the KDDI telecommunications network service provider and also the
“reincarnation” of Japan Airlines He is one of the typical entrepreneurs with the business philosophy “For a happy future both materially and spiritually for all employees” According to him, first, entrepreneurs must set the biggest business goal is to bring happiness both materially and spiritually to employees Leaders must clearly demonstrate their business philosophy to all employees, which affirms that the company is always aiming for their development, and at the same time explains the social meaning that their work brings This makes every employee feel proud of the company and ready to give their all for its success All members are bound together by a spirit of shared responsibility rather than by a system of power; organized as a boat of destiny, a common roof; what an employee does for the organization is more important than who the employee is; each employee's career and career path is associated with the successful stages of the business.
Japanese businesses consider people as the most valuable resource, the most important source of motivation to create added value and sustainable development of the business The Japanese believe that in everyone, there are both good and bad sides at the same time, talent, though small, is somewhere in each head, ability, though small, is in each hand The mind may be limited, but it is hidden in every heart Many times talent is still in the latent form, either due to objective or subjective obstacles The Japanese are used to the fact that the initiative belongs to everyone. Proactively proposing an initiative is just as important as its effectiveness, because it is what keeps people thinking about improving their own work and that of others A business fails when people are unmotivated and can't find a place where they can contribute.
The reality and circumstances of Japan make human resources a decisive factor in the development of enterprises That is taken for granted in Japanese corporate culture Enterprises when planning business strategies always consider human resource training and good use of people as the central stage Businesses care about this very early and often Businesses often have associations and scholarships for students in careers that interest them They do not push employees to be challenged because they cannot keep up with management reform or advancement of science and technology, but actively plan from the very beginning of recruitment and regularly upgrade their professional qualifications for employees.
The modern business philosophy is to take the market as the center, from the customer and towards the customer This was shown very early in the style and business lines of Japanese businesses Japan's large enterprises account for less than 2% of the total number of enterprises,most of which are small and medium enterprises, but the linkage between them is very diverse and effective It is the horizontal association between the parent companies (large type) in order to promote the absolute advantages of the member companies, increase the ability to compete in big markets, with major international competitors But under each parent company is a multitude of subsidiaries (small and medium) that are vertically linked to promote the relative advantages of the member companies, exploiting the potential advantages of the local market, increasing the absolute advantage for the parent company, and flexibly adapting to economic fluctuations.
Zaibatsu is an economic group established through a close association between companies that jointly hold the right to operate and dominate financial resources These are large financial capital groups that, by holding credit and banking activities, control many industrial and commercial sectors, thereby taking control of the Japanese economy Most Zaibatsu were established during the early Meiji period Originating from loan sharks, the Zaibatsu evolved into industrial capitalists in the 1870s and 1880s The environment in which the Zaibatsu thrived most was World War I thanks to a series of government orders This is an opportunity for the Zaibatsu to expand to become real financial and industrial groups, playing a leading role in financial activities and many manufacturing sectors Thanks to the support of the Japanese Government through subsidies, and protective tariffs, the Zaibatsu have occupied a dominant role in many other areas of the economy World War II broke out with many mergers of companies that increased the power of the Zaibatsu.
The structure of a Zaibatsu follows a pyramidal structure.
(1) Council of founding members belonging to the same family line.
(2) The holding company is controlled by the founding family member and it is the center of power of a Zaibatsu The company owns a majority stake in nuclear companies.
(3) Nuclear companies (banks, trading companies, insurance companies) Each of these companies owns a certain percentage of shares in many other smaller 4th-tier dependent companies.
It is such a relationship of ownership that companies often stick together very closely, in which banks and trading companies have a rather important role Banks are responsible for providing money for the operations of the companies in their families by providing loans or guaranteeing the issuance of company shares.
2.2.1.2 Some Characteristics of the Zaibatsu Business Model
The most prominent is the scale of operations spread in many different fields, forming a closed system.
The second is that in the apex structure there is a fairly high cross-shareholding ratio among companies belonging to the same Zaibatsu.
Third, there is a distinction between ownership and management rights in a company.
Fourth is the close relationship between companies in the same group, that is, if a member has financial difficulties, that company will be able to sell goods or provide services at a preferential price If there are difficulties in production, experts will come to help with techniques and technology.
Finally, all Zaibatsu have banks At this time, banking credit activities were very developed.
2.2.1.3 Some Achievements that the Zaibatsu Achieved
Four of the largest Zaibatsu (Mitsubishi, Mitsui, Sumitomo, Yasuda) account for about a quarter of Japan's total industrial wealth (Corwin D Edwards, 1979) After World War II, the capital concentration of the Zaibatsu reached a very high level: the 10 largest Zaibatsu amounted to 53% in the financial industry, 49% in heavy industry and 17% in light industry.
After taking over Japan, General Headquarters - Supreme Commander of the Allied Powers (GHQ) set out many policies to stabilize the Japanese economy In which, the biggest initial goal was to take some measures to dissolve the Zaibatsu, "democratize the economy" to eliminate the seeds of war, reduce the economic monopoly, and create a competitive environment for companies in Japan.
2.2.2.1 The Birth of the Keiretsu
The were some changes in the economy in Japan like the collapse of the Japanese stock market in August 1949, amendments to the Antitrust Law such as allowing manufacturing companies to buy shares of other companies, expanding the limit on share ownership of financial institutions in other companies to 10%, and the lifting of the ban on Zaibatsu companies from holding each other's shares From the above policy changes, the ownership structure changed from focusing on natural shareholders to focusing on legal entity shareholders Based on the Zaibatsu - the industrial giant that controlled the Japanese economy before the second world war, the Keiretsu has formed and gradually asserted to bring Japan into the second most powerful power in the world world.
Keiretsu is divided into two types: vertical Keiretsu and horizontal Keiretsu Keiretsu vertical consists of manufacturers, suppliers and distributors in cooperation They work together with the common goal of cutting costs and becoming more efficient A horizontal keiretsu is a collection of companies, large industrial groups from many different sectors of the economy linked together through a financial nucleus, usually consisting of a bank and a distributor which is a giant trading company.