3.3 Asian alternatives
After the Second World War, the commander of the allied occupation of Japan (1945–52), General Douglas MacArthur, proclaimed in a September 1945 interview with the New York Times that ‘Japan will never again become a world power'; and, five years later, his economic experts advised that ‘the Japanese economy's best course in the postwar era would be to make “knickknacks” – their word – for underdeveloped countries’ (Fingleton, 1997, pp. 1–2). Today, Japan is a technological and economic superpower. It is the world's second largest economy and largest supplier of credit, whereas the USA, which is the world's largest economy and sole superpower, is also its biggest debtor nation. Meanwhile, Japan has developed a global reach. While firms headquartered in the USA continue to dominate Fortune magazine's listing of the 500 largest corporations in the global economy (there are nearly 200 US firms), Japan has about 100 firms, which is all the more remarkable considering that, half a century ago, it did not have any. Germany, France and the UK each have nearly half as many such firms as Japan, with numbers distributed around forty. Switzerland, Italy, South Korea and Canada each have about ten entries (Bergesen and Sonnett, 2001).
Japan is the only G7 economy whose traditional institutionalised rules of practice owe almost nothing to Mediterranean origins. The Group of Seven, or ‘G7’, comprises a coalition of the world's major industrial democracies. It was originally the G6 – the UK, France, Germany, Italy, Japan and the USA – which met for the first time in 1975; but Canada joined in 1976 and, in 1998, the addition of Russia created the G8. When Commodore Matthew Perry delivered US demands to open trade relations in 1853, accompanied by the military threat of his ‘Black Ships’, he precipitated the decline of 250 years of unbroken rule by the Tokugawa Shogunate and ended Japan's period of self-imposed international isolation that stretched back more than two centuries. However, the Meiji Restoration in 1868 – which many take to mark the birth of modern Japan – was an adjustment to the established authority structure. It was neither a Norman Conquest nor a French Revolution (Mason and Caiger, 1972, p. 217). Under the slogan ‘rich nation, strong army’ (fukoku kyôhei), the Meiji government sought to establish a prosperous nation that remained free from Western colonisation. Japan learnt from the West but it did not adopt Western rules of practice.
Against the background of Japan's miracle economic growth, the Japanese anthropologist, Chie Nakane (1972), published Japanese Society. Although many people in Japan and elsewhere might be quick to dismiss her account as stereotypical or outdated, it has been hugely influential and debated widely.
Nakane developed her argument using the Japanese concept of ba – which roughly means ‘place’, with the implication that this is (i) the place where purposeful activity is situated, and (ii) connotes the frame of reference or field of interaction that emerges from the pursuit of that purposeful activity among a bounded community of insiders. Nakane (1972, p. 1) explains that this ‘frame’ or ‘field’ arises from people who deal with each other on a regular basis. For example, ba might arise from friendships among people who live in a particular locality or from some other kind of association; but, in all cases, participation in the ba generates a binding force that situates individuals within the group's frame of reference. Although individuals have different attributes, continual human contact within the ba can generate emotional forces that override purely rational considerations: ‘the power and influence of the group not only affects and enters into the individual's actions; it alters even his ideas and ways of thinking. Individual autonomy is minimized’ (Nakane, 1972, p. 10).
Within Japan's workplace organisations, close community relationships among long-term colleagues lower the marginal cost of information transfer and enable insiders to act as a group, which in turn is able to ostracise and retaliate against those who break the group's code. In this respect, Nakane argued that the company-as-family workplace organisation – or kaisha – symbolises the focal point around which all other life revolves:
In an extreme case, a company may have a common grave for its employees, similar to the household grave. With group-consciousness so highly developed there is almost no social life outside the particular group on which an individual's major economic life depends. The individual's every problem must be solved within this frame.
(Nakane, 1972, p. 10)
Of course, many aspects of Japanese society have changed beyond recognition since Nakane wrote her book. Contemporary accounts, such as Yoshio Sugimoto's (2003) An Introduction to Japanese Society, for example, offer a more nuanced interpretation that addresses the dimensions of diversity.
Along with other industrial societies, Japan is subject to centrifugal forces that tend to diversify its structural arrangements, lifestyles and value orientations (Sugimoto, 2003, p. 271). Nevertheless, the dramatic increase in the rate of changes that appear to make Japan look more like a liberal market-rational economy are offset by centripetal forces that drive Japanese society towards perpetuation of the status quo. In contrast to the American aphorism that ‘the squeaky wheel gets oiled’, in Japan gratuitous individualism is countered by each ba's capacity to ensure that members comply with group norms; as the famous Japanese saying has it: ‘the nail that sticks out gets hammered down’. Power, mediated by highly aligned tacit knowing among insiders (whether they be members of Japanese society, in general, or members of a particular company-as-family workplace organisation), acts in the manner of an unseen gyroscope that maintains the same angle of spin despite constant changes in the façade offered to outsiders.
Established practices, in any tightly bounded collective, tend to shape what happens next in a reflexively ‘automatic’ manner, which can be remarkably difficult to change. Such practices often run ahead of explicit discussion about what ought to be done next, because everybody knows ‘the way that things are done around here’. However, the capacity of Japan's company-as-family workplace ba to exercise disciplinary authority over employees stems, in no small measure, from deeply embedded expectations that work should come before personal interests. Accordingly, the wives and dependants of regular male employees are accustomed to the idea that work comes first. For their part, employees who seek to redefine the work-life balance risk being hammered into line in the manner of nails that stick out.
Japan's tightly bounded workplace ba (the Japanese language does not distinguish between single and plural nouns) put a premium on demonstrating emotional commitment to the work of fellow insiders. Outsiders might never be seen again and are not subject to the insiders’ disciplinary authority and implicit code of practice. Japanese organisations deal as a collective (‘us’) with the outside world (‘them’) through appropriate channels – such as the relationship with a supplier or customer – on a long-term basis, with repeat transactions providing an emergent ‘common sense’ of what constitutes acceptable action within each relationship. Social prohibitions against job-hopping and recruitment by poaching have thwarted the development of a significant labour market for specialists and allow organisations to take the cooperation of their permanent male employees for granted. Although an increasing number of permanent employees are leaving their jobs to work for foreign firms, such moves jeopardise trust with long-standing colleagues and the potential consequences tend to discourage all but the most determined. This has significant implications for the management of intra-organisational practice and limits insider interaction with sources of knowledge generated elsewhere. Thus, self-organising horizontal communities of practice and boundary-spanning networking initiated by self-motivated individuals acting alone (of the type that are taken for granted in Anglo-Saxon contexts) run counter to Japan's institutional rules of practice.
Recently, Nonaka and his colleagues (Nonaka et al., 2000) have used the Japanese concept of ba to explore the insider dimension of knowledge creation within a shared context, such as a Japanese organisation. Such an approach embraces important qualities such as ‘love, care and commitment’ (Nonaka et al., 2000) that have often been overlooked in the English language literature on management and business practices.
In what ways might the challenge of managing knowledge in a Japanese company differ from managing knowledge in a UK or US company? You might like to make a note of your answer for future reference.
Japan's company-as-family workplace organisations have evolved within the context of institutional rules of practice that contrast dramatically with their UK and US counterparts. For more than two centuries, Japan was shielded from the market-rational entrepreneurial processes that led the world into the industrial era, and many aspects of its 150-year transition from late feudalism to an economic and technological superpower reflect traditions that run counter to Anglo-Saxon expectations about liberal individualism and explicit rules backed by a legal framework.
During its 250-year rule, the Tokugawa Shogunate developed a vertically segmented society in which authority flowed from the centre to the local area via a vertical hierarchy in which each level was accountable to the one above. Something of this top-down authority is evident in Japan's post-1945 ‘plan rational’ (Johnson, 1986, p. 19) economic development in which the governmental bureaucracy has been effective in coordinating the activities of a remarkably stable population of leading firms. An important consequence of stable relationships between company-as-family workplace organisations, together with limited labour mobility and horizontal networking (of the type associated with Anglo-Saxon boundary-spanning communities of practice), stems from the fact that people tend to deal with one another on a regular basis. Repeat transactions enable them to build high levels of trust associated with what Nonaka et al. (2000) refer to as ‘love, care and commitment’ (as mentioned above). However, if trust is broken, repeat transactions are put at risk and new suppliers or customers would be wary of dealing with an organisation that has violated the informal rules. Similarly, the fear of ostracism typically dissuades individuals from offending against the insider's implicit code.
In the UK, USA and other Western contexts, leaders are often expected to ‘take charge’, articulate explicit policies, rise to the occasion, act quickly and be held to account for their actions. In contrast, decision making in a Japanese organisation typically takes a long time because many people have to be consulted in order to build a consensus, but implementation of the decision (when it has eventually been made) is usually swift and effective: everybody has a hand in its making and everybody is responsible for its execution. Success or failure is a collective, rather than an individual, responsibility.
Arguably, Nonaka and Takeuchi's (1995) emphasis on Japan's knowledge-creating companies (as opposed to knowledge-creating individuals) is a reflection of Japan's institutional rules of practice and associated expectations concerning collective achievement. Put another way, in Japan, there is a sense in which the organisation – as opposed to the individual – is the more appropriate unit of analysis. This differs from UK or US rules of practice that privilege liberal individualism, impersonal market transactions and explicit communication. Indeed, there is often an expectation that organisational rules should be made explicit to the point where they allow any suitably qualified person to step straight into a job and perform in the appropriate manner.
In summary, managing knowledge in a Japanese company typically places a higher premium on continuing long-term interaction among people who know each other well. This often relies more heavily on emotional commitment to the process of working with and supporting colleagues than would be the case in many UK or US organisations. Even in twenty-first century Japan, the lack of a significant labour market for specialists, together with a distrust of those who seek to further their careers by job-hopping, helps to maintain a sharp distinction between organisational insiders and outsiders. In contrast, the relative permeability of UK or US organisations to the movement of people and ideas tends to increase the degree of reliance on information from outside sources, formal rules and individual accountability. Indeed, there is often an expectation that jobs should be specified in such a way that any suitably qualified person could perform the tasks required. Expectations of labour mobility and a fluid labour market can mean that the know-how of key people can move from one organisation to another. In an extreme case there might be mass defections of essential staff – thereby undermining the type of aligned tacit knowing and sense of collective identity associated with Japanese organisations.