"Japan's Revised Economic Model: Lessons for Managers "

JAIMS Knowledge C@fe:

"Japan's Revised Economic Model: Lessons for Managers"

The fourth session in the Knowledge Café lecture series, Japan’s Revised Economic Model: Lessons for Managers, featured Dr. Steven Vogel with post-lecture commentary by JAIMS President, Dr. Ikujiro Nonaka. JAIMS students, alumni, and friends of JAIMS from local businesses and organizations attended the February 18 event at the Halekulani, and gained comparative insight to the differences between U.S. and Japan economic models.

Vogel focused primarily on the time period of 1990-2005. The start of the 90’s brought Japan into a slight economic crisis of mass restructuring and uncertainty. Japan desperately needed fundamental change in both the areas of company restructuring and reform. Initially, the attempt was made to emulate the American “Free Market Model.” This was in stark contrast to the existing Japanese Model based upon “favoring voice over exit” and a “win-win result” between the company and its workers—solidly built upon mutual trust and reciprocation.

During Japan’s time of economic uncertainty, the Japanese Labor Relations System was followed. In an attempt to ride out the bad economy, companies tried to restrain wages instead of laying off workers, pressed for lower costs and better services while still staying loyal to their main bank, and squeezed their suppliers but did not sever ties or business with them. Vogel noted that while the U.S. and Japan go about executing policy and labor reform differently, in the end, both are still constrained by institutional factors such as governmental policies, private sector standards, and social norms.

“While the role of the Japanese Government has been key to restructuring, Vogel presented evidence that the impetus for restructuring is clearly coming from the industry as well,” said Knowledge Café attendee Bernice Bowers. “There are lessons that the U.S. might learn from Japan,” she added, “but again that would need to be customized to American
culture and American business practices.” In regards to Japan, Bowers said, “the Japanese corporate loyalty to their suppliers provides national economic stability and will also ensure Japan’s competitiveness if they focus on performance and cost-competitiveness with their suppliers.”

Commenting on Vogel’s lecture, Nonaka focused on the concept of phronetic leadership which endeavors to serve the common good and not simply to maximize profit. He called for pragmatism (prudence, practical wisdom, and rationality) during times of economic crisis when there is no one “best” or logical solution.

Vogel previously worked as a freelance reporter for the Japan Times in Tokyo. Being fluent in the Japanese language allowed him the opportunity to experience Japan’s economic and political aspects from a native’s perspective, thus allowing him to analyze the differences between the economic models created and executed by both the U.S. and Japan. Vogel specializes in the political economy of advanced industrialized nations, with an emphasis on Japan. Writing extensively on comparative political economy, Japanese politics, and industrial, trade, and defense polcies, his notable works include Japan Remodeled: How Government and Industry are Reforming Japanese Capitalism.

He was the winner of the 1998 Masayoshi Ohira Memorial Prize for his book entitled, Freer Markets, More Rules: Regulatory Reform in Advanced Industrial Countries.

Vogel holds a B.A. from Princeton University and a Ph.D. in Political Science from the University of California Berkeley and has taught at the University of California Irvine, and Harvard University.

The Knowledge Café Lecture series is held several times a year in Honolulu and Tokyo. The next Café is scheduled for June 3, 2009, on the theme of Social Entrepreneurship.