Transformation of Japanese Multinational Enterprises and Business

Management practices and orientation need to change when the climate of the time in which firms operate changes. In the 1980s–early 1990s when the world enjoyed a broad economic growth on a global scale, Japanese management practices were admired in awe around the world. Despite such admiration, however, Japanese firms, on average, tended to have much lower financial performance (measured as ROEs) than U.S. and European firms. Since the Japanese economy began to slip into a decade-long recessionary environment in the late 1990s, many Japanese firms experienced profit losses and even lower ROEs, but their change in management practices to address the new climate of the time has since been slow. Consequently, the world’s admiration of Japanese management began to wane. This article explores how and why, and offers broader implications to management practices in general.

This study examines the continuity and variation of brand personality in cross-cultural context. Since Aaker et al. (2001), although the spatial aspects of brand personality have been extensively discussed, their temporal aspects have been ignored. Therefore, we present a stream of brand personality literature and the strength of the hybrid approach which provide comparability without ignoring specific or local elements. Using a hybrid approach, we illustrate the spatial and temporal continuity/variation of brand personality in Japan. We found that the “Excitement” and “Sophistication” dimensions are spatially and temporally stable, the “Competency” and “Peacefulness” dimensions should be re-labeled to “Sincerity” and “Imperfection” respectively and “Ruggedness” dimension have emerged in Japan. Lastly, we present the limitations of this study and the directions for future research.

Building on the work of Johanson and Vahlne (1977) and Bell et al. (2001), this paper focuses on “Born-again Global Firms” (BaGFs), specifically within the Japanese sake industry. Unlike “Born Global Firms” that internationalize rapidly post-establishment, BaGFs undergo internationalization after a long domestic operation period. In conventional prior research, this transformation has commonly been attributed to “incidents” such as changes of ownership or the internationalization of clients, or it has been driven by companies with advanced technology. However, this study proposes a new classification of BaGF that is independent of these factors. Through case studies, it highlights how traditional culture can fuel global expansion, suggesting industries with strong cultural ties may be more predisposed to becoming BaGFs. Japan’s sake industry, facing over 50 years of declining domestic demand, initiated modest internationalization through exports in the 1980-90 s and saw a surge in overseas demand from 2013. The study of these BaGFs aims to enrich our comprehension of their characteristics, conditions, and progression into becoming multinational corporations.

This study examines the long-term global business model development process of multinational corporations (MNCs) that created markets from the beginning and continue to pursue rapid growth in the global marketplace. By examining the global business model development of Fast Retailing, which operates a global business under the brand name Uniqlo, we found that value propositions and activity systems interact with each other and develop in an integrated manner to evolve into a global business model that creates greater value by generating virtuous cycles. Our data suggest that (1) identifying a global standardized value proposition and (2) dynamic integration in an activity system are two key success factors in the evolution of an MNC’s global business model.

This study examines the changes in international business strategies at Toyota Motor Corporation, one of the largest multinational enterprises (MNEs) in Japan, that enabled it to continue improving its performance during the global pandemic. This study analyzes Toyota’s alliance strategy over the past 50 years to understand the companies they have formed alliances with and identify changes in their strategies. The analysis reveals that Toyota changed its direction significantly after the Lehman’s collapse, especially after 2010, by actively pursuing alliances with companies in other industries. This marks a departure from Toyota’s past strategy of building strengths within the scope of its control, as seen in keiretsu. The study clarifies the reality of alliance strategies that cross national and industry borders, referred to as the “inter-industrialization of international business.” Through this case study, the transformation of Toyota’s strategy is explored, providing insights for other multinational enterprises seeking to adapt to changing market conditions.

In the 1990s, emerging markets experienced significant growth, driven by trade liberalization and globalization. Previous studies on emerging market strategies have primarily focused on innovations originating in these markets and their generation mechanisms, assuming heterogeneity between developed and emerging markets. However, these studies have several limitations: (1) they approached developed and emerging markets based on the dualistic perspective of heterogeneity and homogeneity; (2) they overlooked the diversity of demand within emerging markets; (3) they inadequately examined the dynamic nature of firm behavior in specific contexts. Therefore, this study aimed to explore the heterogeneity and homogeneity of emerging markets, demand characteristics, and the dynamic strategies and actions employed in these markets. Using an inductive research approach, this study examined the Honda motorcycle business in emerging markets from the perspective of strategy formation theory. This study's findings indicated that Honda demonstrated flexibility by focusing on the heterogeneity and homogeneity of emerging and developed markets to guide its strategic actions. Honda strategically allocated its technology and management resources to address the diversity in emerging markets. Consequently, Honda’s global concentration and localization strategies became complementary, and markets and strategic actions co-evolved over time. The theoretical contributions of this study were as follows. It demonstrated that developed and emerging markets possess both familiar and distinct aspects. Further, it unveiled inherent diversity in emerging markets, presented a dynamic perspective on the strategic behavior of MNCs in emerging markets, and highlighted their evolutionary processes. Additionally, the study expanded the theory of strategy formation processes into international management.

The housing industry, with its strong technical characteristics and practices, uses explicit knowledge embedded in a specific local context, leading to stickiness even for know-how. This makes it difficult for firms to expand abroad without overcoming this strong stickiness. Success or failure in multinationalization depends on their absorptive capacity, which is supported by prior knowledge. It is difficult to create internalization advantages through vertical integration; therefore, selective vertical integration is necessary. Vertical integration at the global level is difficult; however, if established, it can provide strong competitive advantages. Nonetheless, the mechanism of creating competitive advantage hinders the multinationalization of firms. This case study examines the theoretical compatibility of the multinationalization of Sekisui House, a leading house manufacturer in Japan. We show that there is potential for advancing global procurement along with international expansion, but the unique standards of Japanese architecture pose a barrier to global procurement. For companies in this industry, it is reasonable to adopt a strategy that creates synergy between the overseas expansion of housing businesses and their own building materials. M&As focus on acquiring local knowledge and capabilities through talent acquisition. Finally, as the know-how of sales has high information viscosity, it is difficult to share it even within the same organization, and even more difficult for organizations across countries.

Diversity and Inclusion (D&I) has gained strategic significance in business. This chapter notes the strategic importance of D&I and investigates Japanese multinational corporations (MNCs)’ D&I management. By integrating the corporate social responsibility (CSR) and financial data of the target companies, the study diagnoses how the companies implemented D&I management and the effectiveness of their efforts. The analysis results for the 420 listed Japanese MNCs show that MNCs see D&I management as valuing and respecting individual differences to add value to their business by stressing the statements of “respecting humans and maximizing individuality” and “creating values” as the directions of their D&I management. Also, the diversity issues of the companies are focused mainly on gender, nationality, and age. Notably, findings proved the financial effect of D&I management, particularly gender D&I management. The finding indicates that gender D&I management that promotes more female managers enhances companies’ growth potential by increasing their total revenue and operating profits. Identifying the direction and issues of D&I management and its effectiveness, the chapter contributes to enhancing the understanding and development of D&I management among Japanese MNCs. The findings of the study will hopefully stimulate the advancement of future relevant research.

This qualitative study examines the dynamics within a research and development (R&D) center of a Japanese multinational corporation (MNC) to understand how employees autonomously create and develop strategies within team settings, from the strategy-as-practice (SAP) perspective. By adopting a sense-making lens, we identified several key findings. First, employees comprising a team give significant importance to engaging in consensus-based decision-making meetings before and during strategic activities, as these meetings serve as foundational elements in constructing shared cognition within the team. Second, the director and specialists within the center were found to play a key and influential role in facilitating the execution of SAP activities. Third, two of the three teams under investigation expanded their strategic activities beyond the limits of the center to encompass broader, company-wide strategic initiatives. These findings underscore the significance of the SAP activities conducted by employees.

Given Japan's unique position as the first developed economy in Asia, comprehending management in Japanese companies holds significant implications for both the emerging economies in Asia and those around the world. This chapter explores the contribution of Japanese management to the Western management literature from a strategic people management perspective. The study reviews the publications on Japanese management using data obtained from the Web of Science. Over six decades, Japanese management-focused publications have evolved in tandem with changes in socio-economic contexts. The review is conducted through the lens of a strategic people perspective, focusing on key aspects such as people, knowledge, learning, culture, leadership, and networking. The literature review is supplemented with qualitative data collected through interviews and dynamic groups. This chapter is structured as follows: after introducing the motivation for this research in the introduction, the theoretical background of strategic people management is presented to explain the rationale for choosing this study, distinguishing it from the traditional field of strategic human resource management. The research methodology section is then presented, followed by results presented in three subsections. Discussions focus on the potential further development of Japanese management for sustainability, emphasizing learning from the culture within Japanese management.