Japan’s fatigued corporate culture
Professor Yoshio Sugimoto
This opinion piece first appeared in The Conversation on 28 March 2011.
The unfolding Fukushima nuclear disaster has highlighted the weaknesses and dysfunctions inherent to Japan’s conventional corporate culture. The Tokyo Electric Power Company (TEPCO), now the center of attention and responsible for the current nuclear incidents, embodies the old-style management model lauded internationally in the 1980s as the engine of the so-called ‘Japanese miracle’ for its internal cohesion, employee loyalty and consensual decision-making practices.
TEPCO has a checkered history when it comes to transparency. Nearly a decade ago, it was revealed that the company had concocted data on the levels of radioactivity in its plant, a record which only adds to the current community suspicion that the full extent of the ongoing risks and dangers are being downplayed to protect the future of Japan’s nuclear industry and shield corporate and ministerial interests. TEPCO’s possible concealment of information regarding the details of the nuclear situation is already subject to severe ongoing criticism from specialists in the field. In old-style Japanese corporate culture, the flow of information is often delayed due to the multiple and complex layers of communication channels and consensus formation processes. In the context of the current crisis, crucial data were withheld by prolonged internal consultations at various levels.
TEPCO operates within the conventional ‘convoy system’ in which government ministries protect major companies and industrial groups while strictly supervising and overseeing the private sector in the name of the national interest. In peaceful situations, the system cultivates intimate and collusive links between large corporations and governmental agencies. The disaster has revealed that the framework remains alive and well despite its considerable weakening as a consequence of recent deregulation and privatization. Closed to ‘outsiders’, the structure has failed to incorporate the assessments of the many international experts already in Japan to examine the situation. Meanwhile, Japan’s major banks that lie within this circle have been quick to support TEPCO, while being slow in offering aid to individual citizens.
Major companies in Japan in this mold are situated at the top of the corporate pyramid above their own associated enterprises, subsidiaries and subcontracting companies. This hierarchy is known as a ‘dual structure’, where a small number of large businesses prevail over a large number of smaller ones. Workers who have been battling in kamikaze style on the dangerous frontline in and around the nuclear plant include a large number of employees of the lower-level companies under its command. Unsurprisingly, the three workers who were exposed to excessive radiation and hospitalized for treatment were not employed by TEPCO.
Japan’s conventional corporate culture reflects the community values in which perseverance, patience and self-control are emphasized. At schools, shops and stations, for instance, it is a routine for most Japanese to stand in queues in an orderly way, a practice that has been evident throughout the disaster areas. When applied to the ‘convoy system’, however, such moral principles give priority to the collective and organizational interests of government ministries and leading corporations. Closely knit and tightly structured, the ministry-industry complex is based on employees’ quiet loyalty and devotion and consistent with the values of individual self-restraint and endurance. Virtually no voices of concern or dissent have been openly articulated from within this structure.
The information industry maintains the ‘convoy system’. Though Japan’s mainstream media organizations are independent and frequently critical of the Japanese government, they are in interdependent relationships in one important respect. Japanese major media companies establish so-called ‘reporters’ clubs’ based in government offices and industrial organizations at various levels, which strictly exclude foreign correspondents, freelance journalists, online reporters and other ‘outsiders’. These exclusive clubs are the sites of official press conferences, government announcements and data dissemination, to which the newsmen and newswomen who do not work for major corporations are denied direct access. As a kind of information cartel, reporters’ clubs around the country receive financial support from government offices and often develop cozy relationships with them. Far from open and competitive, this structure has remained intact even in the present disaster and crisis and has prevented foreign journalists, for example, from attending and raising questions at important news conferences. The Japanese public as well as the international community have been receiving information about the nuclear disaster in the context of this framework.
Meanwhile, Japan’s bureaucratic culture has shown another face in the tsunami-hit areas outside the nuclear-crisis zone. While dragging its feet at the beginning, the corporate machinery revealed its efficiency and effectiveness once following the initial phases of organization. Despite the unprecedented scale of the earthquake disaster in so many locations, major roads were opened within a week, essential supplies were soon delivered to most places, and even train lines were back into full operation in a relatively short period of time.
Though the failure of old-style corporate culture a la TEPCO is now on display, there is little doubt about the overall technological competence of Japanese companies. When the earthquake and tsunami hit Japan, some eighty-eight bullet trains were running in various parts of Japan at full speed. All of them were brought to an immediate halt without incident, an indication of the high-level technology that can now be widely utilized in the reconstruction process. Hopefully, as the Japanese proverb goes, ‘a bamboo bends but never breaks’, and the systems and structures at play in the country will be both flexible and strong enough to cope with the complexities and scale involved in the ongoing crisis.
Professor Yoshio Sugimoto is Emeritus Professor of Sociology at La Trobe University.