Challenges of Human Resource Management in Japan

Ralf Bebenroth, Toshihiro Kanai, Ralf Bebenroth, Toshihiro Kanai

• Publisher: Routledge
• Year: 2010
• eBook ISBN: 9781136936142
• Topic: Business
• Subtopic: Business General
• Index: Business

Human resource management systems differ across corporations around the world. Japan has unique characteristics that create specific challenges for HRM and there is currently a lack of research focusing on Japanese HR issues available to westerners. This book examines the major challenges and dilemmas in human resource management as Japan's industrial society continues its resurgence in the global arena. The first part of the book deals with Japanese HRM from an international perspective, analysing the overall structure of Japanese HRM systems and comparing these with current international systems. The second part of this book looks at Japanese HRM from a domestic perspective and as such covers the micro issues of HRM practice in Japan.

Written by a leading team of HRM experts from Japan, the UK, France, Australia and Canada, this book will be of interest to anyone interested in HRM in Japan, and international HRM more generally.

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Challenges of human resource management in Japan

An introduction

Ralf Bebenroth and Toshihiro Kanai

Aims and purpose

The late 1980s showed Japanese firms emerging as not only globally competitive but superior performers. Many of them were leaders in their industries, “challenging” other countries’ firms with a Japanese model consisting of techniques such as total quality management, lean manufacturing, kaizen (continuous improvement), and the kanban system (just-in-time production). At that time, Japan received high scholarly interest from all around the world (Doz, Santos, and Williamson 2001). Researchers looked at Japanese firms to see how to organize and manage effective and efficient production facilities. Beyond the production process academics and practitioners from both Western and Asian countries were interested in the common organizational characteristics of Japanese firms, such as keiretsu business groups (Whitley 1996, Budhwar 2004).

During the so-called “lost decade” of the 1990s, international interest in Japanese firms waned as the economic situation deteriorated. The country seemed to have lost its competitive edge. Between 2004 and 2008, Japan’s economy was back on stage and even after the recent economic crisis of 2008 and 2009, Japanese firms have regained a globally competitive position. International scholars outside of Japan realize now that Japanese firms have changed, and generally for the better. For example, Schaede identifies a strategy of “Choose and Focus” at many Japanese firms, making them more competitive against international competitors (2008). This is visible by the fact that Japanese companies are once more steadily acquiring foreign firms. However, unlike what was done in the late 80s, today’s Japanese firms undertake strategically relevant acquisitions.

Naturally, these economic changes go hand in hand with the pressures and changes the country faces, as the Japanese society ages fast and has one of the lowest birth rates in the world. Also, there is a mental change visible in Japan, which takes place in various forms, such as an increase of mergers and acquisition transactions domestically but also with firms from other countries (Bebenroth 2007). That means that Japanese managers and their firms are changing their minds regarding adopting foreign standards (Pudelko 2009) and are also becoming more closely linked with foreign companies, something that leads to “challenges” in dealing with non-Japanese people (Stahl et al. 2005, Brannen and Peterson 2009).

The Japanese economic development and the strength of their firms instigated Western interest in Japanese HRM systems (Pudelko 2006). In the 80s, scholars around the world perceived the Japanese HRM and almost all its facets as a source of firms’ successes. Western scholars were eager to learn from Japan. In the 90s, this same system was increasingly regarded as problematic, in need of change and considered to be one of the main reasons for the Japanese economic recession (Aoki, et al. 2007).

From a global perspective, the economic challenges of the twenty-first century for firms differ substantially from that of the 1980s and 90s. Nowadays, knowledge management, the process of successfully connecting knowledge of people and leveraging that knowledge of people, is considered to be a key characteristic of superior firms and establishing global, competitive advantage (Doz, et al. 2001).

Knowledge management is closely related to HRM as it deals with people and the process of how knowledge is transferred. Conventional wisdom holds that firms with better human resources outperform their rivals (Barney 1991). Barney has argued that the key competitive advantage of human resources is based on the difficulty of replicating a high-performance HRM system. Thus, HR competitive advantages are not the same across multinational companies (MNCs) around the world.

Japan has many unique characteristics different from other countries and there is a lack of research by Westerners focusing on HR issues in that country. Even if there is quite extensive research done by Japanese researchers in the Japanese language in this field, only a few works are written in English and therefore normally not accessible to the non-Japanese audience interested in the topic. This publication is designed, by including both contributions from Western and Japanese scholars, to spread knowledge about Japanese HRM systems to the English-speaking world, professors, researchers of HRM, and students/practitioners interested in HRM issues in a Japanese context.

Japan as a country of focus has received scholarly attention by the Routledge Contemporary Japan Series in various publications. Some recently published volumes in this series covered topics like: “The Rise of Japanese NGOs,” by Kim D. Reimann (Nov. 2009), and “Japanese Aid and the Construction of Global Development,” edited by David Leheny and Kay Warren (Oct. 2009).

This volume is edited with original contributions by well-known scholars in the field and written exclusively for the purpose of this book. The current volume aims to shed light on HRM issues at Japanese firms, as well as HRM-relevant issues of MNCs operating in Japan or at least connected to Japanese firms. The first part of this book is comprised of contributions of international scholars, the second part is written by leading Japanese HRM scholars.

The first part of this volume deals with “Japanese HRM from an international perspective.” It is organized from a macro HRM perspective and covers overall structures of systems, makes comparisons between the current Japanese system and other systems, and identifies current Japanese HRM challenges. The second part covers “Japanese HRM from a domestic perspective.” This part deals with HRM practices within the Japanese context and covers the micro issues.

This book had its start at a workshop held in March 2008, at the Institute for Economics and Business Administration of Kobe University, Japan. The workshop was entitled “Challenges of Human Resource Management in Japan” and Mary Yoko Brannen (INSEAD, University of San Jose), who was born in Kobe, Japan, provided the keynote address. Some other prestigious international researchers in this field, like Markus Pudelko (University of Tuebingen), Nealia Sue Bruning (University of Manitoba), and Philippe Debroux, Soka University, Tokyo, presented earlier versions of the current chapters at the workshop. On that day in Kobe, the audience engaged in discussions with the presenters and provided suggestions that were incorporated into chapters. The editors are thankful to the contributors for putting their effort into these unique contributions.

Overview of content

The first part deals with “Japanese HRM from an international perspective,” consisting of contributions by Sue Bruning, Markus Pudelko and Anne-Wil Harzing, Ralf Bebenroth and Donghao Li, Philippe Debroux, Beatriz Braga and Edson Kubo and Mary Yoko Brannen.

Chapter 2 by Sue Bruning, entitled, “Taking stock of the research on evolving relationships between Japanese human resource management practices and firm performance,” examines the linkage between Japanese HRM and firm performance. Dr. Bruning’s review contributes to the literature on common and unique aspects of high-performing HRM (HPHRM) systems. These HPHRM systems are examined briefly in relation to firm performance. The historical differentiation of Japanese HRM systems is reviewed and current changes in Japanese HR practices are reviewed. The changes within Japanese HR systems leads to the question of whether there is a point where the changes challenge the fundamental principles that define Japanese high-performance HRM systems.

Chapter 3 provides a critical analysis of current Japanese HRM systems. Pudelko and Harzing focus on the “Japanese human resource management: inspirations from abroad and current trends of change,” stating that Japanese human resource management has been perceived by many observers as successful during the 1980s with suggestions of how Western managers could learn from the Japanese HRM model. Yet, only a decade later Japan famously entered a strong recession, and so these same HRM practices are also viewed by a series of authors as the root of the malaise. In their chapter, Pudelko and Harzing investigate to what extent Japanese HR managers nowadays incorporate HRM practices from the West and, in addition, shed light on what Japanese firms intend to adopt. Japanese HR managers’ intentions and practices were studied at two levels: at headquarters (HQ) and at the subsidiary level for German, United States, and Japanese firms.

Chapter 4 is devoted to the performance of Japan-based foreign companies. In “Expatriation and performance” Bebenroth and Li investigate whether or not Japan-based foreign subsidiaries perform better under the guidance of an expatriated CEO. In other words, the authors investigate whether Japan-based foreign subsidiaries led by non-Japanese managers outperform other firms who are led by local managers. To broaden the subjects of interest and to focus not only on a single person, the authors also include the ratio of foreign board members. The question to be empirically answered is whether a higher ratio of expatriates in the boardroom leads to a better performance of the subsidiary. In addition to performance, the authors use three mediating variables: the size, the ownership, and the age of the subsidiary for investigating differences between more local and more international HRM-equipped Japan-based foreign subsidiaries.

Debroux investigates “Human resource management and employment systems in Asia: directions of change and new challenges” and sheds some light on one of the biggest problems East Asian companies are likely to face in the long run, the formation of a dual structure of employment. Some employees are skilled and thus “empowered” as workers, continuously improving their capabilities and, on the other hand, “deskilled” workers are expected to be just “cheap” and “flexible.” Such polarization may cause enormous social problems. Debroux states that it could also damage corporate management and thus affect the profitability of firms. The author discusses in this theoretically oriented paper signs of a new HRM system in East Asia and gives ideas on how sustainable labor relations can be built in East Asia, including Japan.

In their theoretical article “Demystifying the relationship between intercultural adjustment and effectiveness in international assignments: reflections on Japanese expatriate managers,” Braga and Kubo contribute to highlighting intercultural adjustment as the determinant factor of the expatriate’s success in an international assignment. The model of international adjustment from Black et al. (1991), argue the authors, puts intercultural adjustment as a prerequisite for the success of an expatriation. Their literature review shows that the interaction adjustment and general adjustment determine the work adjustment and lead to effectiveness. In this context, Japanese expatriates are taken as examples of success in international assignments due to their combined lowest failure rates in the world. However, their literature review shows that the Japanese expatriates do not seem to adjust to the interaction and general dimensions. This contradiction demystifies the central dimensions of the Black et al. (1991) model and their main assumption that adjustment is a precondition for effectiveness.

Mary Yoko Brannen, our keynote speaker at the workshop, investigates “Global talent management and learning for the future: pressing concerns and opportunities for growth for Japanese multinationals.” She investigates HRM-specific aspects of the importance of the multinational company in today’s fast-moving and knowledge-intensive society. She explains the importance of global business and the means for leveraging and exchanging knowledge between locations and across organizational domains. Brannen states that in order to realize this potential with diverse workforces separated by time, space, and economic development, substantial workforce management efforts by all multinationals regardless of country of origin must occur in the coming years. Her chapter summarizes the issues that global talent management needs to address in the coming years and highlights the pressing concerns and opportunities for growth for Japanese MNCs. As such, this chapter serves as a bridge between Part I and Part II of this book.

Part II, “Japanese HRM from a domestic perspective,” is a microanalysis. In addition to our international contributors, prestigious Japanese scholars from Japanese universities who have an intimate understanding on the issues from an insider perspective have participated with their contributions to this book. The second part consists of five contributions. The first paper is contributed by Tomoki Sekiguchi, Norihiko Takeuchi, and Tomokazu Takeuchi. The second chapter is contributed by Yasuhiro Hattori from the faculty of Economics, Shiga University.

The other contributions are comprised of information from experts in HRM from Kobe University, all belonging to the Graduate School of Business Administration faculty, the second oldest business school in Japan, serving as the center of Japanese business research and education. These papers were written by Kiyoshi Takahashi and by Mitsutoshi Hirano. Finally, Toshihiro Kanai participated with a contribution in collaboration with Yoichi Furuno.

In their theoretical contribution, Sekiguchi, Takeuchi and Takeuchi investigate “Strategic human resource management research in the Japanese context: unique opportunities for theory and advancement.” The authors state that there has been a large amount of theoretical and empirical work on strategic human resource management (SHRM) conducted; however, the majority of these studies have been conducted in Western countries, especially in the United States. In this paper the authors discuss how SHRM research in the Japanese context contributes by taking advantage of its unique cultural and institutional settings and the embedded nature of Japanese HR practices. It is argued that undertaking SHRM research in the Japanese context has a potential advantage in elaborating and extending SHRM theory to a broader range of contexts and introducing new perspectives to SHRM. This broader perspective has many implications for managing people in Asian co...

Table of contents

• Routledge Contemporary Japan Series
• Contents
• Figures and tables
• Contributors
• 1 Challenges of human resource management in Japan
• Part I Japanese HRM from an international perspective
• Part II Japanese HRM from a domestic perspective
• Index