This chapter qualitatively examines cross-national managerial strategies employed at the Japanese automakers in the context of economic nationalism. It proposes and tests a simple yet versatile conceptual framework by developing existing models and integrating foundational concepts available in literature. Proposed as a tool for comparative analysis on management styles, the framework has two extreme ends of a continuum to capture not only variants of the social realities but also changes of businesses as it shifts between the extremes. The findings suggest that the force of economic nationalism likely affects the Japanese automakers' growth strategies, and the dynamics of managerial styles are company-specific under intensified globalization.
TopIntroduction
The automobile industry, which constitutes a part of the manufacturing sector, has large multinationals, such as Toyota Motor Corporation (“Toyota”), Honda Motor Co., Ltd. (“Honda”), and Nissan Motor Co, Ltd. (“Nissan”). The major industry players have an extensive global network with localized subsidiaries worldwide. Toyota places a public release, dated January 16, 2018, on their website regarding their annual output in North America: With 46.5 thousand employees, Toyota manufactured 2.0 million vehicles in 2017. Despite their large-scale operations in the US, the Japanese automakers may need to expand further their establishments. Dated November 6, 2017, CNN online news features President Trump’s trip to Japan and communication with Japan, Inc., including executives from the automakers. With the mission of reducing the nation’s trade deficit with Japan by $57 billion, the President asked them to increase the production of cars in the US instead of exporting from Japan. The mission appears to exemplify the current issue of economic nationalism, which tends to promote trade protectionism that can limit imports (Pryke, 2012).
Cross-national management has been an interest of researchers and practitioners. Takeo Fujisawa, cofounder of Honda, once explained his professional journey:
Japanese and American management is 95 percent the same and differs in all important respects. – T. Fujisawa, Cofounder, Honda Motor Corporation (Adler, 2000, xiii)
What differs between Japanese and American management, if not extinct, may not exactly be five percent today. However, it can be hasty to say that the two styles of management have converged with no material differences between them. This line of discussion seems to pose the question of how the Japanese multinationals manage their US operations and reconcile the “five percent” portion in the context of economic nationalism currently being intensified in the USA. Under such circumstances, the Japanese automakers may make more foreign direct investments in the USA for further growth and/or survival in the fierce competition. If the significance of the “five percent” portion is great, the two management styles will likely have more negotiations in cross-national settings. The difference of management styles seems to have direct relevance to the issue of economic nationalism, especially in the case of the country combination of Japan and the USA. This chapter will discuss the following three research questions: what elements constitute the “five percent” portion, why the two styles of management are different, and how the portion will possibly change in the context of economic nationalism, focusing on “all important respects”. This research has turned into the proposition of a new framework by developing existing models available in literature. The framework may be used to analyze management styles and their changes in the context of economic nationalism.
The existing body of literature offers rich discussions over the cross-national differences. Notably, Sako (1992) provides a useful framework entitled Arm’s-Length Contractual Relation (“ACR”) and Obligational Business Relation (“OCR”), based on important evidence discovered in the electronics industry in the UK, where the local and the Japanese businesses were compared for Sako’s study. ACR-OCR has two extreme ends of a continuum to capture any variants of the social realities sitting between the extremes. Also pertinent is the conceptual framework of liberal market economies (“LME”s) and coordinated economies (“CME”s) in the field of political economies (Hall and Soskice, 2001). Integrating these two frameworks, this chapter will propose a three-level framework named Arm’s-Length Business Relation (“ABR”) and Obligational Business Relation (“OBR”), and test its theoretical validity. It is partially named after ACR-OCR because it is partly built on ACR-OCR. It differs from ACR-OCR in that it assumes general applicability to any trading relations between Japan and other countries, while ACR-OCR has its theoretical coverage of the electronics industry in Japan and the UK. The ABR-OBR framework is structured to be as all-embracing as possible. This chapter will begin with a review on ACR-OCR and LME-CME, establish the framework, and tests it against the qualitative findings obtained from the automobile industry.