AAS Annual Meeting

Japan Session 233

[ Japan Sessions, Table of Contents | Panels by World Area Main Menu ]

Session 233: Innovative and Unorthodox Strategies in Japanese Business :Examining Shifting Values, Risk-Taking, and Survival Tactics

Organizer: Jeffrey W. Alexander, , USA

Chair: Ulrike Schaede, University of California, San Diego, USA

Discussant: Patricia L. Maclachlan, University of Texas, Austin, USA

This panel explores innovative and unorthodox strategies employed by Japanese companies in both the 20th and 21st centuries. The panelists look beyond the familiar themes of consensus-building and long-term relationships, focusing instead upon the issues of risk-taking, unique survival tactics, and novel means of profiteering. The individual papers will probe the arenas of entrepreneurship, competition, and collusion, after which the discussant, together with the panelists and the audience, will debate the broader issues of risk perception, shifting values, and Japan’s changing markets and business cultures. Panelist Jeffrey Alexander first investigates the issues of collusion and price-fixing in the Japanese beer cartel, beginning with the secret negotiations that led to a formal market-sharing agreement in the 1930s. Next, panelist Jesper Edman explores innovative survival strategies in Japan’s contemporary microbrewing industry, and reveals that remaining independent has been a more successful and innovative approach for some entrepreneurs than has forming joint or collaborative ventures. Finally, panel chair Ulrike Schaede shares data and the details of corporate interviews to shed light on a series of small, highly profitable companies that are challenging the oft-held impression of Japanese firms as slow, bureaucratic conglomerates. Each topic involves strategic innovation, as well as the adoption of unorthodox means of surviving and prospering, but taken together, the papers address larger issues, including the shifting values in Japan’s business culture, and the necessary steps being taken to ensure profitability.

Ending the Beer Sales War: Price Fixing and Collusion in Japan’s Prewar Brewing Industry
Jeffrey W. Alexander, , USA

After a fruitless, decade-long “beer sales war” during the 1920s, rival firms Kirin, Sakura, Dai Nippon (Sapporo) and others were left exhausted. The superheated market competition was fuelled by ruthless shop owners and underselling wholesalers, some of whom even stole from their suppliers and fled without remitting payments. The brewers referred to these parasitic retailers as batta, or “locusts,” and they agreed in 1933 to form a cartel to curb excessive competition, eliminate underselling dealers, and fix both prices and production targets. Brokered ostensibly by the Ministry of Commerce and Industry, the deal, known as the Cooperative Beer Sales Agreement, was actually mediated by the president of Mitsubishi Bank. The terms of the agreement were so strict and detailed that they are reminiscent of the 1615 Laws Pertaining to Military Houses – which forbade the construction of new castles or the improvement of existing ones in Japan’s Edo-era domains. Both Dai Nippon and Kirin agreed not to build new breweries or even to improve existing ones without consulting the other party first, a remarkable limitation that effectively fixed their proportions of market share relative to those of their competitors – who were soon driven out of business. This explicit collusion between competing manufacturing firms was orchestrated in the name of market stability and securing modest profits. Enacted voluntarily in order to halt a lengthy and exhausting business war, the agreement succeeded in raising the price of a box of beer by ¥1, and it drove out the locusts and their underselling ways.

Better to be Drinking Alone? Collaboration vs Competition in Industry Creation – The Case of Japan’s Microbrewery Industry
Jesper Edman, Hitotsubashi University, Japan

A recurring theme in studies of Japan’s postwar economic development has been the orderly and cooperative fashion in which competing firms jointly form new markets and industries, often in collaboration with local officials. This study investigates whether such joint-development is still the norm, or if there is an opportunity for entrepreneurs to “go-it-alone.” Using the Japanese microbrewery (ji-biru) industry as our setting, we investigate how new entrants of varying backgrounds dealt with prevailing industry norms and practices, and how these strategies influenced their levels of innovation and survival. Our study shows that while traditional aspects of co-development and joint learning still exist, many firms increasingly opt for developing their own unique strategies and approaches. In particular, these “go-it-alone” strategies increase the level of innovation.

Show Me the Money: An Analysis of Japan’s Most Profitable Companies
Ulrike Schaede, University of California, San Diego, USA

Scholars and business people alike have largely written Japanese industry off. The enduring image of slow decision-making in huge, bureaucratic conglomerates, cumbersome administrative processes, and a seeming lack of leadership or vision have greatly curtailed our study of the Japanese economy and its actors. However, this image of Japanese business is only half-true. The other story is that of focused, sometimes smaller firms, largely unknown even within Japan, that occupy important technology niches in the global supply chain and are highly profitable. This paper analyzes these companies, based on descriptive data and corporate interviews. It looks at the strategies that these companies adopt to win, the sources of their innovation, and the corporate culture that is driving their success. These new “winners” represent a style of Japanese management that is hardly noticed but is becoming more important as our conventional image of “the Japanese firm” is rapidly becoming a matter of history.