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Business Ethics: A Japanese View

Published online by Cambridge University Press:  23 January 2015

Iwao Taka
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Abstract:

Although “fairness” and “social responsibilities” form part of the business ethics agenda of Japanese corporations, the meaning of these terms must be understood in the context of the distinctive Japanese approach to ethics. In Japan, ethics is inextricably bound up with religious dimension (two normative environments) and social dimension (framework of concentric circles). The normative environments, influenced by Confucianism, Buddhism, and other traditional and modern Japanese religions, emphasize that not only individuals but also groups have their own spirit (numen) which is connected to the ultimate reality. The framework of concentric circles lets moral agents apply different ethical rules to the respective circles. The dynamics of these religious and social dimensions lead to a different view of both individuals and corporations from that dominant in the West.

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Articles
Information
Business Ethics Quarterly , Volume 4 , Issue 1 , January 1994 , pp. 53 - 78
Copyright
Copyright © Society for Business Ethics 1994

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References

Notes

I wish to thank Prof. Thomas W. Dunfee and Prof. Richard T. DeGeorge, Prof. Thomas Donaldson, and Prof. Norman E. Bowie, for their valuable comments and advice with business ethics and my terminology. I also extend my heartfelt thanks to Miss Mollie B. Zion for her many useful suggestions.

1 The present Chairman of Doyukai is Takashi Ishihara (Chairman of Nissan Motor). It is composed of about 1500 executives and a Subcommittee on “Corporate Citizenship” was established in April, 1990. The present Chairman of Keidanren is Gaishi Hiraiwa (Chairman of Tokyo Electric Power). It is composed of about 940 corporate executives and it established a “Committee on Corporate Philanthropy” in February, 1991. The other business associations in Japan have not yet created specialized committees of business ethics.

2 Keizai Doyukai, Heisei Gannendo Teigen Ikensho Shu (Annual Report of 1989: Proposals and Opinions), (Tokyo: 1990), p. 91.

3 Ibid., p. 92.

4 Ibid., p. 92–93.

5 The original idea of the “normative environment” is the “semantic cosmos” proposed by J. Kyogoku. J. Kyogoku, Nihon no Seiji (Politics of Japan) (Tokyo: Tokyo University Press, 1983).

6 J. Kyogoku, ibid., pp. 139–88. H. Abe, M. Shindo and S. Kawato, Gendai Nihon no Seiji (Politics of Modern Japan) (Tokyo; Tokyo University Press, 1990), pp. 235–39.

7 J. Kyogoku, op. cit., pp. 137–38. The philosophy of the great life force is explained in detail in M. Tsushima, et al., “Shinshukyo niokeru Seimeishugiteki Kyusaikan” (Life-oriented Salvation in the Japanese New Religions), Shiso (Thoughts) (Nov., 1979), pp. 92–115.

8 The closest translation of the Japanese term is “uni-variety normative environment.” The concept, a difficult one even for the Japanese, does not translate easily into English. I am using the term, “transcendental” in its sense of placing emphasis on “the primacy of the spiritual and intuitive over the material and empirical” from the definition of “transcendentalism” in Webster III New International Dictionary. Prof. Thomas W. Dunfee kindly suggested to me the term, “transcendental normative environment.”

9 Taoism criticized Confucianism, saying that Confucianism had constructed an artificial society. For Taoism, formulating manners and requiring people to learn them meant making an artificial society. Taoism regarded this society as immoral. Buddhism also exerted its influence on ordinary people, establishing its own cosmology and metaphysics which Confucianism lacked. Confucians, therefore, aiming at strengthening its influence on common people, developed and elaborated its cosmology and metaphysics in 11th century. It was “neo-Confucianism” or the doctrines of Chu-tzu (1130–1200) that underwent these philosophical changes. K. Miura, Shushi (Chu-tzu) (Tokyo; Kodansha, 1979), pp. 35–263. N. Kaji, Jukyo towa Nanika (What is Confucianism) (Tokyo: Chuokoronsha, 1990), pp. 170–217.

10 K. Miura, op. cit., p. 28.

11 K. Fujita, Jinsei to Bukkyo (Life and Buddhism) (Tokyo; Kosei Shuppansha, 1970), p. 54.

12 J. Kyogoku, op. cit., p. 164.

13 S. Yamamoto found a prototype of the spirit of Japanese capitalism in the Buddhism of Seisan Suzuki (1579–1620). Yet, the logic is almost the same. That is, all people, whether peasants, merchants, priests, or warriors, can enter Nirvana, if they concentrate on their own calling with sincerity and faithfulness. S. Yamamoto, Nihon Shihonshugi no Seishin (Spirit of the Japanese Capitalism) (Tokyo; Kobunsha, 1979), pp. 118–41.

14 M. Imai, Kaizen (New York: McGraw-Hill Publishing Company, 1986), p. 34.

15 J. Kyogoku, op. cit., pp. 182–83.

16 In 1991 (from March, 1991 to February, 1992), 2.77 million Japanese changed jobs. Although this figure is the highest since 1984, the figure accounts for only 4.4 percent of the labor force. The Philadelphia Inquirer (July 25, 1992).

17 One of the typical ways to avoid face-to-face confrontation is “Nemawashi.” This is taken by those who want to propose some new ideas to the group. They explain the content of the ideas in detail and in advance to the conservatives, for the purpose of both eliminating their doubt and anxiety about the new proposal, and also to get the conservatives’ understanding, compliance, and support.

18 According to Nihon Minzoku to Nihon Bunka (Japanese People and Culture), the origin of this propensity is found in Kojiki (The Legendary Stories of Old Japan) as follows; “Compared with Christian mythology, Japanese mythology shows its vivid characteristic. In Christianity, the world is completely synthesized with the absolute God who stands at the central point. A standard of good and evil is made clear there. On the contrary, in Japanese mythology, although Amaterasu and Susanou (Japanese ancient goddess and god) are opposing each other, Kojiki did not show the absolute standard (central position) of good and evil. After all, opposition between them comes to balance. If we call the structure of Christian mythology a centrally-unified-type, we can call that of the Japanese chuku kinko (balanced-vacuum) type.” N. Egami, Nihon Minzoku to Nihon Bunka (Tokyo; Yamakawa Shuppansha, 1989), pp. 430–31.

19 J. Kyogoku, op. cit., p. 161.

20 Ibid., pp. 161–62.

21 Ibid., pp. 191–94. This kind of framework of social conception is also used by T. Doi. T. Doi, Amae no Kozo (Structure of Amae) (Tokyo; Kobundo, 1971), pp. 33–37.

22 T. Doi, ibid., pp. 38–43.

23 It is said that the original idea of this philosophy came from Confucianism, because Confucianism placed emphasis on a virtue of filial piety. But the virtue of filial piety has long been extended and made sophisticated in such a way as to include various virtues not only toward parents and ancestors but also toward nature, social benefactors, descendants, and so forth. Namely, neo-Confucianism has considered that the universe, the natural environment, ancestors, and the community allow a person to live on this earth. The person can never enjoy innumerable favors unless they support his or her existence and life. Therefore the person has to give benefits willingly to society, offspring, and others as a token of his or her gratitude to nature and benefactors. N. Kaji, op. cit., pp. 51–86, and pp. 185–210. This ethical idea is also said to have been nurtured or strengthened by Buddhism. Buddhism says that what makes it possible for a person to live is not due to his or her own power, but due to others’ support and sacrifice. If we look back to the past, we can say that every person’s life depends on his or her parents, grandparents and other ancestors. If we look around our society, we cannot help admitting that not only other people surrounding the person but also many animals and plants support his or her life. Buddhism regards these benefits as ethical debts the person owes, and therefore insists on the necessity to repay these debts to nature, society, descendants, and the like. K. Fujita, op. cit., pp. 84–112.

24 R. Benedict, The Chrysanthemum and the Sword: Patterns of Japanese Culture (New York: Meridian, 1946).

25 K. Imai, and R. Komiya, Nihon no Kigyo (Japanese Corporations) (Tokyo: Tokyo University Press, 1989), pp. 131–58.

26 As for the triangular relationship among Japanese business leaders, bureaucrats, Liberal Democrats, see F. K. Upham, Law and Social Change in Postwar Japan (Harvard University Press, 1987), pp. 14–16.

27 N. Kaji, op. cit., pp. 70–77. Y. Yuasa, “Shakai Seiji Shiso” (Chinese Philosophy of Social Politics), Shiso Gairon (Summary of Chinese Philosophy), edited by Akatsuka, Kanaya, Fukunaga, and Yamanoi (Tokyo; Taishukan Shoten, 1968), p. 307.

28 When Sony, Kyocera, or other newcomers faced difficulties in entering an existing Japanese market, they tried to succeed in doing business in the international market, especially in the American market. Once they succeeded in that market, they were highly appreciated and welcomed by big companies at home in Japan. These historical facts show vivid examples of opening attitudes of Japanese corporations. I. Taka, “Kigyoka no Shinnen Taikei to Soshiki no Kyuseicho (Belief System of Entrepreneurs and Rapid Growth of Organizations),” Waseda University Shokei Ronshu (No. 44, 1983), pp. 1–24.

29 E. Hamaguchi, “Nihon Rashisa” no Saihakken (Rediscovery of Japaneseness) (Tokyo; Kodansha, 1988), pp. 66–67.

30 Hamaguchi calls this trait “outside-in.” Hamaguchi, E., ibid., pp. 305–16. And Imai calls it “market-in.” M. Imai, op. cit., pp. 52–54.

31 J. Kyogoku, op. cit., p. 218.

32 Ibid., p. 222.

33 Although I do not deny that there is also a discrimination based on specialty in the Japanese society, the discrimination in Japan seems to be less serious than that in America.

34 According to a survey, 80 percent of respondents (104 employees of publicly traded companies) think that a corporation should be for its employees, and 77 percent think that a corporation actually exists for its employees (multiple answers). Nikkei Sangyo Shinbun (April 23, 1990).

35 This practice was basically formed for a purpose of defending Japanese industries from foreign threats. But at the same time, Japanese people thought this threat might destroy the employee-centered management. T. Tsuruta, Sengo Nihon no Sangyo Seisaku (Industrial Policies of Post-War Japan) (Nihon Keizai Shinbunsha, 1982), pp. 121–30.

36 W. C. Kester, Japanese Takeovers: The Global Contest for Corporate Control (Cambridge: Harvard Business School Press, 1991), pp. 258–59.

37 Mainichi Daily News (May 15, 1990).

38 According to the United Shareholders Association, in 1991, corporate profits fell by 7 percent, while pay of chief executives advanced an average 7 percent. The Philadelphia Inquirer (February 16, 1992).

39 R. Iwata has pointed out that when Japanese corporations face radical increases or decreases of the work load, they have coordinated 1) the amount of overtime work, 2) the number of the orders to their subcontractors, and 3) the number of their reserved employees such as female and part-time work force. R. Iwata, Nihon no Keiei Soshiki (Japanese Management Organizations) (Tokyo; Koudansha, 1985), pp. 62–68.

40 The income gap between executives and employees has been relatively narrow. For example, in 1988, the average president’s annual salary of the main Japanese corporations was about $230,000, which was only 7 times as much as that of the new employee. Nihon Keizai Shinbunsha, op. cit., pp. 190–91.

41 The Japanese Fair Trade Commission, “Kigyokan Torihiki ni kansuru Chosa (Research on Corporate Transactions)” (Tokyo: JFTC, June 1991). The Japanese Fair Trade Commission, “Kigyo Shudan no Jittai nituite (Research on Corporate Groups)” (Tokyo: JFTC, Feb. 1992). These latest reports conclude that Japanese business practices and corporate groups are not monopolistic.

42 According to a FTC report, most of the foreign electronic part makers give up too easily in their attempts to start a new business with the Japanese assemblers, once they are rejected. They are reluctant to ask the assemblers about the problems their products have. In the case of Japanese part makers, they ask many times about it, and make efforts to improve their products. Through this interaction, they become trustworthy partners of the assemblers. The Japanese Fair Trade Commission, “Kigyokan Torihiki ni kansuru Chosa (Research on Corporate Transactions)” (June 1991), p. 44.

43 Not only in consumer electronics, but also in ship-buildings, synthetic textiles, and gas, continuous transactions can be found as a characteristic. But this does not mean that newcomers are excluded. If they are excellent at product quality or cost, they can be new contractors. The Japanese Fair Trade Commission, Annual Report of The Japanese Fair Trade Commission: White Paper of Antimonopoly (Tokyo: JFTC, 1991), pp. 88–92.

44 The Japanese Fair Trade Commission, “Kigyokan Torihiki ni kansuru Chosa (Research on Corporate Transactions)” (June 1991), pp. 36–41.

45 Ibid., p. 15. This ratio is “the total of the ratios of the number of issued stocks owned by the other group corporations against the total number of the issued stocks divided by the number of group corporations.”

46 From 1981 to 1988, the ratio of sales for the same group corporations declined from 10.8 percent to 7.28 percent, the ratio of purchases from the same group corporations declined from 11.7 percent to 8.10 percent, respectively. The Japanese Fair Trade Commission, “Kigyo Shudan no Jittai Nituite (Research on Corporate Groups)” (Feb. 1992), p. 31.

47 Ibid., p. 93. From 1981 to 1988, the ratio of group corporations which accept directors from the rest of the same group of corporations declined from 69.79 percent to 62.26 percent.

48 The Japanese Fair Trade Commission, Annual Report of The Japanese Fair Trade Commission: White Paper of Antimonopoly (1991), pp. 76–85. As for the American market, on the contrary, it is said that the capital concentration on the top 100 has been stable. I. Taka, and W. Laufer, “Japan and Social Control: New Perspectives on Trade with a Mediator-Centered Society,” International Association for Business and Society: 1993 Proceedings (San Diego: March 1993), p. 146. T. Nanbu, “Nichibei Sangyo Soshiki no Dotai Hikaku (Dynamic Comparison of the Japanese and American Industries),” Nihon Kigyo no Dai-namizum (Dynamism of Japanese Corporations), ed. by H. Uzawa (Tokyo University Press, 1991), pp. 19–23.

49 Recently IBM, Toshiba, and Siemens announced a three-way collaboration to develop a memory chip. Challenging this alliance, Advanced Micro Devices and Fujitsu announced a joint venture to develop a new type of chip. They can be regarded as latest examples of foreign companies’ efforts to enter Japanese fellow circles. The New York Times (July 14, 1992). And also 30 percent of foreign interest groups such as corporations in Japan hold retired Japanese bureaucrats and give them high positions. In contrast only 19 percent of Japanese counterparts employ them. Y. Tsujinaka, Rieki Shudan (Interest Group) (Tokyo: Tokyo University Press, 1988), pp. 196–97.

50 Not only Doyukai, but also Keidanren places emphasis on “fairness.” Mr. Gaishi Hiraiwa, chairman of Keidanren, insists that “it is essential that we establish fair rules and systems of the kind that can be understood by everyone.” Keidanren Review on Japanese Economy (No. 131, Oct. 1991), p. 2.

51 This logic also seems to be applied to only the Japanese people. In the recession of the early 1990s, the Japanese major companies, which once employed many Japanese South Americans (e.g., Brazilians) in the time of economic boom, have begun laying them off. To be sure, since most of them are part-time workers, the Japanese corporations might be able to treat them as a buffer against the business cycle. But if I look at this practice from the viewpoint of the transcendental prime value, this appears discriminatory.

52 Nonetheless, this dependent trait does not mean the complete dependence of Japanese corporations on the Japanese government. Just as individuals live in the transcendental normative environment, so corporations live in the transcendental environment. Therefore, if agencies act excessively to require the corporations to follow administrative orders, relations between the agencies and corporations come into conflict. T. Tsuruta, op. cit., pp. 201–10.

53 In fact, in the same annual report, in the light of this trait, Doyukai proposed the following three reforms to Japanese corporations. 1) “We should contribute to the world with the spirit of noblesse oblige.” 2) “We have to be able to express our way of thinking in an adequate and easily understandable manner.” 3) “We must understand and accept a variety of values and behavioral manners of other people.” Keizai Doyukai, op. cit., pp. 156–57.

54 H. Okumura, “Shoken Sukyandaru de Towareteirumono (What are Real Problems in the Securities Scandals),” The Keizai Seminar (No. 443, Dec. 1991, pp. 17–22.

55 Of course, it is often said that Japanese workers or employees more positively participate in the corporate decision-making than the counterparts of the other countries. But what the Japanese can suggest is limited to the routine work.

56 According to a Keidanren’s survey, 96.8 percent of respondents (managers) say “Efforts should be made to reduce working hours and respect personal freedom in light of the growing tendency to seek leisure and comfort.” Keidanren Review on Japanese Economy, op. cit., p. 3.

57 The Philadelphia Inquirer (Jan. 16, 1992).

58 In fact, G. Hiraiwa has suggested “economic activities based not on fair rules but on Japanese customs and practices that emphasize interpersonal relationship, such as unspoken communication and tacit mutual understanding, no longer hold water even in Japan.” Keidanren Review on Japanese Economy, op. cit., p. 2.

59 A. Negishi, “Kigyo Keiretsu no Ho Kozo (Legal Structure of Industrial Groups),” Kigyo Keiretsu to Ho (Industrial Groups and Law), A. Negishi, Y. Tsuji, K. Yokokawa, & M. Kishida (Tokyo: Sanseido, 1990), pp. 1–68.

60 We should not forget that the trust-based relation sometimes tends to be illegal. For example, recently a Japanese parcel-delivery firm, Sagawa Kyubin, through its Tokyo subsidiary, gave about $4 billion in loans and guarantees to several corporations, without receiving interest payments, for the purpose of establishing and maintaining a favorable fellow circle. Unquestionably, this is illegal. Moreover, Sagawa Kyubin is believed to have given more than 100 politicians (one in seven members of the Diet) some handouts, in order to make political friends in the fellow circle, expecting that the political friends would help Sagawa to expand its business in the long run. This case also shows that the tendency to construct and maintain long-term reciprocal relations could be illegal. The Economist (Feb. 1–7, 1992), p. 38.