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Japanese business organization through mentality perspective 1969

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JAPANESE BUSINESS ORGANIZATION ...through mentality perspective by HIDEO YAMASHITA B.A., Rikko University (Tokyo), 1966 A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION IN THE FACULTY OF COMMERCE AND BUSINESS ADMINISTRATION We accept t h i s thesis as conforming to the required standard THE UNIVERSITY OF BRITISH COLUMBIA A p r i l , 1969 In p r e s e n t i n g t h i s t h e s i s i n p a r t i a l f u l f i l m e n t o f the r e q u i r e m e n t s f o r an a d v a n c e d d e g r e e a t the U n i v e r s i t y o f B r i t i s h C o l u m b i a , I a g r e e t h a t t h e L i b r a r y s h a l l make i t f r e e l y a v a i l a b l e f o r r e f e r e n c e and S t u d y . I f u r t h e r a g r e e t h a t p e r m i s s i o n f o r e x t e n s i v e c o p y i n g o f t h i s t h e s i s f o r s c h o l a r l y p u r p o s e s may be g r a n t e d by the Head o f my Department o r by h i s r e p r e s e n t a t i v e s . It i s u n d e r s t o o d t h a t c o p y i n g o r p u b l i c a t i o n o f t h i s t h e s i s f o r f i n a n c i a l g a i n s h a l l n o t be a l l o w e d w i t h o u t my w r i t t e n p e r m i s s i o n . D e p a r t m e n t o f The U n i v e r s i t y o f B r i t i s h Columbi V a n c o u v e r 8, Canada ABSTRACT This paper i s an attempt to shed l i g h t on Japanese business organiza- t i o n from a mentality perspective and thus to explain some c h a r a c t e r i s t i c a t t r i b u t e s of the organization. "Mentality" provides, the basis for the mode of thought a t t r i b u t a b l e to the nation. The "YAMATO SPIRIT", which i s one of such mentalities and which i s also the core concept of t h i s t h e s i s , i s the Japanese mentality and thus i s the basis f o r Japanese ways of thought and a c t i o n . The Japanese mentality, i n other words, the "YAMATO SPIRIT", i s defined as "an e f f o r t to a t t a i n the i d e n t i t y of one with many through 'Nothingness'". As such, i t manifests i t s e l f i n the business f i e l d as well as i n other aspects of Japanese l i f e . In fa c t , t h i s SPIRIT i s one of the decisive elements i n the business f i e l d , emerging as the Japanese business s p i r i t . The Japanese b u s i n e s s , s p i r i t , i n turn, takes various forms, such as the maxim "do your b i t for your country" on the management side, Nenko wage system and Shushin Koyo employment system on the labor side, and the interdependence among firms, banks, and the Government. Furthermore, i t i s manifest i n the business decision-making f functioning as a synthesizing element. F i n a l l y apart from the business organization, the Japanese mentality manifests i t s e l f with the existence and importance of the "Betriebswirtshaft" i n the scholarly f i e l d of business i n Japan. Again, t h i s paper i s an attempt to explain these c h a r a c t e r i s t i c a t t r i b u t e s of Japanese business organization through Japanese mentality. i i i The paper i s composed of three Parts. In Part I, we s h a l l look b r i e f l y , from a h i s t o r i c a l point of view, at the management and labor sides of Japanese business organization. This preliminary survey should present a good back- ground for us to understand what the "YAMATO SPIRIT" i s , and what i t s implica- tions are i n the Japanese business scene. In Part II, we s h a l l discuss the three elements on which the "YAMATO SPIRT" i s based, and then a r r i v e at the d e f i n i t i o n of YAMATO SPIRIT by r e f e r r i n g to Dr. Nishida's philosophy, and f i n a l l y take up two di s t i n g u i s h i n g t r a i t s of Japanese mentality. The d e f i n i - t i o n of YAMATO SPIRIT and i t s t r a i t s i n t h i s stage w i l l be highly conceptual and abstract. Proceeding to Part I I I , however, YAMATO SPIRIT w i l l take concrete forms; i . e . , the forms of those above-mentioned c h a r a c t e r i s t i c a t t r i b u t e s of the organization. In other words, i t i s i n t h i s Part that we s h a l l view Japanese business organization from a mentality perspective. For t h i s reason, much more emphasis has been put on t h i s p a r t i c u l a r Part. i v TABLE OF CONTENTS Part I 1 S e c . l Eritrepreneurship i n M e i j i Era 2 Sec. 2 Emergence of Zaibatsu ... 6 Sec. 3 Post-War Executives.... 9 Sec. 4 Labor Market in. M e i j i Era....... .. 14 Sec. 5 Emergence of the Prototype of Nenko . 17 Sec. 6 Labor Movement, i n Post-War Period 20 Summary. • • • • • 22 Part II 23 Sec. 1 What i s Japanese mentality based on? 24 Sec. 2 What i s the "YAMATO SPIRIT"? . .. 28 Sec. 3 Distinguishing T r a i t s of Japanese Mentality 31 Summary... 38 Part I II . 39 Sec. 1 The Maxim, Nenko and Shushin Koyo 40 Sec. 2 Decision-making and Japanese Business S p i r i t 43 Sec..3 Interdependence among Firms, Banks and the Govern- ment....... 63 Sec. 4 The "Betriebswirtshaft" and Japanese Mentality... 71 Conclusion .... 77 Bibliography ..... 79 V ACKNOWLEDGEMENT I owe t h i s whole paper to Dr. W. Winiata, Faculty of Commerce and Business Administration, University of B r i t i s h Columbia. Without h i s f r u i t f u l suggestions, encouragement, and patience, the paper could not have been accomplished. I would l i k e to express my sincere appreciation f or his assistance. Any merit which might be found i n these pages i s due s o l e l y to hi s encouragement and understanding. The mistakes are mine alone. -1- PART I In Part I, we w i l l look b r i e f l y at the management and labour sides of Japanese business organizations from a h i s t o r i c a l point of view. The f i r s t three sections of Part I are concerned with the management side, depicting i t chronologically from M e i j i era to Post-war Japan. The remain- ing three sections, on the other hand, deal with the labour side, depicting i t i n a s i m i l a r manner. It i s intended to be shown, i n t h i s Part, that such a t t r i b u t e s of Japanese business organization as the maxim "do your b i t for your country", Nenko wage system, and Shushin Koyo employment system have characterized the organization from M e i j i era to post-war Japan. Since these " l e g a c i e s " are, i n a r e a l sense, very much c h a r a c t e r i s t i c of Japanese business organiza- t i o n , the following discussion w i l l undoubtedly provide the basis for the main theme of the paper. -2- Sec. I. Entrepreneurship''" i n M e i j i Era The entrepreneur i s one of the most s i g n i f i c a n t elements i n the e a r l y stage of i n d u s t r i a l i z a t i o n . Without his i n i t i a t i v e , i n d u s t r i a l i z a t i o n cannot be c a r r i e d out successfully, no matter how abundant the c a p i t a l resources. Good and vigorous entrepreneurs are decisive i n economic progress i n that they perform the key functions of innovation, r i s k - t a k i n g , and 2 management. So, we s h a l l f i r s t begin with pioneers of modern Japanese e n t e r p r i s e . Back i n the e a r l y M e i j i era (the M e i j i Restoration was i n 1868), "the s o c i a l o r i g i n s of the new i n d u s t r i a l pioneers were diverse. Some were mer- chants; others came from f a m i l i e s t r a d i t i o n a l l y engaged i n a g r i c u l t u r e ; and f i n a l l y there were the samurai". Generally speaking, however, "the role of samurai fa m i l i e s i n founding Japan's modern business class can hardly be exaggerated". 4 The samurai were the upper, educated, class of the f e u d a l i s t i c Japan. In the beginning they had been respected as the governing c l a s s . But, with the growth of a money economy, they became poorer and poorer u n t i l at l a s t t h e i r s o c i a l status suffered a sharp d e c l i n e . Above a l l , the l i f e of lower-rank samurai became The term "entrepreneurship" i s used here as meaning, i n a broad sense, the a b i l i t y to recognize and e x p l o i t economic opportunities. o For a more detai l e d discussion on t h i s point, see a group of a r t i c l e s on entrepreneur, The American Economic Review (May 1968) pp. 60-98. W. W. Lockwood (ed.), The State and Economic Enterprise i n Japan (Princeton, N.J.: Princeton Un i v e r s i t y Press, 1965), p. 194. 4 I b i d . . p. 195- - 3 - a b i t t e r struggle against poverty, which i n turn led to a gradual dampening of t h e i r m a r t i a l s p i r i t . In f a c t , "most of them, becoming d i s p i r i t e d by poverty, sank into obscurity"."' Others (a minority) p r i m a r i l y from the lower ranks, however, made great e f f o r t s to absorb Western knowledge and engaged himself i n p o l i t i c a l a c t i v i t y , thus sustaining t h e i r ambitions. It was these industrious and am- bi t i o u s samurai who accomplished the M e i j i Restoration. Even a f t e r the Restora- t i o n , they were quite conscious of t h e i r e l i t e status and r e s p o n s i b i l i t i e s , and they appeared i n almost every f i e l d i n the society, to say nothing of the business f i e l d Japan's business pioneers, whether of samurai or commoner o r i g i n , had one c h a r a c t e r i s t i c i n common; i . e . , the Confucian education. "In Tokugawa times Confucianism was more than a learned s p e c i a l t y of scholars and r u l e r s ; i t was a way of l i f e and thought widely disseminated through every stratum of socie t y . " ^ Furthermore, Japanese Confucianism was d i f f e r e n t from that of i t s mother country, China. "It was eas i e r to understand and pra c t i c e ; i t was blended with Shintoism i n c e r t a i n respects, f o r instance the v i r t u e s of lo y a l t y to the emperor and f i l i a l piety were linked together at the center of the national e t h i c ; and i t modified Bushido, the feudal code of honor and duty, to embrace 5 I b i d . ^Shigeki Toyama (ed.), M e i j i no Ninaite, Jinbutsu Nihon no Rekishi (Tokyo: Yomiuri Shimbun, 1966), V o l . 11-12. ^Lockwood (ed.), op. c i t . , p. 196 -4- Q both the e t h i c of the warrior and the ethic of the r u l e r . " Thus, Japanese Confucianism did not lose i t s s i g n i f i c a n c e even a f t e r M e i j i Restoration and contributed much to generating leadership from both 9 commoner and samurai ranks. In addition, i t s f l e x i b l e pragmatism f a c i l i t a t e d the i n t r o d u c t i o n of Western knowledge and technology, and made the Japanese quick to employ the new knowledge once i t s p r a c t i c a l u t i l i t y f o r national defense and other purposes became c l e a r . Yet i t also c u l t i v a t e d a form of nationalism, even i n the process of adopting Western ways. Hence, " i t c e r t a i n l y provided an i n t e l l e c t u a l and moral climate that favored the emergence of t h i s new leadership." ̂  Or, to take t h i s further, i t might be said that Confucianism was conducive to breeding the entrepreneurial s p i r i t i n as posi- t i v e a manner as did the Protestant E t h i c i n the Western World. As a matter of f a c t , i n the early M e i j i years, although business leaders progressively absorbed Western ways of thinking and knowledge, they d i n g e d f i r m l y to the Confucian e t h i c a l and p h i l o s o p h i c a l values. This i s c l e a r i n t h e i r motivations for proceeding with t h e i r new careers. The natio n a l i n t e r e s t was t h e i r genuine concern, along with personal advantage. Such p a t r i o t i c phrases as "do your Transcendental e f f o r t i s very much c h a r a c t e r i s t i c of Confucianism. For example, "The Master said, In the, morning, hear. ,the, way; i n the evening, die content". Arthur Waley, The Analects of Confucious (London: A l l e n & Unwin, 1949), p. 103. Since transcendental e f f o r t i s one of the main q u a l i t i e s required for entrepreneurship, i t can be said that the l i n k between entrepre- neurship and Confucianism i s quite strong. Thus, i f Confucianism i s easy to understand and pra c t i c e , i t i s of no wonder that t h i s philosophy would help to breed the entrepreneurial s p i r i t . Lockwood (ed.), op. c i t . , p. 196. -5- b i t f o r your country" became t h e i r f a v o r i t e mottoes. This might suggest that such mottoes were used to conceal s e l f i s h purposes. "But not n e c e s s a r i l y . And whatever the motive of the speaker, the maxim was wholeheartedly accepted by the people . In short, a national consciousness, the sense of national c r i s i s that developed i n the closing days of Tokugawa was carried over into the M e i j i era. The slogan "sonno-joi" (Revere the Emperor; Expel the Barbarians) was altered a f t e r the Restoration to "bummeikaika" ( c i v i l i z a t i o n and enlightenment)."^ Business careers i n t h i s connection provided a good opportunity to be "enlightened" and i t helped to make Japan a strong and healthy nation able to cope with severe competition outside. "Gustav Ranis thus characterized Japanese entrepreneur i n t h i s early stage of i n d u s t r i a l i z a t i o n as 'community- 13 centered' i n contrast to Shumpeter's 'auto-centered' entrepreneurs." We 14 would c a l l them "Men of Japanese s p i r i t with Western knowledge." 1 1 I b i d . , p. 197. 12 T,., Ibid . 1 3 I b i d . ^ 40ne of the greatest M e i j i entrepreneurs i s Shibusawa E i i c h i . "He was the acknowledged leader of t h i s r i s i n g business community for almost the entire M e i j i and Taisho periods and was widely admired and imitated by the younger generation e s p e c i a l l y " . (Ibid., p. 209). "Speaking to bankers i n 1892, he remarked that the reasons why some of the i l l s of Western C a p i t a l i s t i c society had not yet appeared i n Japan were reverence for the Emperor and l o y a l t y to old t r a d i t i o n s . Confucian mentality was the bulwark; i f modern education should eradicate the influence of Confucian t r a d i t i o n and e t h i c , those i l l s would appear i n Japan too. The bankers, he concluded, had the moral r e s p o n s i b i l i t y to prevent such a development from taking place." (Ibid., p. 245). -6- Sec. 2 Emergence of Zaibatsu The evolution of ca p i t a l i s m has promoted concentration of c a p i t a l and has produced g i g a n t i c corporations,''" as can be seen i n every developed 2 country. These gig a n t i c corporations came into being as the Zaibatsu i n Japan. It i s a f t e r the Taisho period (the next era to M e i j i ) that M i t s u i , Mitsubishi, Sumitomo, and other Zaibatsu came to be dominant i n the Japanese economy; i n the M e i j i period, they had not developed enough to exert extensive c o n t r o l over the whole economy. In other words, "During the M e i j i period, except f o r some sectors, there was s t i l l much room f o r founder-type executives to manifest t h e i r entrepreneurial s p i r i t . " 3 Because of r e l a t i v e l y l i t t l e bureaucracy i n the corporate structure, many new and young employees i n the M e i j i era had opportunities to exert t h e i r a b i l i t i e s , and a c t i v e l y p a r t i c i p a t e i n entrepreneurial a c t i v i t i e s , such as i n i t i a t i n g innovation, taking daring r i s k s , and performing managerial functions. In so doing, they could take f u l l advantage of the size of the corporation, even under the Zaibatsu system; and yet, they contributed much to the growth of Zaibatsu i t s e l f . Toward the end 1 ' • For further discussion, see J . K. Galbraith, The New I n d u s t r i a l State (Boston: Houghton M i f f l i n , 1967). o "The Zaibatsu were the r i c h f a m i l i e s of prewar Japan (Mitsui, Mitsubishi, Sumitomo, etc.) who owned the great i n d u s t r i a l empires, sometimes delegating the job of management to hired managers, but sometimes, actively, c o n t r o l l i n g the boards of di r e c t o r s themselves." The Economist, Consider Japan (London: The Economist, 1963), p. 44 . ^Ryutaro Komiya (ed.) 3Postwar Economic Growth i n Japan (Berkeley: U n i v e r s i t y of C a l i f o r n i a Press, 1966), p. 232. -7- of the M e i j i period, however, "the f i r s t generation of the corporation came to be replaced by a group of more conservative executives whose main i n t e r e s t lay not so much i n expansion of the firms through new innovations as i n preservation and consolidation of the corporate bureaucracy through market protection and absorption of other firms" 4 We can quote a chemical industry case as one of the examples of such passive Zaibatsu p o l i c y . Y u j i r o Hayashi has observed: "Development of the chemical industry by old Zaibatsu firms was accelerated during the F i r s t World War, but since the postwar Depression began, not a single adventurous step was taken by those firms. - — When the new Zaibatsu, such as Nippon Chisso introduced a new method of producing ammonium sulphate from synthetic ammonia, the old Zaibatsu, continued to c l i n g to the obsolescent method of making i t from calcium cyanamide. The old Zaibatsu tended to keep up with new technology not through t h e i r own research and development but rather through absorption of other, newer firms. M i t s u i , M i t s u b i s h i , Sumitomo, and other old Zaibatsu would r e f r a i n from adopt- ing new production techniques u n t i l and unless t h e i r p r o f i t a b i l i t y was absolute- l y assured. They could r e a l i z e s u f f i c i e n t p r o f i t s by manipulating f i n a n c i a l and commercial means, and the problem of introducing new technology was soluble by way of patents a c q u i s i t i o n and absorption of other t e c h n i c a l l y progressive but f i n a n c i a l l y vulnerable firms." ^ This tendency was revealed not only i n the chemical industry but also i n other i n d u s t r i e s . Because of t h i s conservative and passive a t t i t u d e taken by the old Zaibatsu, some h o s t i l i t y was aroused among the leaders of the li Ibid . ^Yujiro Hayashi, Nihon no Kagaku Kogyo (Tokyo: Iwanami, 1957), pp 94-95, 104. -8- m i l i t a r y c l i q u e . A f t e r the Manchurian Incident, however, many old Zaibatsu changed t h e i r a t t i t u d e into one of much closer cooperation with and active p a r t i c i p a t i o n i n the military-economic operations i n the Chinese mainland. No one can deny that the old Zaibatsu helped Japan progress economically i n many respects. I t may be said, however, that they were, i n one way or the other, an obstacle to the process of growth i n that they tended to generate a bureaucratic atmosphere i n the corporate s t r u c t u r e . They may have been responsible f o r discouraging the creative a c t i v i t y of the entrepreneurial s p i r i t . -9- Sec. 3 Post-War Executives With Japan's t o t a l surrender i n the Second World War, such conditions were completely reviewed. "The United States government's memorandum on occupation p o l i c y , issued as early as September 22, 1945, already indicated the forthcoming Zaibatsu d i s s o l u t i o n . In reply, the Japanese Government disclosed i t s own plan for the d i s s o l u t i o n i n November of the same year. The basic o u t l i n e of the Japanese plan was accepted by the G. H. Q., and the l i q u i d a t i o n of the four largest Zaibatsu (Mitsui, Mitsubishi, Sumitomo, and Yasuda) and the purge of Zaibatsu f a m i l i e s and chief o f f i c e r s from t h e i r holding companies were announced." ^ Accordingly, there was a thorough withdrawal of the VIP's of pre-war Japanese i n d u s t r i a l and f i n a n c i a l circles,? In the f i r s t place, a sweeping personnel reform was taken at the top-executive l e v e l of the old Zaibatsu companies. "A t o t a l of 2,210 o f f i c e r s of 632 corporations and 56 members of the Zaibatsu f a m i l i e s were discharged from t h e i r previous posts." ^ Secondly, i n accordance with the Revised Purge Decree, "2,500 high-ranking o f f i c e r s and major stock owners of large corporations and banks, who were active during the war, were purged i n January 1947." These two measures resulted i n new and fresh opportunities for a younger generation of corporate managers. In other words, these high posts that had been so suddenly vacated had to be f i l l e d by those younger managers who were Komiya (ed.), op. c i t . , p. 233. 2 I b i d . , p. 234. 3 I b i d . - 1 0 - then department heads, s e c t i o n a l vice-presidents, plant managers, d i v i s i o n a l supervisors, and the l i k e . Yet, the tasks which they faced were extremely d i f f i c u l t , p a r t i a l l y because they were those of recovery and reconstruction i n the post-surrender mess, and p a r t i a l l y because they required f u l l - s c a l e research i n modern managerial-control techniques since they were faced with the complexity of post-war p o l i t i c a l , economic, and s o c i a l conditions. As a matter of f a c t , the rapid r i s e of labor unions and the concomitant m u l t i p l i c a t i o n of labor-management problems, the new and complex role of the government v i s - a - v i s r e - o r i e n t a t i o n and r e v i s i o n of the accounting procedures of business firms, the d i v e r s i f i c a t i o n as w e l l as i n t e n s i f i c a t i o n of competi- t i o n requiring firms constantly to engage i n r a t i o n a l i z a t i o n , product, develop- ment, and market research - - - a l l these meant a long l i s t of r a d i c a l l y d i f f e r e n t q u a l i f i c a t i o n s 4 demanded of the post-war generation of corporation managers . As a r e s u l t , some of the younger managers were unable to accomplish the arduous tasks set before them, and thus had to resign a f t e r a short period of time. This i s why they were c a l l e d " t h i r d - c l a s s executives." However, the majority of them did accomplish t h e i r tasks su c c e s s f u l l y and mastered t h e i r new jobs. The performance of these men may indicate that they were equipped with high managerial q u a l i t i e s as w e l l as the entrepreneurial s p i r i t . These managers, i n c i d e n t a l l y , may f a l l into the category of In order to get these newly demanded q u a l i f i c a t i o n s , many of them t r i e d to absorb the methods of American-style management c o n t r o l . With the "management-science boom" s t a r t i n g i n 1955, a great number" of publications concerning American management-science have come out, frequent management- cont r o l seminars have been held, and incessant v i s i t s of Japanese business groups to the States have been made. A l l of these may indicate the indefa- ti g a b l e enthusiasm of post-war executives for modern-management theory. "professional managers" although " i n the l i g h t of t h e i r performances and achievements, these men may be said to have the c h a r a c t e r i s t i c s of 'founders'." 6 In other words, the p r o f e s s i o n a l i z a t i o n of corporate managers i s one major phenomenon i n the post-war Japanese business organization. This was promoted by several measures. In the f i r s t place, "following G. H. Q. i n s t r u c t i o n s , executive prerogatives and compensations were reduced by a sizable margin to become comparable to those of professional managers i n the United States." 7 In the second place, "a major r e v i s i o n (1950) of Japanese commercial laws included numerous provisions designed to promote p r o f e s s i o n a l i z a t i o n of corporate managers, i n which the decision-making power of the d i r e c t o r s was s i g n i f i c a n t l y increased (and that of the stockholders reduced)". 8 j n the t h i r d place, p r i o r i t y was provided to "outside" buyers i n purchasing newly issued company stocks. Furthermore, "various s o c i a l forces which tend to regulate and r e s t r a i n corporate a c t i v i t y , such as labor unions, f i n a n c i a l i n t e r - mediaries, and i n s t i t u t i o n a l shareholders, became more powerful and complex than they had been before the war". 9 Due to these changes, along with the so-called -'The "professional manager" here i s broadly defined as an executor of the art of getting things done through and with people. For a more detailed d i s c u s s i o n of t h i s point, see Harold Koontz, "The Management Theory Jungle", Journal of the Academy of Management, Vol. 4 No. 3 (December, 1961). ^Komiya (ed.) op. c i t . , p. 243. 7 I b i d . , p. 235. 8 I b i d . 9 I b i d . , p. 236. -12- "democratization of securities-ownership", the corporate ownership and c o n t r o l were d e c i s i v e l y separated. This does not mean, however, that the professional managers are e x c l u s i v e l y dominant i n the Japanese industry. In other words, there i s another major phenomenon i n the post-war Japanese industry; i . e . the emergence of new firms set up a f t e r the war or of those which were on a smaller scale before the war. The founders of these companies may be c a l l e d "founder-type executives" ^ i n contrast to the previously mentioned "professional managers". As a matter of f a c t , "these i n d i v i d u a l s are noted for t h e i r c o l o r f u l 'entre- preneurship', although t h e i r educational and business backgrounds are too diverse to be generalized." ^ These men were, i n c i d e n t a l l y , i n a good p o s i t i o n for exerting t h e i r a b i l i t i e s and knowledge since the post-war conditions were very conducive to the f u l l working of entrepreneurship. "Before the war there were s o c i a l , economic, and even h i s t o r i c a l r e s t r i c t i o n s as an under-developed country. The Zaibatsu domination i s one example : i t meant a formidable set of conservative and passive forces opposing new plans, p o s i t i v e ideas, and fresh ventures of 12 entrepreneurs." With the end of the war, however, these r e s t r i c t i o n s were thoroughly removed, as was previously mentioned. As a r e s u l t , these founder-type executives The founder-type executive i s distinguished from the professional manager i n that the entrepreneurial s p i r i t i s more important than managerial s k i l l s and i n most instances he i s an owner of the company. 11-Komiya (ed.), op. c i t . , p. 243. Osamu Shimomura, Nihon K e i z a i Seicho Ron (Tokyo: Kinyu Z a i s e i J i j y o Kenkyukai, 1962), p. 297. -13- could take the i n i t i a t i v e i n the reconstruction and reorganization of the economy as well as setting an example for those who were s t i l l i n a state of upset and stagnation. "They helped to spread a cumulative, r e v i t a l i z i n g influence throughout the en t i r e c o u n t r y , w h e r e b y the whole economy was refreshed and became active again. There i s , i n t h i s connection, one common c h a r a c t e r i s t i c among the post- war executives, whether of the professional manager type or the founder-type. That i s , t h e i r p h i l o s o p h i c a l or mental backbone is.very much l i k e the entre- preneurs i n M e i j i . In.fact, they of ten say: "Do your b i t for your c o u n t r y " , ^ which reminds us of Confucianism. For instance, Sazo Idemitsu (President of one of the largest petroleum companies) writes as follows: "Business must be for the sake of the nation and i t s main objective must be the :welfare of the people To regard business only as profit-making w i l l lead to s h o r t - l i v e d e n t i t y or to ruin...... . " ^ For t h i s reason,. we can c a l l them."Men of Japanese s p i r i t with Western knowledge", the same t i t l e that we gave to the entrepreneurs i n Meigi. 13 Komiya (ed.), op. c i t . , p. 244. •^In t h i s connection, there are a number of books which have been wri t t e n by the business e l i t e i n the past decade or so, and i t i s characteris- t i c that each book, more or less, smacks of Confucianism. For instance, K a t s u j i Kawamata, Yumewa Kokusai Kigyoe (Tokyo: Diamond, 1966), Matasaburo Kinoshita, Nanio Shitaka-(Tokyo: Diamond, 1966), e t c . 15 Sazo Idemitsu, Waga 45 Nen Kan (Tokyo: Bungei Shunjyu, .1966). -14- Sec. 4 Labor Market i n M e i j i Era So f a r , we have concerned ourselves with the management sector of the Japanese industry. In discussing i t , we have neglected the labor side for the sake of a n a l y s i s . It i s not necessary to say that the labor side i s as s i g n i f i c a n t as the management i n t a l k i n g about business organization, since the labor sector i s one of the three p i l l a r s i n the i n d u s t r i a l r e l a t i o n s system. ^ In other words, the discussion about the management makes sense only with reference to i t s counterpart, i . e . the labor s i d e . In order to f u l l y understand the Japanese business organization, we s h a l l have to acquire some knowledge of the labor side as w e l l . So, l e t us go back about 100 years, and begin with the labor market i n the M e i j i era. The s i t u a t i o n and movement of the labor market i n the M e i j i era i s quite f a m i l i a r to most economic h i s t o r i a n s i n Japan. In the f i r s t place, i t i s w e l l known that the i n d u s t r i a l labor i n t h i s era, p a r t i c u l a r l y from the 1880's to the World War I period, had three main sources. That i s , "(a) A major portion of the i n d u s t r i a l work force was composed of unmarried females who were not expected to remain permanently (and, indeed, did not) i n i n d u s t r i a l work; (b) Of the males engaged i n i n d u s t r i a l work, only a small proportion remained r e g u l a r l y i n a given work place, while most of them e i t h e r floated back and f o r t h between farm and factory (so-called deka segi) or moved around from one workshop to another; and (c) Independent labor contractors or master workmen (Oyakata) for the main part provided labor for and withdrew i t from the indus- t r i a l workplaces under agreements with employers." For further discussion, see John Dunlop, I n d u s t r i a l Relations Systems (New York: Holt, 1958). 2 Lockwood (ed.), op. c i t . , p. 642. -15- During the greatest portion of t h i s period, turn-over rates had been quite high and i n t e r n a l wage systems had not been established except f o r the government agencies or i n s t i t u t i o n s and the few large-scale corporations. These conditions w i l l be explained i n the context of r e l a t i v e l y limited i n d u s t r i a l i z a t i o n which has the outstanding c h a r a c t e r i s t i c of dominating many of the small and quite unstable e n t e r p r i s e s . In many instances, wage rates had been determined by the Oyakata middle- men. They "developed highly p a r t i c u l a r i z e d and personalized methods f or sett i n g rates, usually without d i r e c t employer p a r t i c i p a t i o n " . ^ In fac t , most employers concluded a great many production contracts with Oyakata, who i n turn had the r e s p o n s i b i l i t y of fin d i n g the labor, determining methods of work, supervising operations, providing payment to the workers, and meeting the production deadlines. In order to carry out these r e s p o n s i b i l i t i e s , most Oyakata formed a band of followers (Kokata) and thus assured t h e i r own per- sonalized sources of labor supply. Oyakata nurtured t h e i r own band of followers p r i n c i p a l l y through personal connections i n the r u r a l v i l l a g e s . Therefore, "to secure a place i n an Oyakata's retinue (batsu) young workers had to find where these connections existed and to devise an entree into them." 5 Oyakata apparently held sway over s k i l l e d Kobata workmen, and by regula- t i n g the use of such key s k i l l e d Kokata, they could also manipulate the un- s k i l l e d . "Wage structures thus hinged c r i t i c a l l y upon the Oyakata-Kokata system." ^ Like most master-apprentice g u i l d s , Oyakata and Kokata were ti e d Showa Dojinkai (ed.), Wagakuni Chingin Kozo no Sh i t a k i Kosatsu (Tokyo: Shiseido, 1960), pp. 245-249- ^ Lockwood(ed.), op. c i t . , p. 642. 5 I b i d . 6 I b i d . , p. 643- -16- together through strong personal r e l a t i o n s h i p s . "To become an apprentice, a youngster had to r e l y upon intimate personal connections of family, f r i e n d s , or home community. Psychological forces such as on and g i r i (both are types of o b l i g a t i o n ) served to bind the Oyakata and his Kokata f o r l i f e . " Thus, "within the batsu of an Oyakata, there developed a status hierarchy based more on the time length of Oyakata-Kokata attachment and less p r e c i s e l y on the value of tasks performed". 8 Ibid 8 . Ibid . -17- Sec. 5 Emergence of the Prototype of Nenko With the end of the Russo-Japanese War, r a d i c a l changes occured i n the i n d u s t r i a l labor market. It i s i n t h i s period, as a matter of fac t , that the i n d u s t r i a l i z a t i o n progressed r a p i d l y ; a great number of large esta- blishments were set up, advanced Western technology was introduced, vast quantities of raw materials were imported, and sizable production capacities were developed. By the end of World War I, the agriculture-dominated economy had been gradually transformed into an industry-dominated one, although the " t r a d i t i o n a l industry", mainly i n the form of small family-centered shops, had expanded along with the development of modern industry. That i s , " i n the expanding t r a d i t i o n a l sectors, most of the labor and wage practices retained the c h a r a c t e r i s t i c s of the M e i j i period above, e s p e c i a l l y since many Oyakata themselves became small business operators; but a number of sharp departures were developed i n the modern i n d u s t r i a l sectors." This w i l l be accounted for l a r g e l y by the new technology and the scale of modern industry which "made i t economically and administratively f e a s i b l e to f i x workers i n a single work place, to employ males rather than females, and to modify the haphazard and personalized methods of Oyakata for r e c r u i t i n g , s e l e c t i n g , t r a i n i n g , and 2 assigning workers". One of the s i g n i f i c a n t changes was the decline of Oyakata co n t r o l over wage r a t e s . This was made possible primarily by two measures. F i r s t , the government p o s i t i v e l y widened the multi-track secondary school system under the increasing pressure of modern industry. A steady and r e l i a b l e source of Ibid., p. 645. 2 I b i d . -18- labor was thus assured. In addition, most large firms set up inplant t r a i n i n g programs so that the new school graduates could apply t h e i r know- ledge to s p e c i f i c techniques i n production processes. Staff s p e c i a l i s t s f or d i r e c t r e c r u i t i n g and t r a i n i n g were also supplied from the same source, which helped to circumvent continued reliance upon personalized Oyakata connections. "The well-known arrangement among the major spinning companies to divide up the labor supply on a geographical basis was a major example of the work of 3 these d i r e c t l y employed p r o f e s s i o n a l s . " Such steps alone, however, could not thoroughly eradicate Oyakata con t r o l , p a r t i c u l a r l y over e x i s t i n g supplies of labor s k i l l s . "With s k i l l s s t i l l highly personalized, management was at a serious disadvantage i n i t s lack of expertise on t e c h n i c a l production problems (most o f f i c i a l s were univer s i t y graduates without p r a c t i c a l shop experience) . Thus, i t was not a good idea to destroy Oyakata co n t r o l completely. Rather, t h e i r cooperation had to be sought. "To gain t h i s , employers offered a v a r i e t y of inducements to the Oyakata, guarantees of l i f e l o n g attachment to the enterprise,^ regularized s a l a r i e s and salary progression, management recognition of Oyakata-led unions or the establishment of company unions,^ and i n some cases managerial or supervisory t i t l e s . " 7 3 I b i d . , p. 647. 4 I b i d . ^This i s c a l l e d Shushin Koyo and i s s t i l l dominant i n today's enterprise ^ I t should be noted here that today's t y p i c a l union i s the so-called "company union." ^Lockwood (ed.), op. c i t . , p. 647. -19- In the f i n a l analysis, the Oyakata and t h e i r retinues were brought into the firm and the former i n t e r f i r m m o b i l i t y was phenomenally reduced. Out of these organizational re-arrangements, i n c i d e n t a l l y , the now w e l l - known Nenko Joretsu (length of service or experience) wage system came out among modern i n d u s t r i a l firms. "Once established within a firm, Oyakata usually received the highest wages and benefits, and t h e i r followers, as mentioned, were scaled down according to length of attachment to the Oyakata. For t h i s reason, even the new school graduates had to start t h e i r careers at the bottom of t h i s hierarchy. "Progression up the scale depended on demons- t r a t i o n of f a i t h f u l devotion to work and respect f o r the status system." 9 8 I b i d . , p. 648. 9 I b i d . - 2 0 - Sec. 6 Labor Movement i n Postwar Period The end of the Second World War and the t o t a l surrender of Japan brought many changes i n the labor side of the e n t i r e economy. Following the labor reform p o l i c i e s under the Occupation, there developed trade unionism as a countervailing force, and the e q u a l i z a t i o n of income opportunities f or the wage earning class was promoted. "The economic objec- t i v e s , then, were to achieve both an increased labor share and income re- d i s t r i b u t i o n . To implement t h i s , labor was guaranteed the righ t to organize, bargain, and s t r i k e ; u n i v e r s a l labor standards were enacted; s o c i a l s ecurity systems were launched; and public employment exchanges greatly expanded, while labor contracting agents were outlawed or subject to s t r i c t supervision." * Along with these changes, what occurred with i n the fi r m was that the t r a d i t i o n a l Nenko and Shushin Koyo ( l i f e t i m e employment) have been greatly refined and transformed into the present system. In f a c t , "union pressure no doubt has led to a greater systematization of Nenko Joretsu by requiring managements to make more exact s p e c i f i c a t i o n s of the incremental pay increases that a permanent worker can expect as he goes up the career ladder i n h i s en t e r p r i s e . Also, i t has eliminated a r b i t r a r y treatment of union members i n the d i s t r i b u t i o n of base wage increases and bonus payments and i n dispensing o of non-money welfare b e n e f i t s . " Through the refinement of Nenko and Shushin Koyo, however, trade unionism helped to strengthen the attachment of the unionized worker to h i s Ibid., pp. 651-652. Ibid., p. 656. -21- p a r t i c u l a r e n t e r p r i s e . That i s , the so-called "enterprise union", which i s t h e i t y p i c a l Japanese union today, i s dependent upon the preservation of the Nenko and Shushin Koyo systems to a great extent. Strong "enterprise consciousness" i s c h a r a c t e r i s t i c among Japanese unionists,;and various economic functions of, unionism are executed at the plant or enterprise l e v e l . "When the primary unit i s the plant, a federation of a l l unions connected with the same enterprise i s normally established. The next l e v e l of organization i s e i t h e r a regional or p r e f e c t u r a l grouping, or d i r e c t a f f i l i a t i o n on an i n d u s t r i a l basis with a national union. These national unions i n turn are generally members of one of the national federa- t i o n s . " 3 However, "the struggle on the part of national federation o f f i c i a l s to 4 enlarge their, power and functions has been exceedingly d i f f i c u l t . " In addition, "more than two and one-half m i l l i o n unionsmembers remain apart from 5 such federations." In other words, the "company unionism" dominates the ent i r e labor sectors of Japanese industry, and t h i s -is primarily because of the widespread use of Nenko and Shushin Koyo systems. 3 I b i d . , pp. 670-671. 4 l b i d ., p. 671. "*Ibid ., p. 671. For more d e t a i l s , see Ministry of Labor, the D i v i s i o n of S t a t i s t i c s and Research. Basic Survey Report on Trade Unions, 1963. -22- SUMMARY In t h i s Part, we have examined b r i e f l y both the management and labor sides of Japanese business organization from a h i s t o r i c a l point of view. We have found, f i r s t of a l l , that the maxim "do your b i t f o r your country" has li v e d i n the minds of Japanese management. Since t h i s philoso- p h i c a l or mental backbone i s a strong "bond" which t i e s together Japanese management from M e i j i to post-war Japan, we c a l l e d them "Men of Japanese s p i r i t with Western knowledge". We have also found that Nenko and Shushin Koyo have survived many r a d i c a l changes i n the post-war Japan; and that, because of the preservation of these systems, the "enterprise union" i s dominant i n the ent i r e labor sector of Japanese industry. In short, these " l e g a c i e s " are some of the main c h a r a c t e r i s t i c a t t r i - butes of Japanese business organization. As such the previous discussion was intended to provide the basis f o r the main theme of the paper, i . e . , viewing Japanese business organization from a mentality perspective. -23- PART II In t h i s part, we w i l l discuss the very core concept of t h i s t h e s i s , i . e . , the "YAMATO SPIRIT" (Japanese me n t a l i t y ) . Since the "YAMATO SPIRIT" i s a mentality, i t has the a t t r i b u t e s of mentality i n general. That i s , the "YAMATO SPIRIT", as a mentality, functions as a broad and rough framework so that i t i s the basis f o r Japanese ways of thought and a c t i o n . Without such a basis, everything would be i n a state of extreme complexity and chaos, and thus there would be no development of ways of thought and a c t i o n . On the other hand, however, since Japanese ways of though and a c t i o n are based on the "YAMATO SPIRIT", they cannot go beyond t h i s mentality. In other words, the "YAMATO SPIRIT" as a mentality i s a l i m i t a t i o n on the development of Japanese ways of thought and a c t i o n . Or, at least, i f forms a curb that regu- lates the d i r e c t i o n of Japanese development. This Part i s composed of three sections. In Sec. 1, we w i l l discuss the three elements on which the "YAMATO SPIRIT" i s based, and then i n Sec. 2, we w i l l a r r i v e at the d e f i n i t i o n of "YAMATO SPIRIT" by r e f e r r i n g to Dr. Nishida's philosophy. F i n a l l y , i n Sec. 3, we w i l l take up two d i s t i n - guishing t r a i t s of Japanese mentality. As might be expected, t h i s Part, together with Part I, i s intended to provide the basis f o r the main theme of the paper, i . e . , viewing Japanese business organization from a mentality perspective i n Part I I I . -24- Sec. 1 What i s Japanese Mentality based on? Japanese mentality i s , i n a general sense, based on "Shinto", "Con- fucianism", and Buddhism". The "Shinto" i s the archaic, indigenous r e l i - gious cu l t of Japan and the essence of "Shinto" i s a genuine respect f o r the past. The "Confucianism", was introduced from China'and i t s moral order i s concerned with the present. "Buddhism" was introduced from India v i a China and Korea, and emphasizes the future and e t e r n i t y . Since our mentality rests on t h i s t r i a d , i n order to fi r m l y grasp the meaning of "YAMATO SPIRIT", we must f i r s t acquire an understanding of "Shinto", "Confucianism", and "Buddhism". So, l e t us describe these. "In ancient times the soul of Japan found i t s expression i n Shinto. For over two thousand years t h i s e t h i c a l expression of the deepest s e l f of the Japanese people has preserved i t s e l f with undiminished directness, and reaches into modern l i f e , l i k e a stratum of ancient rocks, together with l a t e r layers of r e f l e c t i v e and sophisticated consciousness. Shinto represents the rhythm of l i f e of the Japanese people as a s o c i a l and r a c i a l whole, and encompasses a l l phases of communal a c t i v i t y . It received v i s i b l e form as a mythology and as a 'national c u l t ' but l i v e s i n v i s i b l y and formlessly i n the hearts of every i n d i v i d u a l . Shinto i s the consciousness of the national hearth, of 'NIPPON' as et e r n a l home and holy o r d e r . - — - I n Shinto there i s a f e e l i n g that nature i s sacred and pure. This f e e l i n g i s expressed i n the veneration of mountains, w a t e r f a l l s and trees, as w e l l as i n the pure and simple architecture of the ce n t r a l Shinto shrine at Ise. The old Japanese State philosophy was based on the concept of 'kokutai' (landbody), which means the consciousness of the unity and natural sacredness of the country. ---A fundamental feature of a l l -25- Japanese philosophy i s the respect for nature as something sacred, pure, and complete i n i t s e l f . Above a l l , Shinto means reverence for the imperial and f a m i l i a l ancestors. We might even speak of a communion between the l i v i n g and the dead,--an eter n a l presence of the past." 1 Shinto means the e t e r n a l presence of the past and i s a deeply-rooted emotional trend i n Japanese l i f e . In contrast to t h i s , "Confucianism forms a r a t i o n a l and sober moral code of s o c i a l behavior. Confucian 1 ethics formed the s o l i d structure of Japanese society i n olden days and, despite moderniza- t i o n , even today. This system of c l e a r l y defined duties i s l i k e a l a t e r r a t i o n a l i z a t i o n of the e a r l y emotional t i e s i n family and s t a t e . Confucian eth i c s consist of the following f i v e r e l a t i o n s h i p s : Emperor-subject, father- son, older brother-younger brother, man-wife, f r i e n d - f r i e n d . Around t h i s fundamental structure, we find woven a wealth of p r a c t i c a l rules of etiquette and customs. The conviction that there i s a c o r r e l a t i o n between the outward forms of s o c i a l behavior and the inward form of character, l i e s at the base of Confucian philosophy. From t h i s root springs a strong desire for form and d i s t i n c t d e l i m i t a t i o n . It i s here that the family system, which i s the l a s t i n g foundation of Japanese communal l i f e , finds i t s moral j u s t i f i c a t i o n . Here a l l duties are c l e a r l y defined and delimited." ^ "While Shintoism means the e t e r n a l presence of the past, and Confucianism the p r a c t i c a l , moral shaping of the present, Buddhism opens the gates to the eter n a l future. Japanese philosophy, which has kept aloof from the dogmatism •l-Kitaro Nishida, I n t e l l i g i b i l i t y and the Philosophy of Nothingness (Tokyo: Maruzen, 1958), pp. 7-8. 2 I b i d . , pp. 8-9. -26- of Buddhist sects, i s yet inseparable from the s p i r i t u a l atmosphere of Buddhism. As Mahayana Buddhism, i t has dominated Japanese minds and has ruled i n t e l l e c t u a l l i f e f o r 1,500 years. Mahayana Buddhism i s b a s i c a l l y p a n t h e i s t i c ; i t s p r e v a i l i n g idea i s that Buddha i s i n a l l things, and that a l l things have Buddha-nature. A l l things, a l l beings are p o t e n t i a l l y predestined to become Buddha, to reach s a l v a t i o n . To comprehend the Buddha-nature i n a l l things, an approach i s required which ignores the p e c u l i a r i t i e s of things, and experiences absolute oneness. When the p e c u l i a r i t y and i n d i v i d u a l i t y of a l l things, and also of the human ego disappear, then, i n absolute emptiness, i n 'nothingness 1, appears absolute oneness. By meditative submersion into emptiness, space, nothingness, such r e v e l a t i o n of the oneness of a l l beings brings about absolute peace of mind and salvatio n from s u f f e r i n g Recalling what was said above about unity and sacredness of nature i n Shintoism, i t can be understood why Mahayana Buddhism with i t s pantheistic trend could take root i n Japan, and l i v e f o r so many centuries i n perfect harmony or even symbiosis with Shintoism. Although during the M e i j i revolution Shintoism was restored as an independent c u l t , Buddhism and Shintoism s t i l l l i v e i n peaceful co-exist- ence i n the Japanese heart. "In contrast to the early Indian form of Hinayana Buddhism, Mahayana Buddhism considers i t s e l f neither pessimistic nor h o s t i l e toward nature and l i f e . Again and again Japanese Buddhists a f f i r m that Buddhism.is not negative but p o s i t i v e . This i s to be taken i n the pantheistic sense of Mahayana Buddhism. Even the fundamental concept of 'MU' (Nothingness) receives a p o s i t i v e meaning through the doctrine of the i d e n t i t y of the one with the many. The Buddhists use the word 'soku' which means 'namely 1, and say: 'the world i s one, namely many.',.".3 3 I b i d . , pp. 9-11. -27- Of a l l Buddhist sects and schools i n Japan, "Zen" i s the most dominant and popular one and i t i s r e a l l y the " l i v i n g Buddhism of Japan". Zen i s not a system formed upon l o g i c and a n a l y s i s . In t h i s sense, Zen i s not a philosophy i n the ordinary a p p l i c a t i o n of the term. Then, i s Zen a r e l i g i o n ? Since i t has no God to worship and no ceremonial r i t e s to observe, i t i s not a r e l i g i o n i n the popular sense of the word. According to D. T. Suzuki, "Zen i s free from a l l these dogmatic and ' r e l i g i o u s ' encumbrances. When I say there i s no God i n Zen, the pious reader may be shocked, but t h i s does not mean that Zen denies the existence of God; neither den i a l nor af f i r m a t i o n concerns Zen. When a thing i s denied, the very den i a l involves something not denied. The same can be said of a f f i r m a t i o n . This i s i n e v i t a b l e i n l o g i c . Zen wants to r i s e above l o g i c , Zen wants to fi n d a higher a f f i r m a t i o n where there are no antitheses. Therefore, i n Zen, God i s neither denied nor i n s i s t e d upon; only there i s i n Zen no such God as has been conceived by Jewish or C h r i s t i a n minds. For the same reason that Zen i s not a philosophy, Zen i s not a r e l i g i o n " . 4 "Zen means a f u l l l i f e . Every moment of our human existence can be decisive and can become the s e l f - r e v e l a t i o n of r e a l i t y : a quiet moment of con- templation i n a tiny tea p a v i l l i o n , a fine autumn r a i n outside, the picture i n the alcove showing two vigorously drawn Chinese characters: 'Lion Roars'. Real- i t y i n i t s f u l l vigour i s completely and undividedly present i n t h i s quiet moment of contemplation. Zen means concentrated by f l e x i b l e force, an inwardly r i c h l i f e , existence from the centre, completely balanced freedom at every moment. A Zen Buddhist i s not s a t i s f i e d to merely understand l i f e , but rather, he aspires .to grasp the essence of r e a l i t y . "D. T. Suzuki, An Introduction to Zen Buddhism (London Rider, 1949), p. 39. Nishida, op. c i t . , p. 18. -28- Sec. 2 What i s the "YAMATO SPIRIT" Now that we have gained some knowledge of the three elements of YAMATO SPIRIT, i . e . , Shintoism, Confucianism, and Buddhism, the next task w i l l be to draw a common denominator from these three elements. In other words, what we are searching f o r i s the thread which t i e s the threefold basis together 'in the whole personality; since that must be the r e a l essence of YAMATO SPIRIT. In order to come up with the d e f i n i t i o n of YAMATO SPIRIT, therefore, we w i l l quote Dr. Nishida's philosophy because, f i r s t and foremost, his philosophy i s thought of as an attempt to synthesize these three elements i n the t o t a l personality of the i n d i v i d u a l . In developing the " l o g i c of nothing- ness", he attempts to give a semantic rendering of t h i s synthesis. For t h i s reason, to understand h i s philosophy would be to grasp the thread which i s the core of Japanese mentality. So l e t us begin with the introduction to his philosophy. Dr. Nishida conceives r e a l i t y as an inseparably interwoven unity of . subjective and objective elements as unity of subject and object. Everything that i s regarded as being r e a l , i s subjective-objective. True r e a l i t y on the one hand forms a unity, on the other hand i t i s an etern a l s p l i t t i n g up and ete r n a l e v o l u t i o n . Reality contains endless contradictions which, however, form a u n i t y . On the side of unity we fi n d a r t i s t i c i n t u i t i o n and on the side of d i v i s i o n and evolution we find moral o b l i g a t i o n . In the core of the world, there i s neither one nor many.-'- Nishida, op. c i t . , pp. 15-40. -29- From t h i s l i n e of argument, i t i s easy to see "how much Dr. Nishida must have been attracted by Hegel's concept of a 'concrete l o g i c ' 2 which t r i e s to grasp r e a l i t y i n i t s "dynamic h i s t o r i c a l unfolding". In fa c t , "as i n Hegel, the state i s the perfect i n t e l l e c t u a l form of society and the moral substance of the h i s t o r i c a l species". In other words, "the personality must keep i n mind that i t exi s t s only i n the whole of the people and i n the whole of the world". 4 However, his "Absolute Nothingness", which i s the e s s e n t i a l concept of Nishida's philosophy, i s not l i k e Hegel's "Geist", but i s "nothingness" i n the Buddhist sense. In other words, although he makes use of a methodology s i m i l a r to Hegel,s, the backbone of his philosophy i s p r e c i s e l y Zen Buddhism. Thus, "Nishida's t r e a t i s e ' ' U n i t y of Opposites' may be ca l l e d a grandiose metaphysics of hi s t o r y as r e a l i z a t i o n of the unreal, and at the same time a profound meditation on a Zen-problem: the form of the formless".^ Dr. Nishida i s much concerned with the wholeness and completeness of human existenne through p r a c t i c e . It i s t h i s way i n which the Japanese desires e x i s t e n t i a l mastery i n his contact with the world. He wants to "grasp" l i f e . This i s the reason why the Buddhist does not s t r i v e to know Buddha, but rather s t r i v e s to become a Buddha himself. This i s also why Zen emphasizes the grasping of a f u l l l i f e by p r a c t i c e . Following Dr. Nishida's argument, the world i s envisaged as a task of overcoming the con t r a d i c t i o n of the i n d i v i d u a l standing alone against the 2 I b i d . , p. 49. 3 I b i d . , p. 60. 4Ibid.„ p. 61. 5 I b i d . , p.64. -30r Absolute. The " h i s t o r i c a l species" or i n other words, the people, act as the mediator between the many and the one. However, i f the i n d i v i d u a l i s thoroughly determined by the fixed form of the past, i t would eventually lead to the death of the " h i s t o r i c a l species". The creative productivity of a nation l i v e s only i n each of i t s members. Only when the i n d i v i d u a l i s creative can that which stands behind him also become apparent i n h i s work. In an analogous manner, i t i s the " h i s t o r i c a l species" through which the h i s t o r i c a l world forms i t s e l f by " a c t i o n - i n t u i t i o n " . As has been seen, Dr. Nishida's fundamental problem i s how to achieve the i d e n t i t y of the one with the many, e.g. that of the i n d i v i d u a l with the nation;. .And he comes to a conclusion that t h i s has to be done through "Nothing- ness . This very problem of how to a t t a i n the i d e n t i t y of one with many, i n - c i d e n t a l l y , i s at the same time the problem of synthesizing the three elements of YAMATO SPIRIT i n the whole pe r s o n a l i t y . In other words, the s e l f - c o n t r a - d i c t o r y i d e n t i t y of the one with the many i s the c r u c i a l factor not only i n t h i s philosophy, but also i n the determination of the t o t a l p e r s o n a l i t y . This i s revealed i n Dr. Nishida's philosophy per se. In addition, t h i s can be more e a s i l y seen by r e c a l l i n g the fact that the Japanese wants to "grasp" l i f e , and i n order to do so, his philosophy must at the same time be his whole l i f e . Thus, we arr i v e at the d e f i n i t i o n of the e s s e n t i a l nature of the bond which t i e s the three elements together i n the whole pe r s o n a l i t y . That i s , YAMATO SPIRIT, i s an e f f o r t to a t t a i n the i d e n t i t y of one with many through '.Nothingness '". ^Nothingness i s the " l a s t place for every being, and, therefore, i s i t s e l f no 'being". As the l a s t and enveloping place, Nothingness has the metaphysical function of God i n C h r i s t i a n philosophy. Ibid., p. 248. -31- Sec. 3 Distinguishing T r a i t s of Japanese Mentality Now that we have arrived at the d e f i n i t i o n of YAMATO SPIRIT, l e t us next examine what t r a i t s or tendencies i t has. Since some t r a i t s of YAMATO SPIRIT are c l o s e l y linked to the c h a r a c t e r i s t i c a t t r i b u t e s of Japanese business organization, t h i s section w i l l serve the function of prologue to Part I I I . Broadly speaking, there are two di s t i n g u i s h i n g t r a i t s i n Japanese mentality. In the f i r s t place, Japanese mentality, as an e f f o r t to a t t a i n the i d e n t i t y of one with many through Nothingness, i s t y p i c a l l y seen i n the att i t u d e of Japanese people toward the phenomenal world. "The Japanese are w i l l i n g to accept the phenomenal world as Absolute".''" A Japanese i n d i v i d u a l regards "the phenomenal world i t s e l f as Absolute and re j e c t s the recognition of any- 2 thing e x i s t i n g over and above the phenomenal world". This way of thinking can be noticed i n Shintoism, f o r instance. "Nowhere i s there a shadow i n which a God does not r e s i d e : i n peaks, ridges, pines, cryptomerias, mountains, r i v e r s , seas, v i l l a g e s , p lains, and f i e l d s , everywhere there i s a God. We can receive the constant and intimate help of these s p i r i t s i n our tasks". Likewise, Buddhist philosophy was received and assimilated on the basis of t h i s pheno- menalist way of thinking. For example, "the Chinese translated 'dharmata' i n Sankrit as the 'rea l aspect of a l l things'. This concept refers to the r e a l Hajime Nakamura, Ways of Thinking of Eastern Peoples (Hawaii: East- West Center Press, 1964), p. 350. 2 I b i d - 3 I b i d . -32- aspect of a l l kinds of phenomena i n our experience, and therefore i s composed of two d i s t i n c t contradictory elements, ' a l l things' and 'the r e a l aspect'- But, Japanese Buddhism gave t h i s phrase the i n t e r p r e t a t i o n which 4 emphasized that 'the r e a l ..aspect i s a l l things'" In other words, "the truth which people search f o r i s , i n r e a l i t y , nothing but the world of our d a i l y experience"."* There i s nothing that i s not exposed to us. "The f l u i d aspect of impermanence i s i n i t s e l f the absolute st a t e " . The same can be said, i n t h i s connection, of Japanese Confucianism. In fact, "most of the Japanese Confucianist scholars, even when they follow the metaphysical doctrines of Chu Hsi, never choose the dualism of L i and C h ' i ; . A l l of the c h a r a c t e r i s t i c - a l l y Japanese scholars believe i n phenomena as the fundamental mode of e x i s t - ence. They unanimously r e j e c t the quietism of the neo-Confucianists of the Sung p e r i o d " . 7 This c h a r a c t e r i s t i c tendency of thought to take the phenomenal world as absolute, i n c i d e n t a l l y , gives r i s e to "the acceptance of man's natural d i s p o s i - t i o n s " i n Japanese mind. "Just as the Japanese are apt to accept, external and objective nature as i t i s , so they are i n c l i n e d to accept man's natural desires and sentiments as they are, and not s t r i v e to repress or f i g h t against them". 8 To take an example, "Japanese Buddhist ideas are preached with frank references to matters of love, for sexual love i s not considered to be incompatible with r e l i g i o u s matters. Not only has the s i g n i f i c a n c e of the human body been recognized, but also the idea of taking good care of one's body has become 4 I b i d . , p. 351. 5 I b i d . , pp. 351-352. 6 I b i d . , p.. 352. 7 I b i d . , p. 355. 8Ibid., p. 372. -33- Q prominent i n Japanese Buddhism". "Whereas the majority of the Indians and the Chinese i n general t r y to d i s t i n g u i s h the world of r e l i g i o n from that of the lusts of the f l e s h , there i s a latent tendency among the Japanese to i d e n t i f y the one with the o t h e r " . ^ The acceptance of man's natural d i s p o s i t i o n s , i n turn, i s c l o s e l y related to the "emphasis on benevolence" and "the s p i r i t of tolerance" i n Japanese mind. In f a c t , according to the c l a s s i c a l records, "the Japanese generally treated conquered peoples t o l e r a n t l y . There are many ta l e s of war, but there i s no evidence that conquered people were made into slaves i n toto. Even prisoners were not treated as slaves i n the Western sense of the word. Although there remains some doubt as to whether or not there existed a slave- economy i n ancient Japan, the percentage of slave-servants was very small i n the whole population. It may be safely concluded, therefore, that slave labor was never used on a large s c a l e " . ^ Such a s o c i a l condition, i n turn, "gives r i s e to the tendency to stress 'harmony' among the members of a society rather than dominance based on powerr This i s not to deny e n t i r e l y the presence of the power r e l a t i o n s h i p i n Japanese society since ancient times. The s o c i a l r e s t r i c t i o n s and pressures upon the i n d i v i d u a l might have been indeed stronger i n Japan than i n many other countries, Nevertheless, i n the consciousness of each i n d i v i d u a l Japanese, the s p i r i t 12 of c o n c i l i a t i o n and tolerance i s pre-eminent". 9Ibid.,p381. 1 0 I b i d . , pp. 379-380. 1 1 I b i d . , pp. 383-384. 1 2 I b i d . , p. 384. 34 - Taken together, "the tendency to recognize absolute s i g n i f i c a n c e i n everything phenomenal leads to the acception ( s i c ) of the j u s t i f i c a t i o n of any view held i n the mundane world, and ends up with the a d a p t a b i l i t y of any ' 13 view with the s p i r i t of tolerance and c o n c i l i a t i o n " . In fa c t , owing to the tolerant and more open side of t h e i r nature, "the Japanese assimilated the heterogeneous cultures of foreign countries without, much repercussion. They t r y to recognize the value of each of these d i f f e r e n t c u l t u r a l elements, and at the same time they endeavor to preserve the values inherited from t h e i r own past. They seek nation a l unity while, permitting the co-existence of hetero- geneous elements".''"4 As has been seen, "the tendency to take the phenomenal world as absolute" i s one of the most s i g n i f i c a n t t r a i t s of YAMATO SPIRIT. In addi t i o n to t h i s t r a i t , i n c i d e n t a l l y , we can c i t e another d i s t i n g u i s h i n g c h a r a c t e r i s t i c of Japanese mentality, i . e . "the tendency to emphasize a limited s o c i a l nexus". This tendency involves the c h a r a c t e r i s t i c of attaching great importance to human r e l a t i o n s , and i s manifest outwardly i n the Japanes practice of the rules of propriety. "Japanese greetings are highly elaborate. Forms of p o l i t e - ness have been observed not only among strangers but even among family members of upper classes, .....This habit gave r i s e to the elaboration of h o n o r i f i c words and phrases i n t h e i r language. It i s said that i f a l l such h o n o r i f i c words were taken out of Lady Murasaki's Tale of Genji, the book would be reduced to one h a l f i t s l e n g t h " . ^ 1 3 I b i d . , p. 386. 1 4 I b i d . , p. 400. 1 5 I b i d . , pp. 407-408. 35 This habit of stressing proprieties>is h i s t o r i c a l l y associated with t h e i r a s s i m i l a t i o n of Confucianism. "Confucianism, which was adopted with enthusiasm, deals la r g e l y with concepts of propriety". "These Confucian concepts of propriety were much appreciated as soon as they were imported with Chinese c i v i l i z a t i o n , as one may, well gather from Prince Shotoku's Injunctions (604 A.D.), A r t i c l e 4 of which states that i f the duty of the i n f e r i o r i s obedience, the duty of the superior i s decorum. This does not mean, however, that the concepts of propriety were practiced i n Japan simply as they were l a i d down by Confucianism i n China. The p r a c t i c a l rules i n Japan were to d i f f e r considerably from the Chinese r u l e s . It was as s o c i a l concepts and as a means of preserving s o c i a l s t a b i l i t y and the clan system that Confucian p r o p r i e t i e s were appreciated, and as s o c i a l concepts the Japanese and Chinese p r o p r i e t i e s had much i n common. And i t was such points of s i m i l a r i t y that made i t easy f o r the Japanese r u l i n g class to enforce the rules of propriety upon the people without undue resistance and f r i c t i o n ; Confucian precepts would not have .spread so widely among the people i f they had been adopted merely as counsels of government."^ Too much stress upon the human r e l a t i o n s , i n c i d e n t a l l y , leads to "the tendency of s o c i a l r e l a t i o n s h i p to supersede or take precedence over the i n d i - v i d u a l " . And, "consciousness of the i n d i v i d u a l as an e n t i t y appears always i n the wider sphere of consciousness of s o c i a l r e l a t i o n s h i p s , although the s i g n i - ficance of the i n d i v i d u a l as an e n t i t y i s s t i l l recognized; the recognition of the unique value of i n d i v i d u a l s i s lessened, when he i s placed i n a s o c i a l 18 c l a s s " . In fa c t , most Japanese "tend to look upon man as a being subordinated 1 6 I b i d . . p. 408. 1 7 I b i d . 18 Ibid., p. 409. -36- to a s p e c i f i c and limited human nexus; they conceive him i n terms of h i s 19 r e l a t i o n s to a circumscribed s o c i e t y " . "A human event, i n th i s way of thinking, i s not a purely personal event but an event having some value and 20 emotional s i g n i f i c a n c e i n a narrowly given sphere of s o c i a l r e l a t i o n s " . Thus, "the people to whom a human nexus i s important place great moral emphasis upon complete and w i l l i n g dedication of the s e l f to others i n a s p e c i f i c human c o l l e c t i v e . This a t t i t u d e , though i t may be a basic moral requirement i n a l l peoples, occupies a dominant p o s i t i o n i n Japanese s o c i a l l i f e . Self-dedica- t i o n to a s p e c i f i c human nexus has been one of the most powerful factors i n 21 Japanese h i s t o r y " . In t h i s connection, "the tendency to confine values to a limited human nexus reveals i t s e l f i n Japan i n absolute devotion to a s p e c i f i c i n d i v i d u a l as a concrete symbol of Japanese s o c i a l values. The Japanese, unlike the Indians and Chinese, prefer not to conceive of a human nexus i n an abstract way. They are apt rather to follow an i n d i v i d u a l as a l i v i n g representative of that nexus,-- the 'family' i n ancient Japan was not an abstract concept, but was embodied i n the person of the l i v i n g family head. There i s also a tendency to i d e n t i f y the Shogun with the bakufu (shogunate government), the Emperor with the State. In the feudalism of the West, r e l a t i o n s between lord and v a s s a l were extremely complex, and the notion of contract played an import- ant part i n such r e l a t i o n s . In feudal Japan, however, t h i s r e l a t i o n s h i p was a simple one; the vassal devoted his e n t i r e existence to h i s l o r d . This gave r i s e to the motto 'a l o y a l v a s s a l does not know two masters'. This way of thinking, l 9 I b i d . , p. 414. 2 or,-.. Ibid . 21 T, ., Ibid. -37- c h a r a c t e r i s t i c of Japanese society i n general, manifests i t s e l f among Japanese thinkers i n an attitu d e of absolute devotion and obedience to a 22 s p e c i f i c i n d i v i d u a l " . Ibid., p. 449. -38- SUMMARY We have seen that YAMATO SPIRIT i s based on Shintoism, Confucianism, and Buddhism. Shintoism means the etern a l presence of the past, and as such i s the recognition of the i d e n t i t y of the past with the present. Confucianism i s the p r a c t i c a l , moral shaping of the present, and thus transcendental e f f o r t i s very much c h a r a c t e r i s t i c of i t . And f i n a l l y , Buddhism (Zen) i s the recog- n i t i o n of the i d e n t i t y of object with subject through Nothingness. Since YAMATO SPIRIT i s the thread which t i e s t h i s t r i a d together i n the whole personality, we have arrived at the d e f i n i t i o n , i . e . , "an e f f o r t to a t t a i n the i d e n t i t y of one with many through Nothingness" by r e f e r r i n g to Dr. Nishida's philosophy. We have also mentioned the two di s t i n g u i s h i n g t r a i t s of YAMATO SPIRIT. One i s "the tendency to take the phenomenal world as absolute", and the other i s "the tendency to emphasize a limited s o c i a l nexus". We s h a l l r e f e r to these t r a i t s again i n Part I I I . 39 - PART III This Part i s the main body of t h i s t h e s i s . Based on Part I and II, we w i l l t r y to explain some c h a r a c t e r i s t i c a t t r i b u t e s of Japanese, business organization through Japanese mentality. This Part consists of four sections. In Sec. I, the Maxim, Nenko and Shushin Koyo that were mentioned i n Part I w i l l be reviewed i n the context of YAMATO SPIRIT. In Sec. 2, the r e l a t i o n s h i p between decision-making and Japanese business s p i r i t w i l l be discussed. This section s t r i k e s at the heart of the study and i s therefore very important. A great deal of emphasis has been put on t h i s p a r t i c u l a r s e c t i o n . In Sec. 3, the interdependence among firms, banks and the Government w i l l be referred to again i n the context of YAMATO SPIRIT. F i n a l l y , i n Sec. 4, we s h a l l r e fer to the connection between the "Betriebswirtshaft" and Japanese mentality. This Part i s not complete i n any sense, but i s simply an attempt to explain these c h a r a c t e r i s t i c a t t r i b u t e s of Japanese business organization through Japanese mentality. -40- Sec. 1 The Maxim, Nenko and Shushin Koyo In Part I, we looked b r i e f l y at the management and labor sides of Japanese business organizations from a h i s t o r i c a l point of view. There we found that the maxim "do your b i t for your country" has lived i n the minds of Japanese management, while on the labor side Nenko and Shushin Koyo have survived many r a d i c a l changes i n the post-war Japan. This maxim i s , so to speak, a strong bond which t i e s together Japanese management, from M e i j i to post-war Japan; and Nenko and Shushin Koyo have, at the same time, characterized the labor sector. Now then, what do these legacies of the past age imply i n the context of YAMATO SPIRIT? In other words, there must be some c o r r e l a t i o n between these legacies and Japanese mentality since they are products of the Japanese unique c u l t u r a l s e t t i n g . Apparently, these legacies have t h e i r own basis i n Confucianism. As was mentioned i n Part I, Confucianism was a way of l i f e and thought widely disseminated through every stratum of the F e u d a l i s t i c Japanese so c i e t y . Its ethics formed the s o l i d structure of Japanese society, and i t s system of c l e a r l y defined duties i s l i k e a l a t e r r a t i o n a l i z a t i o n of the early emotional t i e s i n family and state.-'- In other words, i t was blended with Shintoism i n c e r t a i n respects. For example, the v i r t u e s of l o y a l t y to the emperor and f i l i a l piety were linked together at the center of the nationa l e t h i c . It i s here that the family system, which i s the l a s t i n g foundation of Japanese communal l i f e , f inds i t s moral j u s t i f i c a t i o n . - ^ ISee Part II 2See Part I 3 See Part II -41- The family system, i n c i d e n t a l l y , was brought into the business organi- z a t i o n primarily because of the necessity of Oyakata s co-operation i n the early stage of i n d u s t r i a l i z a t i o n , and l a t e r Nenko and Shushin Koyo were b u i l t up. 4 Once established within a firm, Oyakata usually received the highest wages and benefits, and t h e i r followers were scaled down according to length of attachment to the Oyakata. For t h i s reason, even the new school graduates had to st a r t t h e i r careers at the bottom of t h i s hierarchy Apparently, we can see here the "respect for age" which i s one of the representative a t t r i b u t e s of the family system. In addition, Shushin Koyo implies the guarantee of l i f e - l o n g attachment to the enterprise, so that the consciousness of enterprise would be quite s i m i l a r to that of family. In t h i s sense, Nenko and Shushin Koyo may be regarded as another and modified form of the family system i n the business organization. The family system i s based on Shintoism, Confucianism and Buddhism. Furthermore, i t i s thought of as a form of the i d e n t i t y of one with many. In other words, the family i s a t y p i c a l manifestation of the Japanese tendency to emphasize a limited s o c i a l nexus. It i s the most important of t h e i r s o c i a l nexus and the dominant unit of s o c i a l organization. In f a c t , as Ya i c h i Haga asserts, "the unit of Western society i s the i n d i v i d u a l and groups of i n d i v i d u a l s who make up the State. In Japan, the State i s an aggregation of f a m i l i e s . Therein l i e s the basic d i f f e r e n c e " . Thus, the family system i s one of the t y p i c a l manifestations of YAMATO SPIRIT i n the enti r e s o c i e t y . This system, as was just mentioned, appears i n the business f i e l d as Nenko and Shushin Koyo. See Part I See Part I Nakamura, op. c i t . , pp. 417-418. -42- In other words, Nenko and Shushin Koyo may be considered to be manifestations of YAMATO SPIRIT i n the business organization. By reasoning further, we can see that the maxim i s also a manifestation of YAMATO SPIRIT. At f i r s t glance, i t seems to be ex c l u s i v e l y a r e f l e c t i o n of Confucianism, but t h i s does not t e l l the whole story. When a Japanese management says: "do your b i t for your country", i t i s an expression emerging from his whole pe r s o n a l i t y . In other words, we cannot a r i t h m e t i c a l l y divide his mentality into three parts. Confucianism i s complexly and inseparably interwoven with the other two elements i n the whole p e r s o n a l i t y . Moreover, the maxim implies an e f f o r t of synthe- s i z i n g n a t i o n a l i n t e r e s t with s e l f - i n t e r e s t . As such, i t can be thought of as a form of the i d e n t i t y of one with many. In addition, i f the Japanese concept of emphasis upon a s p e c i f i c limited human nexus were to take i t s ultimate form, i t would appear as "nationalism". Thus, we would conclude that the legacies of the past age, i . e . , the maxim and Nenko and Shushin Koyo are a l l manifestations of YAMATO SPIRIT i n the business organization. For t h i s very reason the term " l e g a c i e s " i s a misnomer since Japanese mentality has been forming for a few thousand years. It i s the perpetual stream of l i f e . -43- Sec. 2 Decision-making and Japanese Business S p i r i t In t h i s section, we s h a l l survey a c o r r e l a t i o n between Japanese b u s i n e s s . s p i r i t as the manifestation of YAMATO SPIRIT i n the f i e l d of business and business decision-making . Since the business decision-making i s done by those who l i v e i n t h i s unique c u l t u r a l s e t t i n g , apparently there must be some implications of the mentality i n the decision-making process. In other words, i t i s the whole personality that makes an actual decision, not the l o g i c a l frameworks. Then, as a whole personality, how does a Japanese businessman accept a decision-making problem? How does he understand i t and think i t through? How does he determine the course of a c t i o n he must take? In order to make these questions c l e a r and a r r i v e at some v a l i d answers, le t us f i r s t present a conceptual scheme for analyzing the decision-making process. (Diagram 1) Whole Personality EXPERIENCE OR KNOWLEDGE PERCEPTION OF THE REAL-WORLD VALUE SYSTEM - 4 4 - (Diagram 2) DECISION-MAKING PROCESS (In most instances) CHANCE CAUSES PERCEPTION OF THE REAL-WORLD PERCEPTION A DECISION- MAKING PROBLEM (Diagram 2) DECISION-MAKING PROCESS (In a few instances) CHANCE CAUSES PERCEPTION OF THE REAL-WORLD I in I A DECISION- (1) MAKING PROBLEM 1 ACTION A ACTION B PERCEPTION OF REALITY SUBJECTIVE PROBABILITY (5) 'A) INTERPLAY (7) RESPONSE VALUE SYSTEM \ -46- (Diagram 3) Feedback RESPONSE -> RESULT -£J EXPERIENCE OR KNOWLEDGE PERCEPTION OF THE REAL-WORLD 1 VALUE SYSTEM Diagram 1 shows the whole personality, which i s composed of three f a c t o r s : (1) Experience or knowledge i s the accumulation of past happenings that the personality has encountered so f a r under a given cultural; background, social-economic environment, and the inhe r i t e d a t t r i b u t e s and d i s p o s i t i o n . It takes the form of a multitude of simple models, and as such i t functions as a storage i n the whole p e r s o n a l i t y . (2) Perception of the Real World has been formed pr i m a r i l y through c u l t u r a l f a c t o r s , social-economic environment, inherited a t t r i b u t e s and d i s p o s i t i o n , and past experience. This concept i s used i n the same sense as the "cosmology" concept that Professor Douglas McGregor defined. As he.argues i n The Professional Manager, the "cosmology" i s defined as "The theory of the universe as a whole and the laws governing i t , The function of cosmology i s to bring some semblance of order to experiences which otherwise would be so confusing that there would be no basis for a c t i o n . The cosmology, or which i s the same thing, Perception of the Real World i s not r e a l i t y . It i s a human perception of r e a l i t y , and as such i t i s an imperfect representation of r e a l i t y . 1 (3) Value System follows from Experience of Knowledge and Perception of the Real World. It i s the combination of a "need structure 1 and a ladder of h i e r a r c h i c a l values. In Diagram 2, the decision-making process i s depicted. When a person faces a decision-making problem, several f e a s i b l e courses of action come to his mind. Then, he i s required to make a s e l e c t i o n from those courses of a c t i o n . In t h i s s e l e c t i o n stage, there are two factors which determine the would-be a c t i o n : (1) One i s Perception of r e a l i t y i n a p a r t i c u l a r decision- making s i t u a t i o n which consists of Perception of the Real World and Chance Causes. One of the main examples of Chance Causes i s the " a s p i r a t i o n l e v e l " which i s associated with the nature of a decision-making problem and with a decision-maker's i n t e r e s t i n i t . Another example i s a decision-maker's physica and mental conditions i n the decision-making s i t u a t i o n . (2) The other i s Value System. Value System may be considered to be c r i t e r i a f o r the s e l e c t i o n In t h i s context, as with the forming of cosmology, Professor Douglas McGregor asserts as follows: "The i n d i v i d u a l never experiences a complete lack of order i n r e a l i t y , because he i s endowed with a nervous system that enables him to perceive and remember s e l e c t i v e l y , to generalize, to r e l a t e , to discriminate, and to organize with respect to situations and events. In- e v i t a b l y , he develops strong needs to find subjective order i n what o b j e c t i v e l y i s massive complexity. In f a c t , his needs frequently lead him to impose order on r e a l i t y even when i t i s not o b j e c t i v e l y there. His possession of these c h a r a c t e r i s t i c s , plus the fact that he l i v e s i n a culture i n which there are already e x i s t i n g ordered views of r e a l i t y , provides him with the basis for developing a cosmology". Douglas McGregor, The Professional Manager (New York: McGraw-Hill, 1967), p. 4. o For further discussion on t h i s point, see A. H. Maslow, Motivation and Personality (New York: Harper, 1954), 3 It should be noted here that i t i s not f e a s i b l e to separate need structure from a ladder of h i e r a r c h i c a l values; since these are considered to be complexly interwoven with each other. -48- process. In the f i n a l analysis, the determining factor i n a choice of the f e a s i b l e courses of action and the action which ultimately r e s u l t s i s the i n t e r p l a y between Perception of r e a l i t y i n the decision-making s i t u a t i o n and hi s Value System. In other words, i t i s the i n t e r p l a y that gives "subjective p r o b a b i l i t y " ^ to each f e a s i b l e course of action i n order to determine the action that he would s e l e c t . In most instances, the interplay can determine which course of action he should take, and consequently a concrete action r e s u l t s . However, there are some instances i n which the i n t e r p l a y alone cannot t e l l which way to go. For example, Action A and Action B might be too s i m i l a r to d i s t i n g u i s h i n terms of the subjective p r o b a b i l i t y . In that case, what has to be done i s a synthesizing of his Perception of r e a l i t y with hi s Value System, and through t h i s synthesis, he may a r r i v e at a concrete d e c i s i o n . The very f a c t o r that makes t h i s synthesis possible i s I n t u i t i o n i n the sense that synthesis between perception and l o g i c cannot be attained through l o g i c . Diagram 3 shows the feedback of a r e s u l t from a course of action which was chosen through t h i s mechanism. The feedback a f f e c t s , i n one way or the other, the three factors i n the t o t a l p e r s o n a l i t y . Now that we have found the conceptual scheme for the decision-making process, l e t us next c i t e some f i r s t - c l a s s Japanese management's arguments about t h e i r decision-making, and t r y to explain t h e i r arguments through t h i s con- ceptual framework. The "subjective p r o b a b i l i t y " here i s defined as the "extent of favor- ablene.ss" associated with each f e a s i b l e l i n e of action which would be accom- panied by some outcomes. The outcomes are, i n turn, ranked i n importance through Value System, so that t h i s subjective p r o b a b i l i t y could determine which a l t e r n a t i v e course of action i s to be selected. -49- Let us begin with the argument of Mr. Oya, president of T e i j i n Co. Mr. Oya approaches a decision as i f herwere a Zen monk. When he encounters a r e a l l y d i f f i c u l t problem, on which he has to make a decision within a short period of time, he thinks of i t over and over again for as long as three days and nights, and "sooner or l a t e r , my consciousness becomes dim and I f e e l as though I am about to vomit. While i n such a s i t u a t i o n , you may lose the i n t e l l i g i b l e power of a n a l y s i s . Instead, however, you-can see ahead with an eye of the mind or with something s p i r i t u a l . This i s the very timing of decision-making .""* We can see from h i s argument that he implies the function of I n t u i t i o n at the very timing of decision-making. That i s , he must have t r i e d to determine which course of a c t i o n he should take through the interplay between Perception of r e a l i t y and Value System. The subjective p r o b a b i l i t y was assigned to each f e a s i b l e course of a c t i o n . However, i t was too d i f f i c u l t f o r him to decide the best course of a c t i o n . He thought of the problem over and over again. Obviously, he must have encountered a dilemma. Now, then, how could he solve t h i s dilemma? It i s i n t u i t i v e l y c l e a r that he would not have transcended i t as long as he had remained at t h i s s e l e c t i o n stage. In other words, the int e r p l a y has i t s own l i m i t a t i o n i n decision-making. In order to go beyond i t s l i m i t a t i o n , a synthesis of Perception of r e a l i t y with Value System i s necessary. Again, the most s i g n i f i c a n t factor determining t h i s synthesis i s I n t u i t i o n . In the case of Japanese decision-making, I n t u i t i o n f a l l s into Taizo Kusayanagi, "Waga Ketsudan", Bungei Shunjyu (February, 1968) ^ jPjy^ -50- the category of Nothingness. That i s to say, the synthesis of Perception and Logic (Value System) through I n t u i t i o n i s the attainment of the i d e n t i t y .of one with many through Nothingness. It can be said, therefore, that "an eye of the mind or with something s p i r i t u a l " as referred to by Mr. Oya i s I n t u i t i o n i n the category of Nothingness. Mr. Idemitsu, president of Idemitsu O i l Company, explains h i s decision- making as follows: " I f and only i f you are capable of s a c r i f i c i n g yourself for the sake of the nation and the society can you be a r e a l decision-maker."^ " I n t u i t i o n " i s the fundamental noetic p r i n c i p l e whereby a synthetic apprehension of the whole becomes po s s i b l e . It i s an integrating p r i n c i p l e and i s ever seeking unity on the grandest possible s c a l e . In the case of Prajna I n t u i t i o n (Japanese I n t u i t i o n ) , there i s no definable object to be i n t u i t e d . It i s an i n t u i t i o n . a l l by i t s e l f and cannot be c l a s s i f i e d with other forms of i n t u i t i o n as we o r d i n a r i l y understand the term. Apparently, there i s no dualism here. And t h i s non-dualistic t r a i t of Japanese I n t u i t i o n should be understood i n the context of "the.tendency to take the phenomenal world as absolute". The I n t u i t i o n i s l i k e a f l a s h of li g h t n i n g , or l i k e a spark from two s t r i k i n g pieces of f l i n t . It i s quick. The "quickness" does not r e f e r to progress of time; i t means immediacy, absence of d e l i b e r a t i o n , no allowance f o r an intervening proposition, no passing from premises to con- c l u s i o n . In other words, i t i s not a process i n the ordinary a p p l i c a t i o n of the term. "Nothingness", i n t h i s connection, i s the "undifferentiated continuum". In the "continuum", there i s no d i f f e r e n t i a t i o n of subject and object, of the seer and the seen. It i s a concrete, i n d i v i s i b l e , undefinable whole. In i t there i s no d i f f e r e n t i a t i o n of parts and whole. It i s "an ir o n bar of ten thousand miles". For further discussion on these points, see D. T. Suzuki, Studies i n Zen (New York: Philosophical Library, 1955). ^Kusayanagi, op. c i t . , yb gg; -51 He emphasizes management's r e s p o n s i b i l i t y primarily because t h e i r d e c i s i o n has a c r u c i a l e f f e c t on the national economy as a whole. Further- more, by putting emphasis on the national i n t e r e s t , he t r i e s to go beyond the arena of Ego 8 and to prepare himself for the synthesis between Perception and Value System p r i o r to making a hard and fast d e c i s i o n . Apparently, nation a l 9 i n t e r e s t occupies one of the highest positions i n his Value System. And, i n his p a r t i c u l a r case, the consciousness of national i n t e r e s t would help I n t u i t i o n to function i n a v i t a l decision-making s i t u a t i o n . ^ Mr. Kawai, president of Komatsu Seisankusho, argues h i s decision-making t h i s way: "An entrepreneur's decision-making i s l i k e a f e e l i n g of love toward a woman. An entrepreneur wants to undertake an enterprise as i f he wanted to woo a woman. L i f e i s to d i r e c t such a desire without h e s i t a t i o n . Once you undertake i t and engage yourself i n i t , you w i l l have to face a series of decision, each d e c i s i o n being the product of the decision-making process. For th i s reason, the 'mental speed' i s necessary i n the decision-making process."''"''" Following h i s l i n e of argument, the "mental speed" i s the speed of r e f l e x a c t i o n when you encounter a decision-making problem; as soon as an a t t r a c t i v e plan comes into your mind, you immediately grasp i t ; i f i t i s not good, you reje c t i t . The mental speed should be interpreted i n such a way. In other words, the mental speed implies the speed of the int e r p l a y between Perception and Value System. It i s the speed of assigning subjective p r o b a b i l i t y to each f e a s i b l e course of a c t i o n . The speed i s s i g n i f i c a n t because once you Q Ego i s considered to be the arena i n which the int e r p l a y i s performed. Q This i s e a s i l y seen since the consciousness of national i n t e r e s t , i . e . "nationalism", i s considered to be the ultimate form of "the tendency to em- phasize a limited s o c i a l nexus". lOldemitsu, op. c i t . URusayanagi, op. c i t . ? f>p. *3%-99. -52- undertake an enterprise and engage yourself i n i t , you w i l l have to go through a series of d e c i s i o n s . Mr. Kobayashi, president of Nippon E l e c t r i c Company, asserts that "my decision-making l i e s i n a f e e l i n g . In the advancement and development stages of an enterprise, there are several ' j o i n t s ' . Even when the enterprise seems to advance favorably, there are several j o i n t s where some c r u c i a l decision- making problems are involved. I f you are able to sustain a good f e e l i n g at 1 2 each of these j o i n t s , you w i l l be i n proper form for making a good d e c i s i o n . " The "good f e e l i n g " i n h i s sense can be regarded as I n t u i t i o n i n our sense. When you encounter an extremely complicated and d i f f i c u l t decision- making problem, i n the f i n a l analysis you have to appeal to your I n t u i t i o n . In other words, you need to synthesize Perception and Value System through Nothingness. Nothingness, i n c i d e n t a l l y , requires clearance and hates vague- 13 ness. Everything must be c l e a r i n the face of Nothingness. In t h i s connection, Mr. Ono, president of Morinaga Milk Company, argues as follows: "once an enterprise gets a favourable wind, everything tends to go well ..In such a good s i t u a t i o n the president i s l i k e l y to l i s t e n to the opposite opinions i n the executives' committee and to become not quite sure of h i s own p o s i t i o n . Then, i t follows that h i s d e c i s i o n w i l l become dim and vague, and lose i t s sharpness. In general, p o l i c i e s emerging from t h i s vagueness turn out to be wrong."1^ 1 2 I b i d . ? ft . F o r further discussion, see Suzuki (An Introduction to Zen Buddhism), op. c i t 14 Kusayanagi, op. cit.» pm jol% -53- We have so far viewed the decision-making process from an i n d i v i d u a l ' s point of view and t r i e d to analyze i t through our conceptual scheme. In so doing, for the purpose of our analysis, we have ignored the influence of other persons i n a decision-making s i t u a t i o n . Reality i s , however, that most decisions made i n the business organiza- t i o n take the form of "group decision-making" i n that the head of a committee takes into account, i n some way or the other-, the other members' views. For t h i s reason, what we need i s a conceptual scheme for group decision-making. In t h i s connection, the same mechanism that i s found i n the i n d i v i d u a l ' s decision-making process also applies to group decision-making. To put i t another way, the mechanism functions i n a s i m i l a r manner here although some modifications are necessary i n the conceptual framework. Upon analysis, there i s only one person, who i s presumably the head of a committee, that makes a f i n a l d e c i s i o n . Now, then, what i s the conceptual scheme for group decision- making ? Before presenting t h i s scheme, however, le t us f i r s t c i t e one a r t i c l e from the Economist (London) for the purpose of our explanation. A correspondent from the Economist who attended one board of d i r e c t o r s meeting writes as follows: " . . . . i t seems to be a t r a d i t i o n i n Japan that i f any changes i n any plans are to be made, they must be agreed to by everyone. Even at the boardroom l e v e l , decisions are not taken by majority vote but t h e o r e t i c a l l y only by unanimous agreement. To prevent t h i s t r a d i t i o n of unanimity from being e t e r n a l l y s t u l t i f y i n g , many Japanese organizations seem to have a man whom the outside observer finds himself d i s r e s p e c t f u l l y c a l l i n g the Emperor-figure. Conversation with and even between d i f f e r e n t executive grades i n Japanese industry can go forward most i n t e r e s t i n g l y and pointedly -54- u n t i l t h i s Emperor-figure a r r i v e s ; then, your correspondent found, every- body f a l l s into a deep and r e s p e c t f u l hush. As the Emperor-figure (who may belong to the family owning the firm) does not seem always to be the man best f i t t e d to make big decisions, the system i s puzzling at f i r s t ; but i n fact his function i s probably often to work merely as a c o n s t i t u t i o n a l monarch. When there i s a controversy about some l i n e of action to be taken, he lays down what has already emerged as the majority opinion as his own decided view; everybody then agrees that he must be right and so the t r a d i t i o n of unanimity i s maintained. The system does not make for speed i n operation, but i t has some achievements to i t s c r e d i t . A f t e r a l l , i t was by t h i s method, with the r e a l Emperor, that Japan c a l l e d o f f the War i n 1945. What a s u p e r f i c i a l and misleading a r t i c l e I Why does everybody agree that the Emperor-figure must be right? Why does the Emperor-figure lay down the majority opinion as h i s own decided view? What i s the t r a d i t i o n of unanimity? These v i t a l questions are v e i l e d i n mystery and a l l of them are explained only by the term " t r a d i t i o n " . What i s needed here i s a good conceptual scheme for analysis of the group decision making i n the Japanese business organization. In f a c t , without such a framework, i t would be very d i f f i c u l t f o r us to grasp the process of decision-making at boardroom l e v e l . So, l e t us f i r s t present the conceptual framework, and then explain the a r t i c l e through t h i s scheme. The Economist, op. c i t . , p. 93. ( (Diagram 4) A MEMBER'S DECISION - MAKING (In most instances) (Diagram 4) A MEMBER'S DECISION - MAKING (In a few instances) CHANCE CAUSES PERCEPTION OF THE REAL-WORLD PERCEPTION OTHER MEMBERS \ (Diagram 5) PRESIDENT'S OR EMPEROR - FIGURE'S DECISION - MAKING (In most instances) CHANCE CAUSES PERCEPTION OF THE REAL - WORLD PERCEPTION OF REALITY \ \ (Diagram 5) PRESIDENT'S OR EMPEROR - FIGURE'S DECISION-MAKING (In a few instances) -59- F i r s t of a l l , various opinions are exchanged among the members at a board of d i r e c t o r s meeting. In t h i s stage, each member i s not yet quite sure of his p o s i t i o n as to the decision-making problem. Through the exchange of ideas, however, he sooner or l a t e r , a r r i v e s at his own view of the problem i n point. The process through which his view i s formed i s almost the same as i n Diagram 2, except f o r the Logic or Reasoning of other members. In other words, as Diagram 4 indicates, i t i s the int e r p l a y among Perception of r e a l i t y , Value System and the other members' log i c or reasoning that r e s u l t s i n the subjective p r o b a b i l i t y of each f e a s i b l e l i n e of a c t i o n . I f the p r o b a b i l i t y i s clear enough, a response occurs quite automatically. I f i t i s not, there i s an e f f o r t of synthesizing these three elements through which, i n one way or the other, a response w i l l r e s u l t . The responses of a l l of the members thus recorded enter into the whole personality of the President or Emperor-figure. The President or Emperor- figure l i s t e n s to the responses of the other members, and then the interplay of t h e i r responses, his own Value System and h i s Perception of r e a l i t y begins to function i n h i s whole pe r s o n a l i t y . Sooner or later,-each f e a s i b l e lin e of ac t i o n w i l l be assigned some subjective p r o b a b i l i t y . I f, i n t h i s stage, the course of action to be taken i s c l e a r l y distinguishable, then he would be i n a good p o s i t i o n for decision-making. I f i t i s not, however, a synthesizing of these three elements i s necessary within his t o t a l p e r s o n a l i t y . Over and over again, I n t u i t i o n functions here as a t i e among the elements. Apparently, i t i s t h i s stage that i s referred to i n the above a r t i c l e by the London correspondent. A l l of the views had already been exchanged and discussed among the members. And yet, there was s t i l l a controversy about -60- the l i n e of a c t i o n to be taken. It i s the Emperor-figure that had to bring the controversy to an end. He must have, at f i r s t , t r i e d to determine i t through the i n t e r p l a y i n his t o t a l p e r s o n a l i t y . But, he i n f a c t , was unsuccess- f u l . Obviously, an e f f o r t was made to synthesize the three determinants, i . e . , Responses of the members, Perception of r e a l i t y , and Value System. I n t u i t i o n must have played a decisive and v i t a l role here. Then, a f t e r a long period of mental struggle, he came to a c e r t a i n conclusion. The conclusion having emerged from these e f f o r t s must have been accepted by a l l of the members. It i s the conclusion which was gained through an e f f o r t of the i d e n t i t y of one with many through Nothingness. In other words, the method through which the Emperor-figure arrived at h i s conclusion manifested i t s e l f as Japanese business s p i r i t . He performed what we c a l l "haragei". The "haragei", i n c i d e n t a l l y , comes out i n an e f f o r t to transcend a dilemma. As such, to perform "haragei" i s thought of as to arise beyond Ego, since Ego i s the arena of the i n t e r p l a y among the determinants for decision-making. In other words, the "haragei" appears only i n the synthesis stage of the decision- making process. Thus, the Emperor-figure must have been regarded as the person who transcended Ego. His d e c i s i o n was considered to be beyond s e l f - i n t e r e s t . It i s no wonder that t h i s very fact was persuasive and convincing i n having the d e c i s i o n accepted by the other members. As was mentioned i n Part II, because of "the tendency to emphasize a limited s o c i a l nexus" i n Japanese mind, consciousness of the i n d i v i d u a l as an e n t i t y appears always i n the wider sphere of consciousness of s o c i a l r e l a t i o n - ships. Most Japanese tend to look upon man as a being subordinated to a -61- s p e c i f i c and limited human nexus. And i f a s p e c i f i c i n d i v i d u a l i s regarded as a concrete symbol of Japanese s o c i a l values, the Japanese are apt to follow the. i n d i v i d u a l as a l i v i n g representative of that nexus. Apparently, the Emperor-figure i n the above a r t i c l e must have been regarded as one of such representatives. Furthermore, "the tendency to recognize absolute s i g n i f i c a n c e i n every- thing phenomenal" i n Japanese mentality leads to the acceptance of the j u s t i f i - cation of any view held i n the mundane world, and res u l t s i n the a d a p t a b i l i t y of any view with the s p i r i t of tolerance and c o n c i l i a t i o n . In fa c t , owing to the tolerant and more open side of t h e i r nature, the Japanese assimilated the heterogeneous elements of foreign countries without much repercussion. Recall the t i t l e "Men of Japanese s p i r i t with Western knowledge" that we gave to the entrepreneurs both i n M e i j i and i n post-war Japan. They t r i e d to recognize the value of each of those d i f f e r e n t c u l t u r a l elements, and at the same time they endeavored to preserve the values inherited from t h e i r own past. They seeked natio n a l unity, while having permitted the co-existence of heterogeneous elements. In short, the de c i s i o n that the Emperor-figure arrived at must have been agreed to by every member? since the mentality of the members i s consistent with that d e c i s i o n . A l l of the members understood what the Emperor-figure had done i n order to synthesize the three factors i n his t o t a l p e r s o n a l i t y . The dec i s i o n was, therefore, accepted as an e f f o r t of the i d e n t i t y of one with many through Nothingness. For t h i s reason, whether the dec i s i o n rests on a majority opinion or not i s not important. In other words, the unanimous agreement i s not based on a majority opinion. Or, at least, the majority opinion i s not socccucial a factor -62- as Japanese mentality. The very f a c t o r that leads to the unanimous agree- ment i s an e f f o r t of the i d e n t i t y of one with many through Nothingness. On t h i s point, therefore, the a r t i c l e i s misleading. In addition, the unanimous agreement i s not a t r a d i t i o n , since, as was mentioned above, the a r t i c l e refers only to a p a r t i c u l a r stage i n the decision-making process. In other words, the a r t i c l e r e f e r s to a s p e c i a l case, and cannot be applied to decision-making i n general since d a i l y decisions are carried out quite smoothly without any such unanimous agreement. Weighing a l l of the factors, we see that the a r t i c l e i s a s u p e r f i c i a l analysis and i s very misleading, largely because of the complete ignorance of the YAMATO SPIRIT. -63- • Sec. 3 Interdependence among Firms, Banks, and the Government Now, l e t us r e f e r to another important aspect of YAMATO SPIRIT i n the business scene, i . e . , the interdependence among firms, banks, and the Government. The power of banks i n today's Japanese business i s well known. In fa c t , "Japanese companies are heavily financed by t h e i r bankers. The l i a b i - l i t i e s of the average major Japanese fi r m during the f i r s t h a l f of 1962 broke down as follows: net worth 30% (divided equally between paid-in c a p i t a l and surplus), current l i a b i l i t i e s 50% (in great part due to banks), and long- term debt 20%. In other words, the t o t a l debt-equity r a t i o i s about 2:1, something l i k e the reverse of the average U.S. firm's. And much of the equity i n Japanese companies i s owned by the banks as well."-'- "As might be expected from such a r e l i a n c e on bank loans, Japanese manufacturing firms are very much under the co n t r o l of t h e i r bankers. Frequently, the bank puts one of i t s own men into a key p o s i t i o n i n a company to which i t has loaned large sums of money. Moreover, banks tend to act as though they know more about a manufacturing company's business than does i t s own management. For example, when a manufac- turing company seeking a l i n e of c r e d i t t e l l s a bank what i t s peak money needs are, the bank may well make i t s own evaluation and reply with another 2 f i g u r e . " "Another example of the power of the bank i s the experience of a would-be U.S. investor i n negotiating with Japanese manufacturers for a part- nership. Almost every Japanese company president with whom the American dealt had a 'f r i e n d ' s i t i n with him. When the negotiations got down to brass tacks, Business International, Financing Foreign Operations (New York: Business International, 1964), p. 167. 2 I b i d . -64- the ' f r i e n d ' suddenly became active, revealed himself to be a banker, and proceeded to carry on the negotiations as though he were the r e a l head of the company r e f e r r i n g to the president almost as to a mere tech n i c i a n . " In t h i s context, there have been some arguments about the c a p i t a l structure of Japanese firms, and most of the scholars have argued that the c a p i t a l structure had deteriorated because of the high speed of the economic growth. As a matter of fa c t , there has been a great s h i f t i n the c a p i t a l structure i n comparison with that of pre-war Japan as w e l l as that of represen- t a t i v e Western countries. 3 I b i d .  -66- (1960) (1960) J A P A N W. G E R M A N Y T h e Whole Industry T h e Whole Industry (1961) (1961) U.S. E N G L A N D T h e Manufactur ing - industry I ho Whole Industry S o u r c e : Hyoe O u c h i e t a l , N i h o n K e i z a i Z u s e t s u (3rd e d . r e v ; Tokyo: Iwanami, 1964), p. 91, As i s shown above, t h e c a p i t a l s t r u c t u r e o f Japanese f i r m s has been s h i f t e d g r e a t l y . I n o t h e r words, "The average Japanese company has been g e t t i n g deeper and deeper i n t o d e b t . I t i s making l i t t l e e f f o r t t o r e - i n v e s t e a r n i n g s f o r e x p a n s i o n o r t o s e l l more e q u i t y t o p r o v i d e a c u s h i o n a g a i n s t 4 r e c e s s i o n s " Now t h e n , why has the Japanese company been a b l e t o f i n a n c e i t s e l f i n such an u n o r t h o d o x manner? T h i s may be p a r t l y e x p l a i n e d by the f a c t t h a t t h e economy has f l o u r i s h e d i n the pa s t decade, w i t h r i s i n g income p r o v i d i n g ample funds t o pay i n t e r e s t . B ut, t h i s has been p o s s i b l e p r i m a r i l y because o f the i n t e r d e p e n d e n c e between the f i r m and the bank. 4 I b i d . -67- As a matter of f a c t , even before the war, where the c a p i t a l structure i s considered to be quite normal, there was the interdependence between the fir m and the bank. Take a Zaibatsu for instance. This was (and i s ) "one of several groups of companies that c o n t r o l large portions of the country's industry and-trade, including most of the banks and insurance companies through i n t e r l o c k i n g management and ownership."^ In other words, although the c e n t r a l p o s i t i o n of power has shifted from non-banking fi r m to bank,6 the interdependence between them has been always present i n Japanese business. The interdependence, i n turn, has i t s own root i n the " c o l l e c t i v i t y orienta- t i o n " of Japanese people. In f a c t , "the c o l l e c t i v i t y o r i e n t a t i o n , focused on a human nexus, serves the function of providing s o c i a l security and mutual assistance within a society beset by many d i f f i c u l t i e s ; " ' ' although i t can at the same time become stagnant as was seen i n the Zaibatsu domination of pre-war Japan i n Part I. Hence, i n spite of the d i f f e r e n t phenomena i n the c a p i t a l structure, we can conclude that the interdependence between them i s the r e a l essence, which i n turn can be regarded as a manifestation of Japanese business - s p i r i t . As has been mentioned, Japanese companies are heavily financed by t h e i r bankers. To put i t another way, "as of December 31, 1962, Japanese commercial banks had lent almost as much to business as t h e i r t o t a l deposits. Of t o t a l 5. . . , Ibid., p. 166. ^For. further, discussion on t h i s point,., see G. C. A l l e n , A Short Economic History of Modern Japan (London: A l l e n & Unwin, 196>1). °Business International, op.cit., p. 167. ^Nakamura, op. c i t . , p. 426. -68- assets of a l l banks, loan to business made up 61%. To obtain funds, banks must often borrow from the Bank of Japan. These borrowings at that time were 6.4% of t h e i r t o t a l d e p o s i t s . " 8 We can c l e a r l y see the extent of the i n t e r - vention of the Bank of Japan, or more broadly, of the Government into the business f i e l d . This may be p a r t l y explained by the excessive growth of the economy a f t e r the war, but again, can primarily be explained by the i n t e r - dependence between firms and the Government. In f a c t , " i n Japan there i s f a r more c o l l a b o r a t i o n between big business and government than e x i s t s i n the U.S., the more so because industry tends to r e c r u i t i t s top management from former government employees. During and a f t e r o f f i c e hours men from private corporations are meeting and comparing notes with the bureaucrats i n a kind of prolonged committee meeting. The r e s u l t i s a continuous dialogue as to what Q should and should not be done." Thus, only with reference to such an interdependence can most of the Government poli c e s be explained. For instance, "Japan's Export-Import Bank was established by the Government i n 1950 to extend long-term loans for promoting export of c a p i t a l goods, such as ships, r o l l i n g stock, and heavy machinery P r a c t i c a l l y every type of r i s k i s covered, including losses suffered by exporters when they ship goods on consignment and sales prove disappointing, and losses on promotion and advertising abroad i f sales do not reach the expected l e v e l . Insurance i s also provided to banks for non-payment of discounted export bills."''" ^Fortune (September, 1968), pp. 95, 128. '^Business International, op. c i t . , pp. 171-172. ^'Ibid., p. 169. -69- Taking another example, " i n 1963, the Government announced v i a the Bank that i t would i n s t i t u t e an ' i n d u s t r i a l structure' financing system, with favorable loans going to enterprises e s t a b l i s h i n g good order i n Japn's i n - d u s t r i a l structure through coordination, tie-up, and merger within the same indu s t r i e s , and adjustment of products and sales o p e r a t i o n s . " ^ Furthermore, " i n October, 1963, the Bank announced the p r e f e r e n t i a l loan treatment; loans for up to 50% of project cost and extending up to 15 years (including three years of grace) would be granted t o : projects involving new techniques, including those with foreign p a r t i c i p a t i o n ; new i n d u s t r i a l projects, e s p e c i a l l y i n nuclear power generation, new metals, petrochemicals, and synthetic r e s i n s ; and export i n d u s t r i e s , e s p e c i a l l y those concentrating on Europe. Under t h i s program, the camera, watch and clock, and t r a n s i s t o r - radio i n d u s t r i e s have received top c r e d i t p r i o r i t y . You can e a s i l y argue that the conglutination of business firms with the Government i s , more or less, present everywhere i n the world. In the sense used by J . K. Galbraith, many countries areadirected toward the I n d u s t r i a l •I o State. For t h i s very reaon, the conglutination may not be a unique phenomenon i n Japan. However, to say that the phenomena are the same i s not to say that the essence i s the same. In addition, Galbraith's model may be too broad to account for the Japanese p a r t i c u l a r . We should rather explain i t through Japanese mentality. As a matter of f a c t , the Government intervention has met much less resistance from the business f i e l d i n Japan than i n the United States. k l b i d . . p. 169. ^ G a l b r a i t h , op. c i t . -70- It can be said, therefore, that Japanese are i n better p o s i t i o n f o r govern- ment intervention because of the e x i s t i n g mentality. S e l f - i n t e r e s t has to be synthesized with the nationa l i n t e r e s t through Nothingness. For t h i s very reason, we must again conclude that the interdependence between firms and the Government i s a manifestation of Japanese business s p i r i t , as i s that between firm and bank. -71- Sec. 4 The "Betriebswirtshaft" and Japanese Mentality Since the M e i j i Revolution, Japan has imported various ideas and thoughts from abroad. In t h i s respect, we have learned many things from Germany. As an example, we can r e c a l l that Dr. Nishida's philosophy i s quite s i m i l a r to Hegel's i n terms of methodology. As another example, we s h a l l be able to mention the scholarly f i e l d of business i n Japan. Here, the "Betriebswirtshaft" i s , i n one way or the other, very s i g n i f i c a n t and influences many students i n the f i e l d . Now then, why has the German methodology been accepted without any f r i c t i o n ? As might be expected, t h i s i s largely due to the Japanese tendency to recognize absolute s i g n i f i c a n c e i n everything phenomenal, as was mentioned i n Part I I . More s p e c i f i c a l l y , however, we can e a s i l y fi n d a c o r r e l a t i o n between Japanese mentality and the German methodology. That i s , Japanese mentality i s consistent with the German methodology, since one i s the essence and many i s the m u l t i p l i c i t y of phenomena i n the German methodology. Moreover, we can mention that Hegel and Marx made use of the "paradoxical l o g i c " , which assumes A and non-A do not exclude each other as predicates of X, under the name of d i a l e c t i c s . This does not mean, however, that the "paradoxical l o g i c " i n the East i s the same as that i n the West. In fac t , as E r i c h Fromm argues i n the Art of Loving, i n the East "the ultimate r e a l i t y , the ultimate One cannot be caught i n words or i n thoughts".^ "The teachers of paradoxical l o g i c say that E r i c h Fromm, The Art of Loving (London: A l l e n & Unwin, 1961), ft IS. -72- man can perceive r e a l i t y only i n contradictions, and can never perceive i n thought the ultimate r e a l i t y - u n i t y , the One i t s e l f . This led to the conse- quence that one did not seek as the ultimate aim to find the answer i n thought. Thought can only lead us to the knowledge that i t cannot give us the ultimate answer. The world of thought remains caught i n the paradox. The only way i n which the world can be grasped ultimately l i e s , not i n thought, but i n the act, i n the experience of oneness." In terms of Japanese mentality, p r a c t i - c a l i t y i s p r i o r to any theory." 3 How to achieve the i d e n t i t y of one with many through Nothingness i s s i g n i f i c a n t . The "through Nothingness" i s a decisive factor i n Japanese mentality, whereas the Western paradoxical l o g i c pre- 4 supposes something creative i n nature. In spite of t h i s great difference, however, i t can be said that Japanese mentality i s consistent with the German methodology as long as we can make use of i t within the bounds of science. This i s why the "Betriebswirtshaft" i s , i n one way or the other, of consequence i n the scholarly f i e l d of business i n Japan. We can c i t e many examples of the importance of the "Betriebswirtshaft" i n .this field,.. ,We. .shall mention only one of those examples. This w i l l be given i n 2 i b i d . r wnn-n*. 3 In t h i s connection, the concept of r e a l i t y as "becoming" or as " i n a constant state of f l u x " , i . e . the tendency to take the phenomenal world as absolute, i s compatible with the Japanese tendency to be anchored to a particu- l a r human nexus. These two factors are combined to bring about an emphasis on p r a c t i c a l i t y w i t h i n a concrete s o c i a l nexus. For further discussion on t h i s point, See Nakamura, op. c i t . , Part IV. 4 I n other words, the Western paradoxical l o g i c i s not beyond dualism. For example, Hegel argues t h i s way: "the unive r s a l i s neither seen nor heard, i t s existence i s the secret known only to the mind. Rel i g i o n leads us to a universal, which embraces a l l else within i t s e l f , to an Absolute by which a l l else i s brought into being: and t h i s Absolute i s an object not of the senses but of the mind and, of. thought". ("The Logic of Hegel", The Encyclopaedia of the Philosophi- c a l Sciences, trans. William Wallace (Oxford Eng.: The Clarendon Press, 1874), pp. 25-38. -73- a discussion of one of the works i n the f i e l d , i . e . , the Introduction to F i n a c i a l Management by Takashi Hosoi, 1968. * it >V * Vc * The author devotes the f i r s t h a l f of the book to the argument of the essence of f i n a n c i a l management, while i n the la s t h a l f , he refers to the various functions of f i n a n c i a l management based on the e s s e n t i a l argument of the f i r s t h a l f . Since the la s t h a l f may be considered to be merely a deductive extension of the f i r s t e s s e n t i a l argument, although he introduces there a v a r i e t y of models which were developed i n the United States i n analy- zing f i n a n c i a l phenomena, our concern w i l l be only with the f i r s t h a l f , i . e . , the argument of the essence of f i n a n c i a l management. The argument, i n e f f e c t , s t a r t s with Dr. E i i c h i Furukawa's d e f i n i t i o n of f i n a n c i a l management and develops into further discussion, f i n a l l y r e s u l t - ing i n a new concept "Top i n charge of c a p i t a l " which i s the author's o r i g i n a l conception. So, l e t us f i r s t mention Dr. Furukawa's argument through the author. According to the author, i t i s Dr. Furukawa, one of the a u t h o r i t i e s i n the scholarly f i e l d of business i n Japan, that grasped the essence of f i n a n c i a l management and set up i t s p i v o t a l conception. In fa c t , f i n a n c i a l a c t i v i t y should be broken down into two aspects on the basis of i t s c h a r a c t e r i s t i c s , as Dr. 'Furukawa a s s e r t s . That i s , f i n a n c i a l a c t i v i t y , as the whole c i r c u l a r process of c a p i t a l , i s c l o s e l y associated with other managerial a c t i v i t i e s , while on the other hand, i t i s a p a r t i c u l a r f u n c t i o n a l a c t i v i t y . The former i s concerned with f i n a n c i a l control over the whole enterprise, while the l a t t e r i s concerned with executive f i n a n c i a l operations. -74- Since the former i s of prime importance, i t i s necessary to survey the interdependent r e l a t i o n s h i p between f i n a n c i a l a c t i v i t y and other mana- g e r i a l a c t i v i t i e s i n accordance with the c i r c u l a r process of c a p i t a l i n the en t e r p r i s e . In here, Dr. Furukawa introduces M. R. Lehmann's two types of "Umsatz" concept, i . e . , "Finanz-Umsatz" and "Produktions-Umsatz". The "Finanz-Umsatz" implies the inflow and outflow of money as a mani- f e s t a t i o n of the c i r c u l a r process of c a p i t a l , while maintaining a homogeneous nature throughout t h i s process. On the other hand, the "Producktions-Umsatz" st a r t s with the acquirement of inputs which are brought into the enterprise by expenditure of money or some c r e d i t r e l a t i o n s h i p . Then, i t converts them into products for sale through the use of productive consumption of the inputs and ends up with the sale of these products. Each of these "Produktions- Umsatz" forms an element of the c i r c u l a r process. Since the "Produktions- Umsatz" i s an indispensable "Umsatz" i n the pursuit of an enterprise goal, i t i s also c a l l e d "Zweck-Umsatz". In short, we should regard the whole c a p i t a l - c i r c u l a r process as the r e l a t i o n s h i p of "Produktions-Umsatz" against "Finanz-Umsatz". That i s , these heterogeneous "Produktions-Umsatz" are c a r r i e d out along with the homogeneous "Finanz-Umsatz", and thus these "Productions^Umsatz" are woven into the whole c a p i t a l - c i r c u l a r process as the unity of an e n t e r p r i s e . This very fact not only implies the c h a r a c t e r i s t i c of "Finanz-Umsatz" as against "Produktions-Umsatz", but also the close interdependence of f i n a n c i a l a c t i v i t y with other managerial a c t i v i t i e s i n the whole c i r c u l a r process of c a p i t a l . To put i t another way, f i n a n c i a l a c t i v i t y i n i t s e l f i s a d i f f e r e n t f u n c t i o n a l a c t i v i t y from other managerial a c t i v i t i e s associated with the "Zweck-Umsatz", but at the same time i t has some connection with those other managerial a c t i v i t i e s . That i s , i t has a unique function of homogenizing those -75- heterogeneous elements i n the other managerial a c t i v i t i e s ; and t h i s function i s of prime s i g n i f i c a n c e i n f i n a n c i a l management. In concrete terms, f i n a n c i a l management sets up f i n a n c i a l planning and performs f i n a n c i a l c o n t r o l i n order to make the other managerial a c t i v i t i e s e f f e c t i v e from the standpoint of the optimization of the whole e n t i t y . Now that Professor Hosoi has arrived at the essence of f i n a n c i a l manage- ment, based on Dr. Furukawa 1s argument, he next goes back to r e a l i t y and c i t e s many examples of the expansion of the r e s p o n s i b i l i t y scope of f i n a n c i a l manage- ment. Then, he refers to a research study "Company Organization of the Finance Function" which was published by American Management Association i n 1962. And f i n a l l y he comes to a conclusion as follows: "In short, i t i s quite c l e a r that today's business demands some f i n a n c i a l functions which are beyond those of treasurer, c o n t r o l l e r , and those of f i n a n c i a l vice-president that i s only a mediator between them. Even the t h i r d 'Top i n charge of Finance' i n huge companies i n the United States does not perform the new comprehensive functions. Its prime r e s p o n s i b i l i t y i s thought of as only a mediator between treasurer and c o n t r o l l e r , or a coordinator between president and treasurer and c o n t r o l l e r . This 'Top i n charge of Finance', I think, should go beyond the role of merely a mediator or a coordinator, and perform the comprehensive f i n a n c i a l functions which today's enterprise so desperately requires. I would c a l l the 'Top" i n t h i s sense 'Top i n charge of C a p i t a l 1 The tasks of t h i s 'Top' w i l l be creative, rather than routine and i t s practice implies the destruction of habitual procedures."^ ^Takashi Hosoi, Introduction to F i n a n c i a l Management (Tokyo: Yuhikaku, 1968), ppt llo-U^ -76- The quotation above concludes the f i r s t h a l f of the book, i . e . , the argument of the essence of f i n a n c i a l management. , As might have been expected, the author i s greatly influenced by the "Betriebswirtshaft", and h i s argument i s very German. This i s why the book i s considered to be one of the examples of the influence of the "Betriebswirt- s h a f t " i n the f i e l d . The "Betriebswirtshaft" i s , i n turn, consistent with Japanese mentality. In other words, the author must have been capable of grasping t h i s concept, and further for developing i t into his own conceptual framework. Thus, the "Top i n charge of C a p i t a l " would be meaningful to Professor Hosoi, given the understanding of "Betriebswirtshaft" which he demonstrates. Upon analysis, his work may be said to be very "Japanese". -77- CONCLUSION Our main contention i n th i s paper i s that YAMATO SPIRIT manifests i t s e l f i n the business f i e l d as well as i n other aspects of Japanese l i f e . It i s manifest, i n the f i r s t place, i n the maxim "do your b i t for your country" on the management side. As was explained i n Sec. 1, Part I I I , the maxim i s considered to be mainly a r e f l e c t i o n of the Japanese tendency to emphasize a s p e c i f i c limited human nexus which i s one of the di s t i n g u i s h i n g t r a i t s of Japanese mentality. Japanese mentality takes further the forms of Nenko and Shushin Koyo on the labor sid e . That i s , Nenko and Shushin Koyo are regarded as another and modified forms of the family system which i s again a t y p i c a l manifestation of the Japanese tendency to emphasize a limited s o c i a l nexus. The same can be said, i n t h i s connection, of the interdependence among firms, banks and the Government; since the interdependence has i t s own root i n the Japanese c o l l e c t i v i t y o r i e n t a t i o n focused on a human nexus. YAMATO SPIRIT, on the other hand, has the other c h a r a c t e r i s t i c a t t r i b u t e ; i . e . , the tendency to take the phenomenal world as absolute. This non-dualistic tendency i s p a r t i c u l a r l y manifest i n the synthesis stage of the business decision- making. As was seen i n Sec. 2, Part I I I , P r a j n a - I n t u i t i o n (Japanese I n t u i t i o n ) , as a synthesizing element, has no definable object to be i n t u i t e d . It i s an integrating p r i n c i p l e and i s ever seeking unity on the grandest possible scale. In other words, i t abides i n Nothingness which i s defined as the "un d i f f e r e n t i a - ted continuum." As such, the I n t u i t i o n i s regarded as the core of Japanese mentality. -78- F i n a l l y , we have seen that apart from the business organization, Japanese mentality manifests i t s e l f with the existence and importance of the "Betriebswirtshaft" i n the scholarly f i e l d of business i n Japan. Taken together, t h i s paper i s an attempt to explain these above-mentioned c h a r a c t e r i s t i c a t t r i b u t e s of Japanese business organization through Japanese mentality. -79- BIBLIOGRAPHY A l l e n , G. C. A Short Economic History of Modern Japan (London: A l l e n & Unwin, 1961). The American Economic. Review A s s o c i a t i o n . A group of a r t i c l e s on entrepreneur, The American Economic Review, (May, 1968), pp. 60-98. Business I n t e r n a t i o n a l . Financing Foreign Operations (New York: Business International, 1964). Dunlop, John T. I n d u s t r i a l Relations Systems (New York: Holt, 1958). The Economist. Consider Japan (London: The Economist, 1963). Fortune (September, 1968), pp. 95, 128. Fromm, Erich,The Art of Loving (London: A l l e n & Unwin, 1961). Galbraith, J . K. The New I n d u s t r i a l State (Boston: Houghton M i f f l i n , 1967). Hayashi, Y u j i r o . Nihoh no Kagaku Kogyo (Tokyo: Iwanami, 1957). Hosoi, Takashi. Introduction to F i n a n c i a l Management (Tokyo: Yuhikaku, 1968). Idemitsu, Sazo. Waga 45 Nen Kan (Tokyo: Bungei Shunjyu,.1966). Kawamata, K a t s u j i . Yumewa Kokusai Kigyoe (Tokyo: Diamond, 1966). Kinoshita, Matasaburo. Nanio Shitaka (Tokyo: Diamond, 1966). Komiya, Ryutaro (ed.) Postwar Economic Growth i n Japan (Berkeley: University of C a l i f o r n i a Press, 1966). Koontz, Harold. "The Management Theory Jungle", Journal of the Academy of Management, V o l . 4, No. .3 (December, 1961). Kusayanagi, Taizo. "Waga Ketsudan", Bungei Shunjyu (February, 1968). Lockwood, W. W. (ed.) The State and Economic Enterprise i n Japan (Princeton, N.J.: Princeton University Press, 1965). Maslow, A. H. Motivation and Personality (New York: Harper, .1954). -80- McGregor, Douglas. The Professional Manager (New York: McGraw-Hill, 1967). Ministry of Labour,. The D i v i s i o n of S t a t i s t i c s and Research. Basic Survey Report on Trade Unions, 1963. Nakamura, Hajime. Ways of Thinking of Eastern Peoples (Hawaii: East-West Center Press, 1964). Nishida, K i t a r o . I n t e l l i g i b i l i t y and the Philosophy of Nothingness (Tokyo: Maruzen, 1958). Ouchi, Hyoe et a l . Nihon K e i z a i Zusetsu (3rd ed. rev.; Tokyo: Iwanami, 1964). Shimomura Osamu. Nihon K e i z a i Seicho Ron (Tokyo: Kinyu Z a i s e i J i j y o Kenkyukai, 1962). Showa Dojinkai (ed.) Wagakuni Chingin Kozo no Shit e k i Kosatsu (Tokyo: Shiseido, 1960). Suzuki, D. T. . An Introduction to Zen Buddhism (London:Rider, 1949). Studies i n Zen (New York: Philosophical Library, 1955). Toyama, Shigeki (ed.) M e i j i no Ninaito, Jinbutsu Nihon no Rekishi (Tokyo; Yomiuri Shimbun, 1966), Vol. 11-12. Waley, Arthur. The Analects of Confucious (London: A l l e n & Unwin, 1949). Wallace, William (trans.) "The Logic of Hegel", The Encyclopaedia of the Philo s o p h i c a l Sciences (Oxford Eng: The Clarendon Press, 1874), pp. 25-38.

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