Modernization and the Japanese Factory

by Robert Mortimer Marsh, Hiroshi Mannari

Overview

While some writers account for Japan's postwar economic "miracle" in terms of a distinctively Japanese, traditional model of social organization, the writers of this study consider Japan's technological growth to have been accompanied by convergence toward modernized social organization. The authors test both of these theoretical models. Their data are derived from a nine-month period of observation, analysis of company records, interviews of personnel, and questionnaire responses from production, staff, and managerial employees in three main Japanese firms. Other firms were visited more briefly. The analysis shows that the most distinctively Japanese variables have less causal impact on performance within a firm than do more universal variables such as employee status, sex, and job satisfaction.

The authors test both of these theoretical models. Their data are derived from a nine-month period of observation, analysis of company records, interviews of personnel, and questionnaire responses from production, staff, and managerial employees in three main Japanese firms. Other firms were visited more briefly. The analysis shows that the most distinctively Japanese variables have less causal impact on performance within a firm than do more universal variables such as employee status, sex, and job satisfaction.

Originally published in 1976.

The Princeton Legacy Library uses the latest print-on-demand technology to again make available previously out-of-print books from the distinguished backlist of Princeton University Press. These editions preserve the original texts of these important books while presenting them in durable paperback and hardcover editions. The goal of the Princeton Legacy Library is to vastly increase access to the rich scholarly heritage found in the thousands of books published by Princeton University Press since its founding in 1905.

Product Details

ISBN-13:	9780691617121
Publisher:	Princeton University Press
Publication date:	03/08/2015
Series:	Princeton Legacy Library , #1515
Pages:	458
Product dimensions:	6.10(w) x 9.10(h) x 3.80(d)

Read an Excerpt

Modernization and the Japanese Factory

---

By Robert M. Marsh, Hiroshi Mannari

PRINCETON UNIVERSITY PRESS

Copyright © 1976 Princeton University Press
All rights reserved.
ISBN: 978-0-691-10037-1

---

CHAPTER 1

Introduction to the Problem

A society may be considered modernized "to the extent that its members use inanimate sources of [energy] and/or use tools to multiply the effects of their efforts" (Levy 1966:11). This definition has at least two virtues. First, it is an objective definition and therefore lends itself to operational measurement: a society's level of modernization is its inanimate energy consumption per capita. Second, it is a deliberately narrow, rather than broadly inclusive, definition. It therefore treats the question of what kinds of polity, family patterns, values, etc. are associated with varying levels of energy consumption per capita as a question for theoretical and empirical investigation, rather than one to be settled by definitional fiat.

In this study we are concerned with the validity of the convergence theory of modernization. This theory holds that as societies become more highly modernized they tend to become more alike in their social and cultural structure. Few would argue that the attainment of high modernization eliminates all differences among societies which stem from their different histories and culture, from whether they are early or late modernizers, and the like. But analysts disagree on the extent of similarity that results.

This study attacks the problem of convergence at the level of complex organizations — specifically, industrial manufacturing firms. At this level there is a problem in defining "modernization" in terms of per capita energy consumption that is avoided at the societal level. This is that energy consumption per capita is highly industry-specific. Steel firms consume much more energy than lace textile firms, but are not necessarily more modernized. To handle this problem, we shall use energy consumption per capita as the measure of modernization only for within-industry comparisons of firms; for cross-industry comparisons of firms we shall use the extent of reliance on inanimate, mechanized, and automated processes as the criterion of modernization.

Japan, though still less modernized than the United States and some other Western societies, is narrowing the "modernization gap" between itself and those societies, both at the general societal level and at the level of its larger firms. Moreover, the performance of those Japanese firms (as measured, for example, by their volume of sales) is also tending toward levels as high as those of comparable Western firms. The convergence theory of modernization, as applied to the level of complex organizations, would predict a similar convergence in the social organization of Japanese and Western firms. On social structural and technological grounds, theory would lead us to expect large, successful Japanese firms to be relatively modernized in their social organization, and to be becoming more so. One widely known model of the Japanese firms — the paternalism-lifetime commitment model — denies this, and argues instead for an anti-convergence theory. "... [Industrial organization in Japan has followed a different course from that of the United States; yet it has also achieved outstanding results. Indeed, it seems likely that it is as a consequence of having developed a different, Japanese approach to organization that Japan has accomplished the industrial success that it has" (Abegglen 1969:100).

It is our position that the paternalism-lifetime commitment model exaggerates the uniqueness, uniformity, and traditionalism of the social organization of Japanese firms; that the most successful firms have in fact moved in the direction of a more modern organizational structure; and that those firms that have not moved in this direction will exhibit significant organizational strains. We shall also attempt to show that although a Japanese firm may have a given attribute of the paternalism-lifetime commitment model, the empirical consequences of that attribute predicted by the model are often not, in fact, observed in our data.

JAPAN'S RAPID INDUSTRIAL DEVELOPMENT

By almost any measure, Japan's economic and, more specifically, industrial development has been a notable success. Its real annual economic growth rate averaged over 10 percent through the 1960s (Oriental Economist 1969,1971). Its industrial productivity index number (1960 = 100) was 172 in 1965 and 371 by 1970(Ouchi 1971:3). Among the 49 nations for which the United Nations presented data, Japan had the fourth highest rate of increase of industrial production in manufacturing between 1964 and 1969 (United Nations 1971: table 51, pp. 167-77). Even among 10 leading industrial nations, Japan's index number for labor productivity in manufacturing (1963 = 100) in 1968 was second only to that of the United States.

At the level of firms a pattern similar to that at the national aggregate level can be seen. Fortune publishes an annual list of the 200 manufacturing and mining firms with the largest sales in the world (excluding the United States). The number of Japanese firms in this group increased from 31 in 1962 to 51 in 1970 {Fortune 1963:139-43; 1971:151-54). In 1962, two other countries — Britain and West Germany — had more companies among the top 200 than did Japan, but by 1969 (and again in 1970 and 1971) Japan had outdistanced them and attained the position of the country with the largest number of firms among the top 200 (Fortune 1972 :153-56). In 1972, Fortune extended its list to include the top 300 firms in the world outside the United States. Japan led with 79 firms, followed by Britain with 61 and West Germany with 43 (Fortune September 1973:203). The Japanese firms' rate of growth in sales was higher than that of the European firms. When United States firms are included, the number of Japanese firms among the 200 firms with the largest sales in the world increased from eight in 1962 to 14 in 1969. Although 114 United States firms had sales of over $1 billion in 1969, in contrast to 13 Japanese firms, in dynamic terms the striking fact is that the Japanese firms were generally rising in rank among the world's leading 200 firms (mean rise of 11.3 ranks in sales from 1968 to 1969), while the American firms were generally falling (mean fall of 2.3 ranks).

What accounts for Japan's success in industrial development? At the national level, a number of explanations have been advanced, variously emphasizing political, economic, technological, sociocultural, psychological, or other factors (Levy 1953, Lockwood 1954, Bellah 1957, Smith 1958, Nakayama 1964, Allen 1965, Chao 1968, Yoshino 1968, Stone 1969). The Japanese government's Economic White Paper for fiscal 1968 summarized these explanations as follows: "Japanese people's industriousness, their high rate of savings, ample and excellent labor, constant technological innovations, consumption revolution caused by the advent of new consumer durables ... and the existence of a competitive society based on institutional reforms are the major factors that have supported the nation's rapid postwar economic growth" (The Mainichi Daily News, 1969:5). In this book we are concerned with explanations at the level of the industrial firm. As Japan's larger firms begin to overtake their Western counterparts in sales and productivity, it is significant to ask, what are the factors on the level of the firm that explain this success? This takes us at once into what may be called the "Japanese factory controversy."

THE JAPANESE FACTORY CONTROVERSY

The controversy over the Japanese factory concerns whether, given the Japanese sociocultural setting, industrial efficiency is maximized by traditional forms of organization, by some combination of traditional and modern forms, or by the wholesale adoption of modern forms. Japanese factory owners, managers, and personnel directors are preoccupied with the rationality and efficiency of their production system. However, they find it difficult to evaluate whether their traditional practices in personnel management are effective in production under changing conditions. Thus, what for sociologists is a central theoretical and research problem is for Japanese industrialists a very practical dilemma.

By the "paternalism-lifetime commitment model" we refer to a variety of similar ideas that have been identified by different terms, such as Whitehall and Takezawa's (1968) "involvement hypothesis," and what Dore (1973) calls being "organization-oriented" rather than "market-oriented." We recognize that these and other Japanese and Western scholars — Matsushima and Nakano (1968), Abegglen (1958), Levine (1958), Matsushima (1962), and Vogel (1963) — do not all regard the thesis as of equal validity.

By the paternalism-lifetime commitment model of the social organization of Japanese firms in this study, then, we refer to the following elements. The relationship between the firm and the employee is one of lifetime commitment (shushin koyo): the employee enters a firm after completing school and remains in that same firm until retirement. Lifetime commitment is supported by Japanese beliefs in "the firm as one family" (kigyo-ikka), and "familistic management" (keiei kazokushugi) (Hazama 1960:137). The basic link between the employee and the firm is more a matter of loyalty and reciprocal obligation than a rational economic calculus (Abegglen 1958:17). There is a seniority system (nenko joretsu-seido) according to which base pay, allowances, and promotions depend more on age and length of service in the firm than on job or performance. Inefficient employees are retained, and recruitment screening pays little attention to skills directly related to work performance.

The model posits further that the strength of lifetime commitment derives not only from the present social structure of Japan, but also its traditional, feudal past. "At repeated points in the study of the factory, parallels to an essentially feudal system of organization may be seen — not, to be sure, a replication of the feudal loyalties, commitments, rewards, and methods of leadership but a rephrasing of them in the setting of modern industry" (Abegglen 1958:131).

It would be one thing if this paternalistic, particularistic, diffuse, and less rationalized form of social organization were found mainly in small-scale, technologically less advanced firms. But the paternalism-lifetime commitment thesis is that these social organizational features are more common in Japan's largest (over 1,000 employees) and technologically most advanced firms. It is this that gives the thesis much of its anti-convergence flavor.

The controversy over the extent of lifetime commitment and other aspects of traditional social organization in Japanese industry has gone on for over a decade now. The paternalism-lifetime commitment model has been challenged by several Japanese and Western social scientists (Tominaga 1961, 1962; Taira 1962, 1970; Odaka 1963; Noda 1963; Tsuda 1965; Shirai 1967; Sumiya 1967; Cole 1971a; Okochi 1972; and Okochi, Karsh, and Levine 1973). These critics argue that lifetime commitment applies to only a small minority of wage earners in manufacturing. They argue further that the situation the model describes as traditional in Japan was in fact a postwar aberration in the capital and labor markets and that during the 1960s Japanese industry began to return to more rational modes. But the model has had more influence than its critics have on social scientists who are not Japan specialists, and Abegglen has held to his original position in more recent writings, claiming that the alleged changes in factory social organization are more apparent than real (Abegglen 1969). Moreover, Dore's entering the lists (Dore 1973) will give the model a new lease on life. Dore's version of the model depicts the typical Japanese factory as organization-oriented, that is, employees have a lifetime commitment to one firm, there is a seniority-plus-merit wage system, an individual has a career within the firm, is trained in and by the firm, the source of his welfare is the firm, not the government, and a high degree of consciousness of the firm as such is nurtured.

As we subject the paternalism-lifetime commitment thesis to close theoretical and empirical scrutiny in this book, we shall refer most often to Abegglen's version. This is not because we regard it as the best statement; Dore's is superior, but was published too late to be our central referent. It is not our intent to single out Abegglen for ad hominem attack, but rather to provide the reader with a specific source for the propositions we shall test. In other words, what is important is the paternalism-lifetime commitment model, and what can be learned from it and from the Japanese experience, not the particular assertions of any of the proponents of the model.

It should be clear that the controversy over the model decisively joins a number of theoretical issues: To what extent can there be a convergence of technology without a convergence of social structure in organizations? What type of organizational structure maximizes performance and efficiency? To what extent can the behavior and attitudes of members of organizations be explained on the basis of the culture and history of their society, to what extent on the basis of technological and structural characteristics of the organizations themselves?

With these questions in mind, a number of systematic empirical studies in Japanese factories have been undertaken in recent years, by Okochi et al. (1959), Whitehill and Takezawa (1968), Cole (1971a), Dore (1973), and Okochi, Karsh, and Levine (1973); the present book is an addition to this growing literature.

These questions involve the relationships between three sets of variables — social organization, technology, and performance — at the level of complex organizations. We next present a conceptual scheme that defines these variables.

CONCEPTUAL SCHEME

A complex organization is a structure for coordinating the work of many persons that is deliberately established to accomplish certain ends. Firms, hospitals, schools, churches, and armies are complex organizations; families, friendship cliques, and neighborhoods are not. For any of these complex organizations, we may analytically distinguish such components as their environment, technology, social structure, or culture. The core concept of this study is that of the social organization (social structure) of the firm and its subunits. At the most general level, this social organization can be viewed according to its degree of bureaucratization.

In Weber's famous statement, bureaucracy is one type of administration, namely, the modern-rational, as opposed to the traditional and charismatic (Weber 1946). An organization is bureaucratic to the extent that its personnel operate on the basis of norms and values of rationality, functional specificity, universalism, and achievement; authority is monocratic, but functionally specific, not diffuse and paternalistic; personnel are selected on the basis of skills related to specific tasks; promotions, pay, and the like are based on workers' performance, rather than on age or seniority alone. Remembering that these elements are variables, not dichotomous attributes, let us consider them as concepts that disaggregate the master concept of the social organization of a firm.

1. Formal structure. Formal structure is defined as "the stable and explicit pattern of prescribed relationships in the organization" (Woodward 1965:10). More specifically, the formal structure refers to the number of hierarchical levels in the organization, the ratio of managerial and staff personnel to all personnel, and the span of control of managers on different levels (Blau and Schoenherr 1971:15).

2. Systematic procedures. The tasks performed by personnel follow "general rules, which are more or less stable, more or less exhaustive, and which can be learned" (Weber 1946:198). More recent studies have made a sharper distinction between "rules that carefully codify behavior and sanctions for violation, thus becoming substitutes for close supervision" and "procedures that give guidelines, the standards that are necessary when something occurs frequently" (Azumi and Hage 1972:223-24).

(Continues...)

---

Excerpted from Modernization and the Japanese Factory by Robert M. Marsh, Hiroshi Mannari. Copyright © 1976 Princeton University Press. Excerpted by permission of PRINCETON UNIVERSITY PRESS.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

---

Table of Contents

• Frontmatter, pg. i
• PREFACE, pg. vii
• CONTENTS, pg. xi
• TABLES, pg. xii
• FIGURES, pg. xvii
• CHAPTER ONE. Introduction to the Problem, pg. 1
• CHAPTER TWO. Three Japanese Firms in Their Industry Settings, pg. 15
• CHAPTER THREE. Formal Structure, pg. 33
• CHAPTER FOUR. Technology and the Division of Labor, pg. 54
• CHAPTER FIVE. Job Satisfaction and Work Values, pg. 99
• CHAPTER SIX. The Reward System: Pay, pg. 120
• CHAPTER SEVEN. The Reward System: Promotion, pg. 157
• CHAPTER EIGHT. Social Integration of the Employee into the Company (1), pg. 178
• CHAPTER NINE. Social Integration of the Employee into the Company (2), pg. 203
• CHAPTER TEN. Social Integration of the Employee into the Company (3), pg. 225
• CHAPTER ELEVEN. Performance in Japanese Firms, pg. 254
• CHAPTER TWELVE. The Social Organization of Japanese Firms, pg. 297
• APPENDIX A. Research Methods, pg. 339
• APPENDIX B. Construction of Indexes, pg. 347
• APPENDIX C. Correlation Matrices, pg. 359
• APPENDIX D. Multiple Regression Analyses, pg. 365
• BIBLIOGRAPHY, pg. 423
• INDEX, pg. 431