Production Organizations in Japanese Economic Development In this important new book, a bevy of international contributors explore how production was organized in the context of the economic development of modern Japan. Production organizations are taken to mean the long-term relationships which economic agents create for production, based on employment contracts or long- term transactions. This includes hierarchical organizations such as factories and corporations, but also flexible arrangements such as subcontracting. Production Organizations in Japanese Economic Development presents the first investigation into the historical development of production organizations in Japan, based on the economics of organization. Contributors provide new insights into several areas including: determinants of organizational choice, governance mechanism of putting-out system, efficiency implication of putting- out system, evolutionary mechanism of organizational development. Tetsuji Okazaki is Professor at the Faculty of Economics, The University of Tokyo. Routledge studies in the modern world economy 1 Interest Rates and Budget Deficits 7 Competition Policy in the Global A study of the advanced economies Economy Kanhaya L. Gupta and Modalities for co-operation Bakhtiar Moazzami Edited by Leonard Waverman, William S. Comanor and 2 World Trade after the Uruguay Akira Goto Round Prospects and policy options for 8 Working in the Macro Economy the twenty-first century A study of the US labor market Edited by Harald Sander and Martin F. J. Prachowny András Inotai 9 How Does Privatization 3 The Flow Analysis of Labour Work? Markets Edited by Anthony Bennett Edited by Ronald Schettkat 10 The Economics and Politics of 4 Inflation and Unemployment International Trade Contributions to a new Freedom and trade: volume II macroeconomic approach Edited by Gary Cook Edited by Alvaro Cencini and Mauro Baranzini 11 The Legal and Moral Aspects of International Trade 5 Macroeconomic Dimensions of Freedom and trade: volume III Public Finance Edited by Asif Qureshi, Essays in honour of Vito Tanzi Hillel Steiner and Edited by Mario I. Blejer and Geraint Parry Teresa M. Ter-Minassian 12 Capital Markets and Corporate 6 Fiscal Policy and Economic Governance in Japan, Germany Reforms and the United States Essays in honour of Vito Tanzi Organizational response to market Edited by Mario I. Blejer and inefficiencies Teresa M. Ter-Minassian Helmut M. Dietl 13 Competition and Trade 22 The New Industrial Geography Policies Regions, regulation and institutions Coherence or conflict Edited by Trevor J. Barnes and Edited by Einar Hope Meric S. Gertler 14 Rice 23 The Employment Impact of The primary commodity Innovation A. J. H. Latham Evidence and policy Edited by Marco Vivarelli and 15 Trade, Theory and Mario Pianta Econometrics Essays in honour of 24 International Health Care John S. Chipman Reform Edited by James C. Moore, A legal, economic and political Raymond Riezman and analysis James R. Melvin Colleen Flood 16 Who Benefits from 25 Competition Policy Analysis Privatisation? Edited by Einar Hope Edited by Moazzem Hossain and Justin Malbon 26 Culture and Enterprise The development, representation 17 Towards a Fair Global Labour and morality of business Market Don Lavoie and Avoiding the new slave trade Emily Chamlee-Wright Ozay Mehmet, Errol Mendes and Robert Sinding 27 Global Financial Crises and Reforms 18 Models of Futures Markets Cases and caveats Edited by Barry Goss B. N. Ghosh 19 Venture Capital Investment 28 Geography of Production and An agency analysis of UK Economic Integration practice Miroslav N. Jovanovic´ Gavin C. Reid 29 Technology, Trade and Growth 20 Macroeconomic Forecasting in OECD Countries A sociological appraisal Does specialisation matter? Robert Evans Valentina Meliciani 21 Multimedia and Regional 30 Post-Industrial Labour Markets Economic Restructuring Profiles of North America and Edited by Hans-Joachim Braczyk, Scandinavia Gerhard Fuchs and Edited by Thomas P. Boje and Hans-Georg Wolf Bengt Furaker 31 Capital Flows Without Crisis 40 Global Governance and Reconciling capital mobility and Financial Crises economic stability Edited by Meghnad Desai and Edited by Dipak Dasgupta, Yahia Said Marc Uzan and Dominic Wilson 41 Linking Local and Global 32 International Trade and Economies National Welfare The ties that bind Murray C. Kemp Edited by Carlo Pietrobelli and Arni Sverrisson 33 Global Trading Systems at Crossroads 42 Tax Systems and Tax Reforms A post-Seattle perspective in Europe Dilip K. Das Edited by Luigi Bernardi and Paola Profeta 34 The Economics and Management of Technological 43 Trade Liberalization and Diversification APEC Edited by John Cantwell, Edited by Jiro Okamoto Alfonso Gambardella and Ove Granstrand 44 Fiscal Deficits in the Pacific Region Edited by Akira Kohsaka 35 Before and Beyond EMU Historical lessons and future 45 Financial Globalization and the prospects Emerging Market Economies Edited by Patrick Crowley Dilip K. Das 36 Fiscal Decentralization 46 International Labor Mobility Ehtisham Ahmad and Unemployment and increasing Vito Tanzi returns to scale Bharati Basu 37 Regionalisation of Globalised Innovation 47 Good Governance in the Era of Locations for advanced industrial Global Neoliberalism development and disparities in Conflict and depolitization in Latin participation America, Eastern Europe, Asia Edited by Ulrich Hilpert and Africa Edited by Jolle Demmers, 38 Gold and the Modern World Alex E. Fernández Jilberto and Economy Barbara Hogenboom Edited by MoonJoong Tcha 48 The International Trade 39 Global Economic Institutions System Willem Molle Alice Landau 49 International Perspectives on 57 Financial Crises Temporary Work and Workers Socio-economic causes and Edited by John Burgess and institutional context Julia Connell Brenda Spotton Visano 50 Working Time and Workers’ 58 Globalization and Self- Preferences in Industrialized Determination Countries Is the nation-state under siege? Finding the balance Edited by David R. Cameron, Edited by Jon C. Messenger Gustav Ranis and Annalisa Zinn 51 Tax Systems and Tax Reforms 59 Developing Countries and the in New EU Members Doha Development Round of the Edited by Luigi Bernardi, WTO Mark Chandler and Edited by Pitou van Dijck and Luca Gandullia Gerrit Faber 52 Globalization and the Nation 60 Immigrant Enterprise in Europe State and the USA The impact of the IMF and the Prodromos Panayiotopoulos World Bank Edited by Gustav Ranis, 61 Solving the Riddle of James Vreeland and Globalization and Development Stephen Kosak Edited by Manuel Agosín, David Bloom, Georges Chapelier 53 Macroeconomic Policies and and Jagdish Saigal Poverty Reduction Edited by Ashoka Mody and 62 Foreign Direct Investment and Catherine Pattillo the World Economy Ashoka Mody 54 Regional Monetary Policy Carlos J. Rodríguez-Fuentez 63 The World Economy A global analysis 55 Trade and Migration in the Horst Siebert Modern World Carl Mosk 64 Production Organizations in Japanese Economic 56 Globalisation and the Labour Development Market Edited by Tetsuji Okazaki Trade, technology and less-skilled workers in Europe and the United States Edited by Robert Anderton, Paul Brenton and John Whalley Production Organizations in Japanese Economic Development Edited by Tetsuji Okazaki First published 2007 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN Simultaneously published in the USA and Canada by Routledge 270 Madison Ave, New York, NY 10016 This edition published in the Taylor & Francis e-Library, 2007. “To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.” Routledge is an imprint of the Taylor & Francis Group, an informa business © 2007 Selection and editorial matter Tetsuji Okazaki; individual chapters, the contributors All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data A catalog record for this book has been requested ISBN 0-203-96227-3 Master e-book ISBN ISBN10: 0-415-39180-6 (hbk) ISBN10: 0-203-96227-3 (ebk) ISBN13: 978-0-415-39180-1 (hbk) ISBN13: 978-0-203-96227-5 (ebk) Contents List of contributors xi 1 Introduction: history of production organizations 1 TETSUJI OKAZAKI AND MASAKI NAKABAYASHI 2 The rise of the power-loom factory in the traditional silk-weaving district: change in demand and labour market 14 TOMOKO HASHINO 3 The Registration System and the Grade Wage: from cooperation to a market for human capital? A lesson from the Japanese silk reeling industry 39 RYO KAMBAYASHI 4 Personnel management and the formation of modern business organisation: the railway industry in Japan before the First World War 75 NAOFUMI NAKAMURA 5 Determinants and effects of employing professional corporate executives: a case of cotton-spinning companies in pre-war Japan 110 TETSUJI OKAZAKI 6 Flexibility and diversity: the putting-out system in the silk fabric industry of Kiryu, Japan 127 MASAKI NAKABAYASHI 7 The development of dispersed production organization in the interwar period: the case of the Japanese toy industry 167 MASAYUKI TANIMOTO x Contents 8 The evolution of organizational