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International Human Resource Management in Japanese Firms Their Greatest Challenge

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International Human Resource Management in Japanese Firms Their Greatest Challenge International Human Resource Management in Japanese Firms Their Greatest Challenge Timothy Dean Keeley INTERNATIONAL HUMAN RESOURCE MANAGEMENT IN JAPANESE FIRMS This page intentionally left blank International Human Resource Management in Japanese Firms Their Greatest Challenge Timothy Dean Keeley © Timothy Dean Keeley 2001 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1T 4LP. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The author has asserted his right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2001 by PALGRAVE Houndmills, Basingstoke, Hampshire RG21 6XS and 175 Fifth Avenue, New York, N.Y. 10010 Companies and representatives throughout the world PALGRAVE is the new global academic imprint of St. Martin's Press LLC Scholarly and Reference Division and Palgrave Publishers Ltd (formerly Macmillan Press Ltd). ISBN 0±333±96506±X This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Keeley, Timothy Dean, 1956­ International human resource management in Japanese firms: their greatest challenge/Timothy Dean Keeley. p. cm. Includes bibliographical references and index. ISBN 0­333­96506­X 1. International business enterprisesManagement. 2. International business enterprisesPersonnel management. 3. Organizational changeManagement. 4. Industrial ManagementJapan. I. Title. HD62.4 .K435 2001 658.3'00952dc21 2001036091 10987654321 10 09 08 07 06 05 04 03 02 01 Printed in Great Britain by Antony Rowe Ltd, Chippenham, Wiltshire Contents List of Tables vi List of Figures vii Acknowledgements viii Abbreviations ix Glossary of Japanese Terms x 1 The Challenge 1 2 Cross-Cultural Management Issues 15 3 Japanese Culture and Organizational Behaviour 32 4 International Human Resource Management 98 5 Communication and Decision-Making 141 6 A Study Clarifying HCN Integration in Japanese MNCs 172 7 Conclusions Concerning HCN Integration in Japanese MNCs 202 Appendix: List of Questions in Scales 222 References 225 Bibliography 237 Index 252 v List of Tables 6.1 Correlation matrix, means and standard deviations for HCN data 194 6.2 Multiple regression reporting standardized coefficients for HCN data 196 6.3 Decomposition for final empirical path model 197 6.4 Correlation matrix, means and standard deviations for PCN managers 199 6.5 Standard multiple regression reporting standardized coefficients for PCN data 200 vi List of Figures 1.1 Conceptual model of factors affecting HCN integration 13 6.1 Conceptual model of factors affecting HCN integration 195 6.2 Final empirical path model for HCN respondents (standardized coefficients) 197 6.3 Final empirical path model for PCN respondents (standardized coefficients) 198 vii Acknowledgements The findings presented in this book are primarily based upon research carried out while I was at the Australian Centre for Strategic Manage- ment (ACSM) at Queensland University of Technology (QUT). First of all, I would like to thank Mark Shadur for inviting me to carry out this research at ACSM. I would also like to express my appreciation to the entire faculty at Kyushu Sangyo University (KSU) who allowed me to take a year's sabbatical so I could concentrate on this research. The financial support for the first phase of the research was covered by a grant from the Industrial Management Research Institute at KSU. The funds for the second phase were provided by the ACSM along with the Faculty of Business at QUT. I greatly appreciate all the time and energy spent by all the parent company national and host country national managers who completed questionnaires and participated in interviews. Without their co-opera- tion this research could not be successfully carried out. In addition, there are numerous individuals who assisted me in this research. In particular, I would like to express my sincere gratitude to Mark Shadur, who contributed to the development of the model and the statistical analysis presented in this book, and Kazuo Doi, who was an excellent partner in the first phase of the research. TIMOTHY DEAN KEELEY viii Abbreviations The following is a list of the abbreviations that appear repeatedly throughout the text: FDI foreign direct investment HCN host country national HRM human resource management IHRM international human resource management MITI Ministry of trade and industry (Japan) MNC multinational corporation PCN parent company national SME small and medium size enterprises TCN third country national UNCTC United Nations Center on Transnational Corporations UK United Kingdom US United States ix Glossary of Japanese Terms Though the Japanese terms used in the text are all defined when introduced, for ease of reference a summary of the terms with brief explanations are offered below: (Note: the romanization of Japanese words used is without distinction between short and long vowels.) ba: place (frame) bucho: department chief endaka: high value of the yen gaijin: foreigner hi-yatoi: day labourers ie: household, often used in reference to companies as households gaman: endurance, sufferance genchi-ka: localization jinji-bu: personnel department jinmyaku: human network kao: face jirei: assignment notice kacho: section chief kaisha: company kazokushugi: familism kigyo-betsu rodo kumiai: enterprise-based unions keiretsu: (sangyo keiretsu) industrial grouping (kinyu keiretsu) grouping centred on a main bank kokoro: mind, heart, soul mado-giwa zoku: window tribe, employees with nothing to do but look out the window Monbu-sho: Ministry of Education nanpo boke: tropical amnesia nemawashi: lay the groundwork for obtaining one's objective mainly through informal discussions (part of Japanese typical decision- making process) nenko joretsu: Japanese-style seniority system nihonjinron: a school of thought that stresses Japanese uniqueness omikoshi management: a metaphor referring to the teamwork involved in carrying a portable shrine omote-ura: front and back onjo-shugi: paternalism x Glossary of Japanese Terms xi oyabun-kobun: the boss or leader and the subordinate or follower (derived from parent-child) ringi: the process of obtaining the sanction to a plan by circulating the draft prepared by a person in charge of a matter ringi-sho: the written proposal (draft of a plan) rinji-shain: temporary employees saiko keiei sekininsha: position of highest managerial authority sei-shain: a regular or full-time employee shain: an employee (member) shain ryoko: company trip shataku: company housing shikaku: attribute (used in conjunction with ba) shiteiko seido or tokuteiko seido: system of recruiting exclusively from a selected number of elite universities shokumu kijutsu-sho: job description shushinkoyo: long-term or lifetime employment sogo-shosha: general trading company soto-uchi: outside versus inside soto no hito: outsiders tan-i kumiai: unit union to which workers are affiliated individually and directly tan-itsu kumiai: single union to which individual members affiliate directly tansan: industrial federations tanshin funin: living away from the family while on assignment in some far away location tatemae-honne: something stated for public consumption versus the real thought or feeling uchi no hito: insiders wa: harmony wa: used in compound words to refer to Japanese things wa-shoku: Japanese food wa-shitsu: a Japanese style room yo: (character for ocean) used to refer to foreign, usually Western, things yo-fuku: Western-style clothing This page intentionally left blank 1 The Challenge Perhaps the greatest challenge Japanese companies face in expanding their foreign direct investment (FDI) is how to integrate host country national (HCN) managers into the management process of their over- seas subsidiaries as well as that of the parent companies themselves. I examine the problems associated with HCN integration in Japanese companies and seek to clarify the extent to which HCN managers are actually integrated. As an integral part of this process I explore a number of important related topics such as: Japanese management in general, the transferability of Japanese management practices to their foreign subsidiaries, international human resource manage- ment (IHRM) issues, as well as cross-cultural management and multi- national management issues. Investigating the role of HCN managers provides insights into Japanese IHRM through the eyes of the HCN managers themselves and reveals how Japanese multinational cor- porations (MNCs) actually manage their foreign subsidiaries. I also address numerous misunderstandings concerning Japanese manage- ment in general and the management of Japanese foreign subsidiaries in particular. There are four underlying assumptions that substantiate the import- ance of effective integration of HCNs. First, globalization of human resource management policies and practices is a positive and prevail- ing trend among the world's MNCs and those MNCs that
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