2006/05/08 ISS Discussion Paper Series Personnel Management and the Formation of Modern Business Organisation: The Railway Industry in Japan before the First World War May 2006 F-123 Naofumi Nakamura (Institute of Social Science, University of Tokyo)
[email protected] Introduction The purpose of this paper is to present the history of organisational reforms in Nippon Railway Co., the largest railway company in Meiji Japan, focussing mainly on the relationship between the personnel management and the internal organisation of the company. Through this work, I intend to have some insights into the background and implications of the formation of modern business enterprises in Japan. In the seminal work The Visible Hand, which discusses the development of the modern business enterprise in the U.S., Chandler summarises the characteristics of the modern business enterprise into two points1: 1) it consists of multiple distinct operating 1 Chandler 1977: 1. 1 2006/05/08 units; 2) it is managed by a hierarchy of salaried executives. Based on those observations, he vividly depicts the process of the emergence of the first modern business enterprise and the class of salaried managers in the U.S. railway industry. In particular, the decentralised divisionalised structure introduced by J. Edger Thomson in 1857 to the Pennsylvania Railroad was an epoch-making event in the history of the modern business enterprise. According to Chandler, the Pennsylvania Railroad was the first American business to work out fully the line-and-staff concept of