Context Dependent Success
International Human Resource Management in Japanese Firms
Volume 4, Issue 1 (Book review 6 in 2004). First published in ejcjs on 15 September 2004.
Timothy Dean Keeley (2001) International Human Resource Management in Japanese Firms: Their Greatest Challenge, New York: Palgrave Macmillan, Hardback, ISBN: 033396506X, 256 pages.
International Human Resource Management in Japanese Firms analyses and explains the characteristics of and background to Japanese firms' human resource management behaviour and practices in international business by focusing on Host Country National (HCN) managers' integration into the management process of Japanese overseas subsidiaries.
The book first presents a "conceptual model" of factors affecting HCN managers' integration and the author proposes three key factors that affect this: "business and culture" and the challenge to cross-cultural management, "communication" and how it affects the decision making process, and "IHRM" (International Human Resource Management) as a medium to put those two factors into practice. Following this, in chapters 2 through 5, and based on his conceptual model, Keeley examines the factors which affect the integration of HCN managers into the management processes of Japanese overseas subsidiaries. These are cross-cultural management (chapter 2), Japanese culture and organizational behaviour (chapter3), IHRM (chapter 4) and communication and decision-making (chapter5). In Chapter 6 he presents his own research into HCN managers integration in Japanese Multi-National Corporations (MNCs) based on qualitative data collected through interviews with HCN managers and parent company national (PCN) managers in Japanese subsidiaries in Malaysia and Australia. In addition, findings from other qualitative data gathered via questionnaires from foreign subsidiaries of Japanese firms in Australia, Malaysia, Singapore and Thailand are presented.
Keeley successfully argues for consideration of the special characteristics of Japanese management and Japanese business people's behaviour by referring to various existing theories and concepts concerning Japanese culture and social traits. In addition, Japan's historical relationships with countries such as Thailand, Malaysia, Singapore and Australia are considered. Like Keeley, as an academic of HRM who has practical business experience I understand the necessity of including a wide spectrum of issues including domestic politics, international relations, economics, culture, and history in order to understand and explain corporate behaviour. Moreover, his analysis of IHRM using Pelmutter's four categories (ethnocentric, polycentric, regiocentric and geocentric) is helpful not only to understand IHRM in Japanese firms but also the broader subject of IHRM worldwide.
Keeley's own field work very nicely supports and contextualises his conceptual model. Although it is understandable that the author would need a good deal of space to explain the complex factors which affect HCN integration, perhaps there could have been a greater volume of data presented. Moreover, the survey was limited to managers in foreign subsidiaries of Japanese companies in Malaysia and Australia. Comparison with cases in other Asian countries, Europe and the United States would, in my opinion, have been even more helpful in understanding the peculiarities of Japanese companies and the importance of culture and communication in IHRM. In addition, some insight into the motivations of parent companies in Japan may have helped us to understand some of the reasons why Japanese companies have maintained their unique management practices and so further assist us in understanding the relative importance of culture and structure in business decision making.
Although Keeley wisely keeps a neutral position, on reading his book I was prompted to feel that there may be a greater proportion of negatives than positives among Japanese companies' attitudes towards HCNs. I was prompted to ask myself whether and why Japanese companies have been so inefficient in managing foreign subsidiaries. Needless to say, many negative stereotypes remain, such as the idea that Japanese companies try to force subsidiaries in HCNs to implement Japanese management practices and that people from Japan do not understand local culture and people. However, and in sum, I think it can be said that Japanese companies could be more successful in terms of the internationalisation of their management.
To understand IHRM in the context of a company's overall business strategy is crucial. Increasing employees' motivation undoubtedly increases productivity and efficiency in an organization and, as stakeholders, to increase employee satisfaction is a core company aim. However, HRM is not the final goal. Rather HRM is a function which sustains and supports a firm's business. For example Itagaki (2002) proposes the problem of Japanese MNEs slowness in entrusting plant management to local personnel, which may lead to low levels of profitability. However, he argues that considering Japanese companies' overall high operational efficiency, it is difficult for then to lose this by standardization within the organization, thereby sacrificing low job separation partitions and high levels of information sharing, or by suddenly decreasing the number of Japanese employees, whose presence compensates for the insufficient transfer of organizational characteristics from Japan. Itagaki also presents Japanese companies' commitment to remaining in Asian countries even when the financial crises hit., unlike many US MNEs which withdrew during the period. According to Itagaki, long-term commitment is a positive characteristic of Japanese companies' business principles.
The separation of emotional and operational issues in companies is also important in analysing IRHM. Especially, in analysing data, one must pay careful consideration of the background to respondents' answers and Keeley does well to present the various issues which may affect people's perceptions before moving to his own study. With regard to people's perceptions, ironically, although Japanese outward FDI is overwhelmingly greater than it's reverse, and consequently not many studies have been done on subsidiaries of foreign companies in Japan, we continue to hear the same stereotypes and biased perceptions among HCN managers regarding the behaviour of Japanese people toward foreign companies and of expatriates from parent companies.
In conclusion, there are many issues and difficulties in analysing IHRM and there seems to be no single best practice which is applicable to all kinds of companies in the world. Appreciating this will impact upon how we can conduct research into companies in various environments and in rapidly changing economic situations, for both business people and academics are struggling to improve the quality of their performance. On the whole, Keeley presents a profound examination of IHRM as well as many rich and detailed examples of management practices and managers' perceptions with regard to the integration of HCN managers within the management processes of Japanese overseas subsidiaries.
This book is suited to both academics and business people interested in Japanese society and business management practices. Moreover, the book is helpful more broadly within the field of International Human Resource Management. The author's analysis covers various influential theories and concepts regarding HRM and organizational behaviour without neglecting the importance of seeing and understanding cause and effect in practical business situatioons. The author's experience of living in Japan for many years, in business dealings with over 200 Japanese companies and their subsidiaries, and his language proficiency in both Japanese and English have enabled him to analyse the subject from various approaches and to provide us with an excellent insight into this complex and challenging subject.
Itagaki, Hiroshi (2002) Japanese Multinational Enterprises: The Paradox of High Efficiency and Low Profitability, Asian Business & Management, 1, 101-124
Article copyright Kuniko Ishiguro.