Organizational and environmental effects on innovation: A comparison of two countries

Significant changes in science and technology are the result of a complex interaction of environmental and organizational factors which are further contingent upon situational factors that may be culture specific. Numerous authors maintain that there are significant differences between Japanese and American organizations. These differences, it is proposed affect the innovativeness of organizations in both countries. The United States can be considered the leading innovator among industrialized nations as measured by its net exports of knowledge-intensive goods. However, the R & D trade balance, reflecting US export strength in technology-based manufactured goods, although increasing from 1960, has recently declined, while Japan has continued to increase its share of high-technology products. In this article factors are identified that affect the process of innovation within organizations and US and Japanese organizations are analyzed to clarify the contributing and inhibiting factors. Suggestions for improving the innovative climate within each country are offered.The author wishes to thank Professors Azumi, Nakamura, and Patrick, and the other members of theUniversity Seminar on Modern Japan, Columbia University for their suggestions on an earlier version of this paper in 1984.     

A comparison of budgetary control systems in American and Japanese manufacturing firms

This article examines and compares some variables considered important in budgetary preparation and performance evaluation by American and Japanese executives of manufacturing firms. The literature asserts that American executives employ management styles and performance evaluation criteria that tend to overemphasise short-term goals, while Japanese executives prefer management philosophy and performance evaluation criteria that emphasise long-term goals. The survey research method is employed to gather evidence to test hypotheses pertaining to such an assertion. The research results provide empirical evidence that supports most of the assertions in the literature.The author expresses his sincere gratitude to Drs James Don Edwards of the J M Tull School of Accounting — University of Georgia, Ato Ghartey of Southeastern Massachusetts University, R S O Wallace of Exter University and annonymous reviewers for their helpful comments and suggestions.     

Japanese joint ventures with western multinationals: Synthesising the economic and cultural explanations of failure

Many research studies have been done to explain the reasons for the tensions and failures observed in joint ventures between Japanese and Western multinational enterprises. These studies have identified, with various degrees of sophistication, the existence of cultural differences as a primary determinant of failure. Alternative explanations focus upon a transaction cost approach, emphasising opportunism and the danger of cheating in such strategic alliances. This paper synthesises the literature through the development of a new conceptual framework. This framework, which distinguishes between economic and cultural reasons for failure, provides a new lens to view the literature. It is demonstrated that the simple view of cultural incompatibility needs to be replaced by an awareness of the combined impact of cultural and economic forces on the viability of joint ventures between Japanese and Western firms.Lee T. Brown is a doctoral candidate in the Faculty of Management at the University of Toronto. Alan M. Rugman is Royal Bank Visiting Professor at the University of Alberta and Professor of International Business at the University of Toronto. Alain Verbeke is Assistant Professor of International Business at the University of Toronto. Helpful comments have been received from Nancy Adler, Mark Casson, Martin Evans, Tom Roehl, Mark Warner and Ken Watson.     

The cognitive,psychological and social contexts of Japanese management

After reviewing the literature on Japanese management theory, Keys & Miller (1984), called for a deeper understanding of the environmental contexts of Japanese management and the development of more integrated, internally consistent models. The literature review presented here discusses the dimensions of the cognitive, psychological and social contexts of Japanese management, and concludes with a causal integration between the contexts that underly Japanese management and specific Japanese management practices.Portions of this paper were presented by the first author at the Annual Meeting of the Academy of Management, San Diego, 1985. The authors thank Richard N. Farmer, Richard Peterson, Franklin R. Root, and the reviewers for their helpful comments. Requests for reprints should be sent to Mark E. Mendenhall, Department of Management, College of Business Administration, Loyola Marymount University, Los Angeles, CA 90045.Mark E. Mendenhall is with the College of Business Administration, Loyola Marymount University. Gary Oddou is with the School of Business, San Jose State University.     

Location,governance, and strategic determinants of japanese manufacturing investment in the united states

A firm's decision to manufacture abroad depends on location, governance, and strategic factors. Governance factors are firm-specific. In spite of this, most empirical studies of foreign direct investment (FDI) have been conducted at the industry level (making it impossible to look at firm-specific determinants), and only a handful have considered governance, location, and strategic factors simultaneously. This paper is the first large sample study of the determinants of foreign direct investment at the product and firm-level. It examines the impact of location and governance factors, and of four types of strategic interactions, on a Japanese firm's propensity to manufacture in the U.S. The results support the view that foreign direct investment is explained by location, governance, and strategic variables. Economies of scale and trade barriers encourage Japanese FDI in the U.S. The larger a Japanese firm's R & D expenditures, the greater the probability it will manufacture in the U.S., but this is not the case for advertising expenditures. Some strategic factors are also important: Japanese firms with medium domestic market shares have the highest propensity to invest in the U.S. There is evidence of follow-the-leader behavior between firms of rival enterprise groups, but none of ‘exchange-of-threat’ between American and Japanese firms. Japanese investors are also attracted by concentrated and high-growth U.S. industries.     

How Different Are Human Resource Practices in Japanese “Transplants” in the United Kingdom?

Are the practices in Japanese plants really prototypical of a universal commitment-maximizing approach, or do they largely mirror local conventions? The research reported here aims to address this question by comparing the personnel practices of Japanese manufacturing plants in the United Kingdom and a similar sample of non-Japanese plants. It shows that the extent of high-commitment management is significantly higher among the Japanese plants and moreover that the practices associated with it are used in distinctive ways. As such there is no evidence of a wholesale “Japanization” of British industry. The study shows that the difference between Japanese and non-Japanese plants partly reflects their being Japanese, although the Japanese seniority plus merit pay (nenko) system has not been fully adopted. Nor is the current extent of fully fledged just-in-time in Japanese plants sufficient to account for the difference; yet the author concludes by suggesting that their managements' commitment to developing this still may be crucial.     

The pattern of managerial behaviour in Thai culture

This paper examines the various factors which have shaped contemporary Thai managerial behaviour, exploring the influence of basic cultural values, beliefs and religion, and education. Though the paper is primarily conceptual in orientation, empirical data is presented on the leadership styles of Thai managers. The paper demonstrates how what is essentially an ethnographic approach can be useful in understanding the impact of culture on managerial style.The authors are from the Faculty of Management Sciences, Prince of Songkla University, Thailand.     

Management practices of Taiwanese firms: As compared to those of American and Japanese subsidiaries in Taiwan

The management practices of local Taiwanese firms were evaluated by Negandhi in 1973 as the least developed as compared to those of the American and Japanese subsidiaries. Since then, the local Taiwanese firms have undergone a phenomenal change. In comparison to the American and Japanese subsidiaries, the current management practices — organisational structure, decision making and human resource management of the local Taiwanese firms are a mixture of those of the American and Japanese subsidiaries. The local Taiwanese firms have adapted very well to the impact of the West (the United States) and the East (Japan) and contributed greatly to the economic prosperity of Taiwan.The author wishes to thank the Council for Economic Planning and Development, Republic of China (Taiwan) for financial support.     

Exploiting globalization potential: U.S. and japanese strategies

This paper develops a model of global strategy that includes the constructs of industry globalization potential, the use of global strategy, the role of organization and management and the performance consequences of using global strategy. Propositions are developed as to why American and Japanese MNCs might differ in their perceptions of industry globalization potential, in their desired global strategy response, in their organizationally-derived ability to implement global strategy and in their resulting performance. The model and arguments are examined in extensive interviews with senior executives at 36 worldwide businesses belonging to some of the largest American and Japanese MNCs. Data are analyzed using a partial least squares causal model. The results show that the Japanese firms have more globalized stategies than do the Americans, and that this factor affects their performance favorably.     

Strategic action generation: A comparison of emphasis placed on generic competitive methods by U.S. And Japanese managers

The paper identifies similarities and differences in the emphases and patterns that U.S. and Japanese managers attribute to a set of 22 generic competitive methods. It highlights the different ways that Japanese and American managers combine these methods to form general business strategies. Using factor analyses and smallest space analyses, the study shows differences in business strategy patterns between managers in Japan and the U.S. Such differences reflect the organizing principles underlying the strategy approaches in U.S. and Japanese firms. The organizing principle underlying U.S. responses is the desire to find way to differentiate a firm from its competitors. In contrast, the organizing principle underlying Japanese responses is a desire to establish a comprehensive, stable and defensible position. The paper discusses the implications of these results for strategic management and suggests directions for future U.S. and Japanese comparative strategy research.     

Interaction Orientation and Product Development Performance for Taiwanese Electronics Firms: The Mediating Role of Market‐Relating Capabilities

While academics and practitioners are increasingly aware of the value of including the customer in new product development (NPD), processes for doing so effectively remain unclear. Therefore, this study explores the process through which a firm's interaction orientation (the ability to effectively interact with customers) influences product development performance. Drawing on the resource‐based view, this study develops a research model in which two market‐relating capabilities—market‐linking and marketing capabilities—mediate the effect of interaction orientation on product development performance. The validity of this model is examined by analyzing primary data gathered from 167 Taiwanese electronics companies. The model results provide support for a process link between interaction orientation, market‐relating capabilities, and product development performance, such that a firm's capabilities enable the conversion of customer‐based resources into productive new product outcomes. More specifically, the interaction orientation–product development speed relationship is mediated by both marketing and market‐linking capabilities, while the interaction orientation–product innovativeness relationship is partially mediated by marketing capability. That is, interaction orientation has indirect effects on product innovativeness and product development speed by strengthening both marketing and market‐linking capabilities that in turn improve product development performance. In addition, the results suggest that a firm's interactive rationality moderates the relationship between interaction orientation and marketing capability. Overall, this study enhances our understanding of how firms achieve superior product development performance by developing effective customer interaction. The findings of this study provide important strategic insights into NPD.     

A cross-cultural study on the leadership behaviour of Chinese and Japanese executives

In recent years the People's Republic of China has focused on economic development. The State called on scientists to contribute to the implementation of economic reform and leadership reconstruction. In the Institute of Psychology, Academia Sinica, a research group conducted a cross-cultural study on the leadership behavior of Chinese and Japanese executives. The performance maintenance (PM) theory of leadership which was widely adopted in Japan, has been introduced into China. The findings of the Chinese study conducted in 53 factories among 16260 respondents are compared with the results from the Japanese study by J. Misumi of Osaka University.The author is Professor of Psychology in the Institute of Psychology, Chinese Academy of Science and Secretary-General of the Chinese Psychological Society     

In Search of Innovation and Customer‐related Performance Superiority: The Role of Market Orientation,Marketing Capability,and Innovation Capability Interactions

Understanding the mechanisms through which firms realize the value of their market‐based knowledge resources such as market orientation is a central interest of innovation scholars and practitioners. The current study contends that realizing the performance impact of market orientation depends on know‐how deployment processes and their complementarities in functional areas such as marketing and innovation that co‐align with market orientation. More specifically, this study addresses two research questions: (1) to what extent can market orientation be transformed into customer‐ and innovation‐related performance outcomes via marketing and innovation capabilities; and (2) does the complementarity between marketing capability and innovation capability enhance customer‐ and innovation‐related performance outcomes? Drawing upon the resource‐based view and capability theory of the firm, a model is developed that integrates market orientation, marketing capability, innovation capability, and customer‐ and innovation‐related performance. The validity of the model is tested based on a sample of 163 manufacturing and services firms. In answer to the first research question, the findings show that market orientation significantly contributes to customer‐ and innovation‐related performance outcomes via marketing and innovation capabilities. This finding is important in that market‐based knowledge resources should be configured with the deployment of marketing and innovation capabilities to ensure better performance. In answer to the second research question, the findings indicate that market orientation works through the complementarity between marketing and innovation capabilities to influence customer‐related performance but not innovation‐related performance. Managers are advised to have a balanced approach to managing the deployment of capabilities. If they seek to achieve superiority in customer‐related performance, marketing capability, innovation capability, and their complementarity are essential for attracting, satisfying, building relationships with, and retaining customers. On the other hand, this complementarity would be considerably less important if firms placed greater emphasis on achieving superiority in innovation‐related performance. In contrast to many existing studies, this study is the first to model the roles of both innovation capability and marketing capability in mediating the relationship between market orientation and specific performance outcomes (i.e., innovation‐ and customer‐related outcomes).     

Localisation of Japanese subsidiaries in Southeast Asia

The success story of Japanese firms, both in their home country and their overseas subsidiaries, has been the focus of comparative management research in the 1970s and early 1980s. Several scholars attributed the impressive productivity gains in Japanese industries to the basic principles of Japanese management. Further, they advocated the adoption of these principles by American and European businesses to solve employee morale and productivity problems. However, in recent years, the validity of the “happy worker” hypothesis in explaining the effectiveness of Japanese management has been seriously questioned. In fact, the results of several empirical studies indicate that Japanese firms are facing manpower management problems both at home and in their overseas subsidiaries. The main purpose of this article is to identify and discuss the Japanese management problems of overseas subsidiaries, based on several empirical studies of Japanese overseas subsidiaries undertaken by the authors of this article and other scholars during the last 17 years (1968 to 1985). These studies are:

Localisation Problems of Japanese Subsidiaries Overseas: A Comparative Study in Southeast-Asian Countries.

A comparative study of American, Japanese and local firms in Taiwan.

A comparative study of American, European and Japanese multinationals' subsidiaries in Brazil, Peru, India, Malaysia, Singapore, and Thailand.

A comparative study of American, German, and Japanese multinations in the United States, Western European countries, Australia, and Japan.

A comparative study of upper-level Japanese and American managers of subsidiaries of Japanese firms in the United States.

A comparative study of subsidiaries of American and Japanese multinationals in Singapore.

An intensive case study of a Japanese subsidiary in Australia.

     

The Strategy and structure of top 100 Japanese industrial enterprises 1950–1970

This paper examines the strategic and structural development of the 100 largest Japanese manufacturing enterprises between 1950 and 1970. Unlike other studies of Japanese business the author focuses not only on some of the key differences between Western and Japanese firms such as the emergence of widely diversified industrial groups, but also on similarities. Using the model developed originally by Channon the author traces the development of diversification in Japan and the emergence of the multidivisional forms of organization which as in the West prove to be the major strategic and structural forms in Japan by 1970.     

What Separates Japanese New Product Winners from Losers

Operating in the upper echelons of highly competitive, global markets, numerous Japanese firms enjoy well-deserved reputations for excellence in new product development. Despite this success, however, almost no research has been conducted to explore the keys to successful new product development in Japanese companies. For the most part, research in this area has focused on North American and European firms. X. Michael Song and Mark E. Parry address this gap with a study of 404 Japanese firms and 788 new product introductions. Their research explores the links between new product success and 10 factors: product advantage; marketing synergy; technological synergy; market potential; market competitiveness; market and technical understanding; senior management support; proficiency in the predevelopment planning process and in concept development and evaluation; proficiency in market research, market pretesting, and market launch; and technical proficiency. To avoid any cultural bias, development of the survey was preceded by in-depth case studies and focus group interviews with Japanese and American new product development teams. Although time-consuming and expensive, these preliminary steps were necessary for ensuring the validity of the survey contents and procedures. Notwithstanding the obvious cultural differences, the findings from this study suggest that Japanese new products professionals view the keys to success in much the same way as their North American counterparts. For the survey respondents, the most important success factor is product advantage. Other important success factors include predevelopment proficiency (that is, proficiency in the predevelopment planning process as well as in concept definition and evaluation) and marketing and technological synergy. Consistent with previous research on North American firms, market competitiveness was found to be the least important success factor. For managers who are trying to predict whether a project will result in a product advantage, several survey items may be useful as a checklist for assessing potential product advantage. In particular, these managers should consider whether the product offers potential for reducing consumer costs and expanding consumer capabilities, as well as the likelihood that the product offers improved quality, superior technical performance, and a superior benefit-to-cost ratio.     

Technology Push or Market Pull? Strategic Orientation in Business Model Design and Digital Start-up Performance*

The digital revolution is fundamentally reshaping the business landscape by generating abundant new opportunities and novel business models. As a new source of value creation, a start-up’s business model is critical for its survival and growth. How, then, should a digital start-up design its business model? The present study departs from existing viewpoints on the topic and proposes a strategic orientation view. By integrating the resource-based view and the demand-side perspective, we examine the impact of strategic orientation in business model design on the performance of start-ups in the digital economy. Using a data set of digital start-ups, our empirical results show that both technology and consumer orientations are beneficial to the performance of start-ups. However, it would be counterproductive for a digital start-up to seek a balance between both strategic orientations in business model design. Furthermore, the positive relationship between consumer orientation and firm performance becomes more prominent in a highly open technological environment, but is weakened in environments characterized by high user interactivity. This study advances business model design research by proposing a strategic orientation view, and contributes to business model theory building by offering an integrated view that embraces the resource-based view and the demand-side perspective.     

Trading companies as vehicles for export promotion

The need for LDCs' export promotion in order to reduce their trade deficits is very well recognized. In order to facilitate such export promotion, the concept of trading companies appears to be uniquely suitable because of their superior record in channel integration and efficiency. An analysis of the development of Japanese and Korean trading companies suggests a strategy for the developmental stages of trading companies.The author is with the Department of Marketing, Northern Illinois University.     

An empirical test of arbitrage equilibrium with skewed asset returns: Australian evidence

Barone-Adesi (1985) has formulated a multivariate test (likelihood ratio) of an arbitrage equilibrium model, based on a quadratic specification of the process generating returns, that can be related to a three-moment CAPM. Australian equity returns are used to replicate this approach over the period 1963 to 1987. Furthermore, a generalised method of moments test of the Barone-Adesi model is also conducted. The results are favourable with regard to the arbitrage model. In addition the quadratic market model performs well against its traditional counterpart. This latter conclusion is robust with respect to allowing for monthly seasonal regularities in Australian returns. However, evidence regarding the three-moment CAPM is largely inconclusive.The author is a senior lecturer in the Department of Accounting and Finance, Monash University, Clayton, Australia. The author is pleased to acknowledge the helpful comments of Tim Brailsford, two anonymous referees, the participants of the Seminar Series at Monash University, and participants of the Second International Conference on Asian-Pacific Financial Markets, Hong Kong, 1991, the 1992 Annual Conference of the Accounting Association of Australia and New Zealand and the Fifth Annual Australasian Finance and Banking Conference, Sydney, 1992.     

American and Japanese management practices in their Singapore subsidiaries

Multinational corporations have made significant contributions to the economic growth of Singapore; American and Japanese companies are among those in the forefront. This study is aimed at finding the extent to which US and Japanese companies have transferred and implemented the management practices in their subsidiaries operating in Singapore. Extensive and intensive interviews of a small sample of companies in the electronic/electrical industry reveal that the Japanese are not practising what they do in Japan while the Americans have demonstrated that the transferability of their management practices is feasible and they are workable in Singapore.Joseph M. Putti is an Associate Professor at the School of Management, National University of Singapore. Thomas Chong F.H. is a Production Manager in Union Carbide, Singapore.