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Crawford, R. J. 1998. Reinterpreting the Japanese economic miracle. Harvard Business Review (January-February): 179-184.

Summary by James R. Martin, Ph.D., CMA
Professor Emeritus, University of South Florida

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Crawford’s observations are based on two books. Smith, P. 1997. Japan: A Reinterpretation. New York: Pantheon Books; and Yoshimura , N. and P. Anderson. 1997. Inside the Kaisha: Demystifying Japanese Business Behavior. Boston: Harvard Business School Press. Note: The term demystify means to make less complex, less ambiguous, or to make less difficult to understand.

Crawford poses two questions in this paper.

1. After 40 years of success, has Japan exhausted its system?

2. Can other countries adopt Japan’s system piecemeal, picking and choosing elements to enhance their own industrial performance, or is the system a coherent whole and thus difficult to emulate?

The theme of the paper is to present a balanced view of Japan since both admirers and critics of Japan have painted views that are too narrow. According to Crawford, admirers created a sanitized picture of a nation in harmony with the wholesome values of hard work and long-term vision, while critics said that Japan’s success came from adversarial trade policies and powerful industrial cartels and that it sacrificed the well-being of its citizens to cold economic imperatives. They didn’t play better, they just didn’t play fair.

Crawford provides what he refers to as a more balanced view as follows:

Japan is a producer economic state - an export Frankenstein. The Japanese pillars of success include:

1.The roll played by large business groups (keiretsu), who’s mission is to gain market share while holding stockholder’s interests secondary.

2. The roll played by the Japanese government in providing trade barriers, exchange rates that promote exports, tax breaks and cheap credit for the keiretsu, while Japanese consumers are forced to pay high prices, receive scarce credit and a relatively low standard of living.

3. A well educated workforce willing to sacrifice their present standard of living for a more productive future.

4. A national strategy of emphasizing the large high-value sectors such as automobiles and electronics.

5. Business practices such as: Deming style quality management, lean production, cross functional product development, management by loyal, lifetime employees willing to work extremely long hours (salarymen), who follow rigid rules of behavior, e.g., precisely choreographed submissive posture to take before certain clients and how to bow to superiors.

6. The integration of robots, computer chips and fuzzy logic software into manufacturing.

However, there are also many flaws in the Japanese system including:

1. Advancement by seniority and management bullies that creates a stodgy bureaucracy.

2. Management by consensus that creates a slow decision process.

3. A management obsession to avoid embarrassment to appear to be in harmony.

4. No mobility of management (salarymen). Since advancement is by seniority, there is no starting over at another company.

5. Company oriented management training that is useless outside the company.

6. Less flexibility and creativity than needed to maintain market leadership today.

7. A restrictive system of internal controls to promote the appearance of harmony.

8. A system of lean production and labor practices that requires a workforce willing to accept stressful conditions.

9. A new generation that is less willing to accept the current practices and desires a more consumer oriented society.

10. Some political corruption scandals by the political elite.

11. A number of failed projects promoted by the Japanese Ministry of International Trade & Industry such as the Fifth Generation project (related to artificial intelligence), Magnetically levitated train, Micro machines and High-definition analog television.

Crawford’s conclusion is that much of Japan’s remarkable success came from stifling constraints unlikely to be tolerated in the west.

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