Asli M. Colpan and Alvaro Cuervo-Cazurra
Business groups are an organizational model in which collections of legally independent firms bounded together with formal and informal ties use collaborative arrangements to enhance their collective welfare. Among the different varieties of business groups, diversified business groups that exhibit unrelated product diversification under central control, and often containing chains of publicly listed firms, are the most-studied type in the management literature. The reason is that they challenge two traditionally held assumptions. First, broad and especially unrelated diversification have a negative impact on performance, and thus business groups should focus on a narrow scope of related businesses. Second, such diversification is only sustainable in emerging economies in which market and institutional underdevelopment are more common and where business groups can provide a solution to such imperfections. However, a historical perspective indicates that diversified business groups are a long-lived organizational model and are present in emerging and advanced economies, illustrating how business groups adapt to different market and institutional settings. This evolutionary approach also highlights the importance of going beyond diversification when studying business groups and redirecting studies toward the evolution of the group structure, their internal administrative mechanisms, and other strategic actions beyond diversification such as internationalization.
William M. Tsutsui
Tracking with Japan’s macroeconomic fortunes since World War II, global interest in Japanese management practices emerged in the 1950s with the start of Japan’s “miracle economy,” soared in the 1980s as Japanese industrial exports threatened manufacturers around the world, and declined after 1990 as Japan’s growth stalled. Japanese techniques, especially in labor and production management, fascinated Western scholars and practitioners in their striking divergence from U.S. and European conventions and their apparent advantages in creating harmonious, highly productive workplaces. Two reductive approaches to the origins of Japan’s distinctive management methods―one asserting they were the organic outgrowth of Japan’s unique cultural heritage, the other stressing Japan’s proficiency at emulating and adapting American models—came to dominate the academic and popular literature. As historical analysis reveals, however, such stylized interpretations distort the complex evolution of Japanese industrial management over the past century and shed little light on the current debates over the potential convergence of Japanese practices and American management norms.
Key features of the Japanese model of labor management—“permanent” employment, seniority-based wages and promotions, and enterprise unions—developed between the late 1800s and the 1950s from the contentious interaction of workers, managers, and government bureaucrats. The distinctive “Japanese Employment System” that emerged reflected both employers’ priorities (for low labor turnover and the affirmation of managerial authority in the workplace) and labor’s demands (for employment security and respect as full members of the firm). Since 1990, despite the widespread perception that Japanese labor management is inefficient and inflexible by international standards, many time-honored practices have endured, as Japanese corporations have pursued adaptive, incremental change rather than precipitous convergence toward a more market-oriented American model.
The distinguishing elements of Japanese production management—the “lean production” system and just-in-time manufacturing pioneered in Toyota factories, innovative quality-control practices—also evolved slowly over the first century of Japanese industrialization. Imported management paradigms (especially Frederick Taylor’s scientific management) had a profound long-term impact on Japanese shop-floor methods, but Japanese managers were creative in adapting American practices to Japan’s realities and humanizing the rigid structures of Taylorism. Japanese production management techniques were widely diffused internationally from the 1980s, but innovation has slowed in Japanese manufacturing in recent decades and Japanese firms have struggled to keep pace with latest management advances from the United States and Europe.
In sum, the histories of Japanese labor and production management cannot be reduced to simple narratives of cultural determinism, slavish imitation, or inevitable convergence. Additional research on Japanese practices in a wide range of firms, industries, sectors, regions, and historical periods is warranted to further nuance our understanding of the complex evolution, diverse forms, and contingent future of Japanese management.
Dry goods stores, the predecessors of Japanese department stores, were forced to modernize and change their business format after the Meiji Restoration in 1868, which led to the demise of their main customers. The largest dry goods store, Mitsukoshi, was the first to learn about modern retailing in the West, and it broke out of the mold of the traditional Japanese retailer in around 1900 in an effort to catch up with Western department stores. Other large dry goods stores were quick to follow its lead: they transformed into department stores and created their own “cathedrals of consumption” in the 1920s, to match those in the West. This new retail format strongly contributed to Japan’s economic growth and to the Westernization of the Japanese lifestyle.
Despite numerous publications on the history of department stores, there has been little research on this transfer of Western department stores into a very different world: Japan. Although there are many studies on Japanese department stores in Japanese, focusing on how they were influenced by Western department stores, they are mostly subdivided on the basis of specific topics, such as levels of consumption in the interwar period or their economic impact during Japan’s period of high economic growth. The focus here is on the whole development process of department stores, bridging the gap between Western and Japanese studies on department stores.
The first stage in the development of Japanese department stores was in the early 20th century, when Japanese retailers raced to catch up with Western department stores to become modern Western-style retailers themselves; the second stage was in the late 20th century, when these new Japanese stores continued developing along their own unique path in order to target the domestic market during the growth of the Japanese economy, introducing ready-to-wear clothing, luxury brands, and gift products. In this way, Japanese department stores succeeded in increasing their efficiency and establishing a more upmarket image. However, in exchange for this prosperity, department stores also gave up control of their sales floors to the wholesalers and reduced their own merchandising skills. After the economic bubble burst in 1991, Japanese department stores began to suffer from decreased sales and lack of control over the points of sale in their stores.
Previously, most attention to managerial attitudes to railroad labor during the late 19th century has focused on industrial conflict in the United States, most particularly the so-called Pullman Boycott, a national stoppage that brought much of the American rail network to a halt in May–July 1894. Most historians—Alfred Chandler, Richard White, Gabriel Kolko, and Shelton Stromquist, to name a few—have associated this pattern of American conflict with falling freight rates caused by excessive competition between the United States’ privately owned railroads. If this assumption is correct, then one would expect both of the problems—labor conflict and falling freight rates—would be absent in New World societies where railroads operated under public rather than private ownership. Among New World societies, public ownership of the railways was arguably most significant in Australia, a continental society almost identical in geographical size with the mainland United States. Here, railroads played a similar role in national development. Despite this variance in ownership, however, Australian railroads were beset with similar problems to the United States. Per-ton freight rates declined in like fashion. As in the United States, Australian railroad managers responded to falling freight rates by savage wage cuts and staff redundancies. The commonalities between Australia and the United States points to a common causal factor. It is argued that this common causal factor was the falling world price for grain, most particularly wheat, the London benchmark wheat price falling from US$1.92 in 1871 to US$0.81 in 1891.
Pierre-Yves Donzé and Rika Fujioka
The luxury business has been one of the fastest growing industries since the late 1990s. Despite numerous publications in management and business history, it is still difficult to have a clear idea of what “luxury” is, what the characteristics of this business are, and what the dynamics of the industry are. With no consensus on the definition of luxury among scholars and authors, the concept thus requires discussion. Luxury is commonly described as the high-end market segment, but the delimitation of the lower limit of this segment and its differentiation from common consumer goods are rather ambiguous. Authors use different terminology to describe products in this grey zone (such as “accessible luxury,” “new luxury,” and “prestige brands”).
Despite the ambiguous definition of “luxury,” various companies have described their own businesses in this way, and consumers perceive them as producers of luxury goods and services. Research on luxury business has focused mostly on four topics: (1) the evolution of its industrial organization since the 1980s (the emergence of large conglomerates such as Moët Hennessy Louis Vuitton SE or LVMH, and the reorganization of small and medium-sized enterprises); (2) production systems (the introduction of European companies into global value chains, and the role of country of origin labels and counterfeiting); (3) brand management (using heritage and tradition to build luxury brands); and (4) access to consumers (customization versus standardization). Lastly, new marketing communication strategies have recently been adopted by companies, namely customer relations via social media and the creation of online communities.
The Swiss watch industry has enjoyed uncontested domination of the global market for more than two decades. Despite high costs and high wages, Switzerland is the home of most of the largest companies in this industry. Scholars in business history, economics, management studies, and other social sciences focused on four major issues to explain such success.
The first is product innovation, which has been viewed as one of the key determinants of competitiveness in the watch industry. Considerable attention has been focused on the development of electronic watches during the 1970s, as well as the emergence of new players in Japan and Hong Kong. Yet the rebirth of mechanical watches during the early 1990s as luxury accessories also can be characterized as a product innovation (in this case, linked to marketing strategy rather than pure technological innovation).
Second, brand management has been a key instrument in changing the identity of Swiss watches, repositioning them as a luxury business. Various strategies have been adopted since the early 1990s to add value to brands by using culture as a marketing resource.
Third, the evolution of the industry’s structure emphasizes a deep transformation during the 1980s, characterized by a shift from classical industrial districts to multinational enterprises. Concentration in Switzerland, as well as the relocation abroad of some production units through foreign direct investment (FDI) and independent suppliers, have enabled Swiss watch companies to control manufacturing costs and regain competitiveness against Japanese firms.Fourth, studying the institutional framework of the Swiss watch industry helps to explain why this activity was not fully relocated abroad, unlike most sectors in low-tech industries. The cartel that was in force from the 1920s to the early 1960s, and then the Swiss Made law of 1971, are two major institutions that shaped the watch industry.