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date: 10 April 2020

History of Japanese Labor and Production Management

Summary and Keywords

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.

Keywords: labor management, production management, Japan, convergence, employment systems, manufacturing, lean production

Introduction: Japanese-Style Management as Curiosity, Inspiration, and Cautionary Tale

Japanese management methods did not attract much attention from scholars or practitioners abroad through most of the first century of Japan’s industrialization. At the turn of the 20th century, a brief vogue of enthusiasm for Japan as a model of “national efficiency” swept through Great Britain (Stead, 1906), but otherwise, few in the West looked to an Asian nation, late to industrial development, for lessons (salutary or cautionary) on economic growth or factory production. Although Japanese manufactured goods (especially silk and cotton) began to spread globally in the last decades of the 19th century, and Japan’s exports (synthetic fibers, steel, and ships and, later, electronics and automobiles) surged after World War II, Japanese products had a lingering reputation for being “cheap and shoddy,” and appraisals of Japanese industrial management by Western observers were almost uniformly slighting (see Abegglen, 1958, p. 85).

However, with the meteoric rise of postwar Japan’s high-growth economy (dubbed the “miracle” by skeptical global media), interest in Japanese managerial techniques and philosophies began rising steadily in the late 1950s. Social scientists, particularly in the United States and Britain, were the first to take notice of the role of management practices—which departed substantially from Western norms and were out of keeping with dominant theories of modernization—in Japan’s unprecedented growth. The apparent success of Japanese methods, notably in the management of industrial labor, directly challenged the notion that there was a single, narrow path to economic development, along which the institutions, customs, and mindsets of the world’s nations would steadily and invariably converge toward a modern Western ideal.

Several landmark studies marked this international “discovery” of what came to be known as Japanese-style management (Nihon-teki keiei). James Abegglen’s The Japanese Factory (1958) first brought international attention to the distinctive labor relations in large Japanese industrial firms. Abegglen argued that Japanese practices—such as the “permanent employment system” and “paternalistic,” “feudalistic” compensation arrangements—grew from Japan’s “historical customs and attitudes” and “the social system as it existed prior to the introduction of modern industry” (p. 131). Abegglen’s conclusion—that there was no need (or impetus) for Japanese management to converge with American conventions—was extended in Ronald Dore’s (1973) important comparative study British Factory Japanese Factory. Dore rejected easy assumptions about the cultural roots of Japanese methods, suggesting instead that Japan’s status as a “late developer” allowed it to learn from and improve upon the models from the industrial West. Given the increasingly apparent advantages of Japanese arrangements, Dore asserted, American and European industry were more likely to evolve toward Japan’s labor management system than vice versa. Ezra Vogel (1979), in his audaciously titled book Japan as Number One, was even more provocative, declaring that long-complacent American policymakers and business leaders had “practical things to learn from Orientals” (p. ix). Maintaining that “Japan has dealt more successfully with more of the basic problems of postindustrial society than any other country” (p. viii), Vogel stressed the urgency of understanding and emulating Japan’s foundational social institutions, including the Japanese “company system,” with its harmonious labor relations, long-term perspective, and prowess in technological innovation.

During the 1980s, when Japan’s economy was flying high and its perceived threat to America’s global financial and industrial dominance was the most intense, interest in Japanese management reached a fever pitch in the business world, in popular culture, and in the academy. A small army of self-proclaimed gurus promised to reveal the secrets of Japanese success in bestsellers with such titles as Theory Z and The Art of Japanese Management. American and European firms earnestly studied and hurriedly tried to implement the novel shop-floor methods—kaizen, just-in-time production, quality-control circles—that were reputed to have delivered stunning gains in productivity and quality for Japanese manufacturers such as Toyota and Sony. Even Hollywood parodied the widespread mania for Japanese-style management. In the 1986 Ron Howard film Gung Ho!, for instance, the managers of a struggling American auto plant attempt (in vain) to energize their jaded employees with a routine of morning calisthenics, the traditional warm-up to a workday in Japan. Indeed, so eager were Western companies to “learn from the Japanese” that American practitioners, scholars, and journalists regularly held up exemplars, for example, Honda, “to illustrate and support apparently contradictory positions” (Mair, 1999, p. 25). In the end, the international fascination with Japanese techniques in the 1980s had all the hallmarks of classic management fad—“better at raising hopes than delivering results” (Miller & Hartwick, 2002, p. 26)—and traced the typical trajectory of such managerial flashes in the pan from invention through dissemination and acceptance to eventual disenchantment and decline (Clark, 2004).

Meanwhile, many leading academic experts, particularly those who focused on the automobile industry, proclaimed that Japanese workplace practices had become the new global standard. In their influential volume The Machine That Changed the World, James Womack, Daniel Jones, and Daniel Roos (1990) declared that Japanese “lean production,” pioneered in the factories of Toyota, was poised to supplant Fordist mass production, offering lower costs, less waste, greater flexibility, and higher quality than traditional assembly-line methods ever could. Richard Kenney and Martin Florida (1993) stressed that the Japanese model offered clear benefits not just for managers and shareholders, but also for workers, who would be freed from Fordist drudgery under Japan’s empowering, inclusive, and humane ways. Japanese-style management came to be described in almost utopian terms, as a revolutionary break from the mechanistic, dehumanizing tyranny of American and European best practices in the organization of industrial work. There were, of course, many outspoken doubters and detractors—especially from the labor movement and the political left—who regarded Japanese methods as an intensification of Fordism rather than a meaningful improvement on it (see Tsutsui, 1998). But scholarly and popular opinion gradually began to acknowledge that the future of industrial management—if indeed, the traditional manufacturing sectors of the United States and Western Europe had a future at all—was looking distinctly Japanese.

The heyday of Japanese-style management was short-lived, however. As rapidly as the global euphoria had swelled in the 1980s, it subsided in the 1990s, tracking closely with the fortunes of the Japanese economy. Japan’s speculative “Bubble Economy” swelled industrial activity and national confidence in the late 1980s, as aggressive monetary-easing policies fueled a rapid inflation in real-estate prices and the equity markets. With the sudden deflation of the “Bubble” starting in 1990, and the onset of what has been called Japan’s Great Recession (or, more commonly, the Lost Decade), faddish assumptions of the inherent superiority and inevitable dominance of Japanese management techniques quickly became passé. The slump in Japan’s macroeconomic performance, coupled with the resurgence of the U.S. economy (which enjoyed strong growth, steady job creation, and rising productivity over the 1990s), fed a renewed faith in American know-how. At the same time, the rising tide of American triumphalism affirmed the increasing cynicism and frustration (among workers and managers alike) with slavish attempts in U.S. and European factories to emulate Japanese shop-floor practices. As Mort Zuckerman (1997) opined in an editorial in U.S. News and World Report:

The Japanese enjoyed a splendid sunrise in the Eighties. Is the sun now setting in the Nineties?

It seems that way. The Nineties have given them their deepest and longest recession since World War II, a collapse of their stock and real-estate markets, and a banking system overloaded with bad loans.

The result is a mood of startling pessimism among the people, made all the starker by the memory of the Eighties. Then, Japan was the economic juggernaut. It replaced America as the world's leading and largest creditor. . . . How the world has changed! The Asian values that once were praised for fostering discipline now are criticized for stifling new ideas and the individual enterprise critical to the information age. . . .

Can Japan change? (p. 80)

By the start of the new millennium, Japanese-style management had come to be regarded almost as a museum piece by scholars and practitioners in the West. The Japanese system was proclaimed to be “in crisis” and was dismissed in the popular media and the academic literature as “outdated and uncompetitive” (Pudelko, 2009, p. 439), a “model of the past” (Pudelko & Haak, 2005, p. 3), and “no longer ‘flavour of the month’” (Kono & Clegg, 2001, p. xi). The innovation that had characterized Japanese practice (especially in production and quality management) since World War II seemed to cease after the deflation of the Bubble, and Japan’s industrial managers increasingly appeared reactive rather than generative, international laggards instead of creative pioneers. While “the flow of management ideas in the 1980s was from east to west, resulting in discussions about the ‘Japanization’ of work organization, quality systems, and industrial relations” (Jacoby, 2005, p. 3), the tide had clearly turned, and Japanese managerial exceptionalism (bemoaned in the new millennium, as in the 1950s, as hopelessly backward) appeared untenable in an age of globalization. On both sides of the Pacific, a growing consensus held that Japanese convergence toward Western (and specifically American) management norms was inevitable and, in fact, well underway. In the early 21st century, even though this convergence has not proceeded as briskly or as thoroughly as was widely predicted, and even as Japanese conventions have proven surprisingly resilient and adaptable, Japanese management continues to be in flux and to be held in relatively low international esteem (Keizer, Umemura, Delbridge, & Morgan, 2012).

Understanding Japanese-Style Management

Understanding the origins, current status, and future prospects of Japan’s distinctive managerial practices must start with establishing a working definition of the notoriously slippery term “Japanese-style management.” In the decades between Abegglen’s seminal study, in the late 1950s, and the recent debates over convergence, “Japanese-style management” has become something of a wet sponge, absorbing as a concept a remarkably wide range of techniques, systems, customary practices, strategies, philosophies, theories, and purported merits (or demerits). Even the most rigorous scholars have tended to be relaxed in delineating the term, not least because Japanese management practices (like those employed in the United States or Britain or, indeed, any nation) are not monolithic over time or uniform across facilities, firms, industries, sectors, and regions (Hayashi, 2002).

Central to most definitions of Japanese-style management is the Japanese Employment System, known colloquially as the Three Sacred Treasures: “permanent” or “lifetime” employment (shūshin koyō); seniority-based wage and promotion systems (nenkō joretsu); and enterprise (as opposed to industrial or trade) unions. Permanent employment (or, more accurately, long-term employment stability for core workers in large firms) is widely regarded as the defining characteristic of Japanese corporate life and, to scholars such as Peter Matanle (2003), “the core institution of the Japanese firm” (p. 8). Also essential to mainstream American and European conceptions of Japanese practice are the innovative systems of Japanese production management, techniques (often referred to collectively as “lean production” or the Toyota Production System) designed to maximize shop-floor efficiency and achieve very high levels of quality. This constellation of managerial tools “completely synchronizes production with the demands of the market and . . . aims towards the complete elimination of waste in production [through] Total Quality Management (TQM) and continuous improvement (kaizen); productions checks such as statistical process control; just-in-time production (JIT); labour flexibility; and multi-skilling through teamwork and job rotation” (Danford, 1999, p. 5).

Around these foundational structures of labor and production management, a variety of other techniques, traditions, and institutional arrangements presumed to be unique to Japanese business have come to be associated with Japanese-style management. Among these are the ringi system of consensus-based decision-making; elaborate networks of subcontractors in major industries, reflecting an enduring economic dualism; extensive corporate welfare facilities for workers in large companies; a distinctive corporate finance system based on “main banks” and loose enterprise groupings known as keiretsu; and a model of corporate governance rooted in “stakeholder capitalism” that prioritizes the interests of employees and customers over those of shareholders (Jacoby, 2005). The concept of Japanese-style management has become associated with a long list of ascribed outlooks and purported advantages that some observers suggest knit together the disparate managerial methodologies the term encompasses and fundamentally differentiate Japanese from Western practices. Thus, in 1973 Abegglen characterized Japanese-style management as a singular system that delivered “efficiency, peace, and harmony” (p. 34); more recent commentators have described it as “a collection of practices [emphasizing] long-term over short-term goals, and collective over individualist principles” (Keizer et al., 2012, p. 9); others have stressed its fundamental humanity, profound investment in workers through training, “bottom-up” organizational design, and relentlessness in seeking perfection in quality and productivity (see Olejniczak, 2013).

In the popular imagination and in the scholarly literature, two genesis narratives of Japanese-style management—both of them compelling in their simplicity and both, it turns out, historically inaccurate—have been dominant over the past half-century. The first, which has been tagged the “culturalist” or “sociocultural” approach, regards the distinctive practices of Japanese business (whether prewar corporate paternalism or postwar “small-group activities” on the shop floor) as an organic outgrowth of a unique and enduring Japanese culture (see Hayashi, 2002; Hazama, 1978; Rohlen, 1974). Originally popularized in the West by Abegglen but embraced by generations of American and European social scientists and practitioners, this approach also has deep roots in Japan, where commentators steeped in Nihonjinron (the “myth of Japanese uniqueness”) have long argued that Japan’s singular models of labor and production management grew from “traditions of groupism, feelings of dependency, and a high regard for harmony and cooperation” (Hazama, 1979, p. 104; see also Sullivan, 1992). The notion that Japan’s modern strategies for organizing factories flowed seamlessly from premodern family structures, village hierarchies, and the reciprocal loyalties of samurai society was readily endorsed both by proud (if parochial) Japanese observers and by Western analysts hard-pressed to account otherwise for Japanese difference.

The second approach, which became prominent in the scholarship and the global mass media during the 1980s, downplayed the force of cultural determinism in the making of Japanese-style management, emphasizing instead Japan’s proficiency at imitating (and incrementally improving upon) managerial models originally developed in the United States. Stressing the role of Americans, such as the quality consultants W. Edwards Deming and Joseph Juran, members of the Allied Occupation forces, and management guru Peter Drucker, this alternate vision of Japanese managerial history reassured the dispirited American business establishment that Japan’s successes were, in fact, “made in the United States” (Wren, 1994, p. 361; see also Deming, 1982; Fisher, 2009). Although this approach never adequately accounted for the distinctiveness of major features of Japanese-style management (including the Three Sacred Treasures), and although its appeal waned along with Japan’s economic fortunes after 1990, the conviction that “we taught them all we know” continues to animate many Western (and especially American) analyses of Japanese corporate practices.

The friction between these two dominant narratives of Japanese-style management echoed other long-standing debates in the social scientific study of Japan after World War II. Western scholars were frequently divided over whether Japan’s modern development was exceptional globally—“an exotic outlying case divorced from the mainstreams of world history” (Tsutsui, 2007, p. 4)—or was commensurate with American and European experience and consistent with the “universal” models of the disciplines of economics, political science, and sociology. As Helen Hardacre (1998) observed, “Japan was an interesting, odd ‘case,’ the source of endless puzzles, but rarely was it recognized as providing conceptual or theoretical innovation in its own right” (p. x). Accordingly, both the “culturalist” and the “made in the U.S.A.” approaches accorded Japanese managers and workers scant credit for creativity in devising novel management philosophies and technologies that were effective in practice and clearly distinct from American norms. Reflecting deeply rooted Western stereotypes—of Japan’s profound cultural exceptionalism and of Japan as accomplished mimic but infrequent innovator—both approaches implicitly denied agency to the individuals and organizations who pioneered and refined the systems of seniority wages and kaizen, caricaturing them as mere vessels of tradition or as derivative copycats.

Other significant continuities have also characterized the scholarly and popular literature on Japanese-style management over the past six decades. First, commentators have tended to assume a clear causal relationship between Japan’s distinctive managerial practices and the nation’s macroeconomic performance, focusing on the institutions of lifetime employment and consensus decision-making as the secret to Japan’s success in the decades of high-speed growth and damning them as the root cause of Japan’s ills come the downturn of the 1990s. Yet scholars have not empirically demonstrated the macro-level impact of shop-floor practices, which raises the possibility that Japanese-style management may have received too much approbation in the years of the “miracle” economy and too much castigation during the handwringing of the Lost Decade (see Jacoby, 2005, p. 14; Keizer et al., 2012, p. 21). Second, analysts of Japanese-style management—the majority of whom have been (and continue to be) scholars of business, sociology, and anthropology, or else journalists and practitioners—have often ignored, discounted, or distorted historical perspectives in framing the origins and evolution of Japanese practices.1 Extensive historical research since the 1980s, conducted primarily in the United States but also in Japan and (to a lesser extent) in Britain, has provided more-nuanced and complete understandings of Japanese labor and production management. More fully integrating this important historical work with the specialist literature in business and the social sciences is critical to advancing our understanding of Japanese-style management and moving beyond the fractured readings—traditional versus modern, native versus imported, creative versus imitative—that have prevailed in the academic and media discourse.

This article focuses on the two major components of Japanese-style management that have interested (and often confounded) Western scholars and practitioners over the past half-century—labor management and production management. After surveying their histories in turn, from the introduction of modern industry in the late 19th century through World War II and the postwar high-growth economy, it will assess how Japanese practices have (and have not) changed since the collapse of the Bubble Economy and the turn of the new millennium. Even this concise overview will demonstrate the limitations of stylized interpretations of the origins of Japanese methods—cultural determinism or slavish mimicry—and cast doubt on notions that convergence toward either Japanese or American ideals is inevitable, desirable, or, indeed, even conceivable. It will also argue for the need for more historical research on Japanese-style management that is both broader and more finely grained, examining practices in different sectors and industries, in firms and workshops of various scales, in various regions, and at different historical moments. Although the evolution of Japanese automobile manufacturing has been documented in detail, even in English (Cusumano, 1985; Fujimoto, 1999; Shimokawa, 1994), historical perspectives on labor management and production management in other industries, with a few exceptions (see Fukusaku, 1992; Kudo & Ihara, 2004; Suzuki, 2004), remain notably lacking.

The History of Japanese Labor Management

The Japanese employment system is often taken to be a thoroughly postwar phenomenon, and in fact, it only assumed its fully elaborated and institutionalized form in what has been called the “golden age of the corporate-centered society,” from the 1960s to the early 1990s (Gordon, 1998, p. 188). But as Andrew Gordon has detailed in his pioneering studies of the evolution of labor management and the labor movement in a cluster of engineering and machinery firms along Tokyo Bay, Japan’s distinctive personnel practices developed through a “century-long process” (Gordon, 1985, p. 1). As historical analysis now reveals, the emergence of Japan’s Three Sacred Treasures was not smooth and linear, and permanent employment, seniority-based wages, and enterprise unions were not organic outgrowths of preindustrial customs or the seemingly timeless attributes of Japanese culture. Instead, the Japanese employment system “evolved through the often troubled interaction of workers, managers, and bureaucrats,” and its “so-called ‘traditional’ practices . . . were absent at the start and took root only as Japan became objectively more ‘modern’ (industrial, urban, literate)” (Gordon, 1985, pp. 3–4).

When modern industry first entered Japan in the late 19th century, the first generation of factory workers was drawn from the ranks of preindustrial artisans and skilled craftsmen. Among the habits and mindsets they brought with them onto the shop floor were a strong sense of independence, a pattern of building individual skills by moving frequently among jobs and workshops, and a system of supervision based on traditional labor bosses (oyakata). Such behavior frustrated Japan’s first generation of corporate managers, who sought a more stable and diligent workforce, as well as more direct managerial control over laborers and the production process. But they faced considerable resistance, from oyakata who were jealous of their customary authority, and from workers who were acutely sensitive to their low status in firms and in a modernizing society that were both pervasively hierarchical. As a result, through the end of the 19th century, labor mobility was high, shop-floor discipline was a constant challenge for employers, and old-fashioned bosses (rather than modern managers) controlled the flow of factory work (Gordon, 1985).

As Japan’s imperial ambitions spurred the growth of heavy industry and Japanese firms invested more in advanced technology after the turn of the century, managers became increasingly systematic (and effective) in their efforts to take charge of workshops and shape the behavior of skilled operatives. Oyakata were successfully integrated into formal staff hierarchies as foremen. At the same time, firms introduced substantive new programs of in-house vocational training that sought to cultivate commitment among notoriously footloose workers (and that would eventually become an important component of the Japanese management model). Employers also began to use compensation systems more deliberately to encourage retention and foster shop-floor discipline. Incentive wage schemes (such as the Halsey and Rowan premium systems from the United States) were introduced in 1890s and were supplemented with elaborate wage ladders that rewarded workers with increases in base pay at regular intervals of service (Gordon, 1985, pp. 43–46). Thus seniority wages began not as a manifestation of Confucian values or a holdover of premodern customs, but as an intentional managerial response to high labor turnover.

At the start of the 20th century, Japanese employers further bolstered their strategies of labor management by adopting the institutions and ideology of paternalism (onjōshugi). Corporate welfare amenities—worker housing, dining halls, health facilities, cultural opportunities—first flourished in the textile industry, inspired by the examples of New England cottons mills and progressive British manufacturers such as Cadbury (Tsutsui, 1998, p. 55; see also Faison, 2007). By the 1920s, such practices became more generalized in large industrial concerns, as managers sought to extend their control over labor beyond work hours, increase employee identification with firms, and forestall the development of an assertive labor movement. Even more potent was the ideology of paternalism, articulated insistently and compellingly by industrialists, managers, and consultants, which strove to naturalize harmonious labor-management relations as something distinctively Japanese, growing spontaneously from the “beautiful customs” of Japan’s feudal past. As one executive of Mitsubishi Nagasaki Shipyard expounded in 1910,

Since ancient times, Japan has possessed the beautiful customs of master-servant relations based firmly on a spirit of sacrifice and compassion, a custom not seen in the many other countries of the world. . . . This relationship is not weak like that of the Western nations, but has its roots in our family system and will persist as long as that system exists. Because of this relationship, the employer loves the employee and the employee respects his master. Interdependent and helping each other, the two preserve industrial peace (quoted in Gordon, 1985, pp. 66–67).

Workers may well have been skeptical of such florid oratory, but they welcomed the concrete benefits of corporate welfarism (Gordon, 1985, p. 200) and would, many decades later, join managers (along with Western social scientists) in assuming that workplace harmony was indeed something “distinctly, essentially, and traditionally Japanese” (Matanle, 2003, p. 70).

Despite wishful managerial rhetoric to the contrary, Japan’s early factory workers were far from docile. In addition to contesting working conditions and wages, sometimes in conflicts that flared into isolated incidents of violence, Japanese industrial labor displayed a consistent and distinctive consciousness of social-status issues from the late 19th century (Gordon, 1985; Nimura, 1990). Resentful of the slighting attitudes and discriminatory practices of corporate managers (as well as Japan’s larger society), workers stressed “concern for dignity, respect, and treatment as a human being and an equal” in their negotiations—and clashes—with employers (Gordon, 1985, p. 235). Although the climate toward unions was decidedly hostile in Japan prior to 1945, with extensive legal restrictions on the labor movement and relentless opposition from companies and the state, workers were frequently assertive in pressing their interests and did organize. The movement remained small—union membership at its prewar peak in the 1930s fell well short of 10% of the industrial workforce (Gordon, 1985, pp. 247–49)—and, from the start, focused on individual workshops as the sites of mobilization. Unlike in Western Europe or the United States, where horizontal ties based on trade skills or industries were the basis for national unions, in Japan labor remained adamantly committed to the local, to factory or firm as the “natural unit of action and a primary source of identity and community” (Gordon, 1998, p. 21). In a contest for dignity and full membership in the corporate community, company unions were (and have remained) a practical vehicle for expressing and advancing the specific interests of Japanese workers.

The prosperity Japan experienced during World War I accelerated unionization and fueled worker demands for more systematic benefits and more equitable treatment relative to management. As boom turned to bust (and as would happen again after the Great Depression reached Japan), layoffs became commonplace throughout Japanese industry. Under these straitened circumstances, workers increasingly came to understand full membership in the firm as a greater guarantee of job security, even in the toughest times economically. Labor also continued to press for more stability in compensation, opposing managers’ plans for expanded efficiency wages (largely inspired by American examples) and championing fixed day wages that would meet the livelihood needs of workers. Over the 1920s and 1930s, although anything approaching a system of permanent employment, seniority pay and promotions, and company unions was embryonic at best, “the key practices associated today with the Japanese factory were slowly evolving out of the wrangling of workers and managers” (Gordon, 1985, p. 205).

With Japan’s entry into full-scale war in China in 1937 and in the Pacific in 1941, government bureaucrats became a driving force in industrial relations, pushing workers and employers toward a more structured, institutionalized, and distinctively Japanese approach to labor management. Steeped both in European and American statist thought and the wartime ideology of Japanese exceptionalism, bureaucrats imposed restrictions on labor mobility, advocated for more modern, scientific practices, and mandated more systematic welfare benefits and facilities through legislation and regulation. To promote workplace harmony (and maximum production), they also encouraged more labor-management consultation through the expansion of factory councils and, eventually, the formation of the national labor front Sanpō (Sangyō Hōkoku Renmei), in 1938. The bureaucrats also sought to intervene in the ongoing tangle over wages, campaigning for “livelihood” (seikatsu) compensation consistent with Japan’s “beautiful customs” (and the long-standing demands of workers) but acknowledging the continuing need for productivity-based systems in Japan’s desperate wartime economy. As Andrew Gordon (1985) concluded, state intervention during the war delivered “a blueprint for a future labor relationship” but not yet the “concrete structure” of the Japanese employment system (p. 326).

With Japan’s defeat and the coming of the reformist American Occupation, Japanese labor appeared poised to achieve long-standing goals in the contest for the workplace. In its initial democratizing zeal, the Occupation provided a clear legal basis for unions and collective bargaining in Japan, as well as organizational and moral support for a reconstituted and emboldened labor movement. Union membership, which had barely exceeded 400,000 before the war, reached nearly 5 million in 1946, and optimism among workers ran high (Gordon, 1985, p. 331). But Cold War anxieties in Washington and a belated resurgence of the Japanese business establishment soon tempered Occupation reformism and allowed for a rapid reassertion of managerial prerogative on the shop floor. What emerged from the “turbulent process” of conflict and compromise in the 1950s (Gordon, 1998, p. 2) was an enduring structure that satisfied many of the basic demands of both workers and managers. Labor won the respect it had long craved, through implicit guarantees of long-term employment stability and a wage and promotion system based on seniority, “a rough proxy for both need and ability” acceptable to both workers and firms (Gordon, 1985, p. 384). But employers also saw clear benefits: sweeping managerial authority was confirmed; cooperative company unions (which counted managers and workers among their members) were the norm; and the fabled harmony of Japan’s “beautiful customs” became a workplace reality. Although some on the left bemoaned labor’s sacrifice of autonomy and shop-floor democracy in the postwar settlement, workers appeared content to make the trade-off to gain secure membership in the firm and a toehold in Japan’s new (and increasingly affluent) middle class.

The strength and resilience of the Japanese employment system derived not just from the mutual benefits it offered to workers and managers, or from the decades-long process through which it was painstakingly forged. It also proved in practice to be extraordinarily well adapted to the economic and social conditions in Japan during the period of high-speed economic growth. For example, Japan’s very low labor turnover and low incidence of strikes were especially important to the success of such production management innovations as just-in-time manufacturing, which is inherently vulnerable to disruptions in production. The institution of permanent employment, and the strong identification with the firm it engendered among workers, meant that companies were able to introduce new technology to factories with a minimum of labor friction. It also meant that investments by enterprises in the training (and re-training) of employees could be recouped over the long term (Keizer, 2010, p. 17). At the same time, as Nishinarita Yutaka (1998) has perceptively noted, as the demand for labor grew steadily over the years of the booming “miracle” economy, “the seniority wage system actually served to restrain the total wage bill as the relative proportion of lower paid young workers increased” (p. 206). The government was also a beneficiary of the durability of the Three Sacred Treasures, because permanent employment and the widespread provision of corporate welfare facilities “privatized the social welfare function,” sparing the state huge expenditures on the social safety net (Keizer, 2010, p. 19; see also Gao, 2001).

Despite the attention that the Japanese employment system has received from scholars and the media, becoming all but synonymous with Japanese-style management in the popular imagination, its core institutions only covered a minority of the Japanese workforce, even in the fabled “golden age of the corporate-centered society.” The benefits (and restrictions) of the Three Sacred Treasures applied just to the core male workers at large companies, what Robert Ballon (1992) has described as an “employee aristocracy” (p. 33). Estimates, all rather impressionistic, suggest that this elite workforce made up, at most, a fifth to a third of the total during the decades of high-speed growth (see Keizer, 2010, pp. 14–15). A far larger “marginal workforce”—women, temporary staff, and part-timers in the large firms, as well as all the employees in small- and medium-sized enterprises—did not enjoy guarantees of long-term employment, seniority wages, or company union membership and “thus acted as a buffer to shield the core workforce from major adverse effects” (Pudelko, 2005, p. 185). Nevertheless, the key features of the Japanese employment system, which diverged so markedly from the market-oriented labor management practices of the United States and Europe, became “a normative model for the rest of society” (Dore, 1973, p. 305).

Japanese Labor Management since 1990

By the mid-1990s, when it had become apparent that Japan was not about to bounce quickly back from the bursting of the Bubble and that America’s economic resurgence was robust and genuine, the assumption that the Japanese employment system was doomed as inefficient and inflexible became increasingly widespread. More-nuanced observers argued that a series of profound changes in the global business model (from outsourcing to the information-technology revolution) created a more favorable environment for American labor management techniques than for Japanese practices like permanent employment and seniority wages. Less subtle commentators simply touted the inherent superiority of American capitalism. Economist Rudi Dornbusch assured readers of the Far Eastern Economic Review in 1998 that “Japan needs a vigorous market economy; the old model is dead. . . . Like sclerotic Europe, Japan must now adopt the U.S. model. But since that is counter to Japanese culture, don’t wait for it” (quoted in Huchet, Dirks, & Ribault, 1999, p. 9). Yet even those deeply invested in the system in Japan began to call for sweeping reforms amid the nation’s ongoing industrial and financial struggles. In 1995, for instance, Nikkeiren (the Japan Federation of Employers’ Associations) published the widely read report on “Japanese-Style Management in a New Era” (Shin jidai no Nihon-teki keiei), which stressed the pressing need for “flexible employment policies.” While advocating for labor management that was “long term oriented” and still demonstrated “respect for human beings,” Nikkeiren envisioned substantially diluted guarantees related to employment tenure, compensation, promotion, and corporate welfare in a new system of labor management premised on “the principles of results and performance” (Nikkeiren, 1995).

As it turned out, however, reports of the death of the Japanese Employment System—particularly permanent employment—were greatly exaggerated. Even as Japanese firms faced stiff global competition and heightened pressure to move production to lower-cost venues overseas, significant layoffs remained rare at large corporations during the Lost Decade and into the new millennium. Employers used a range of creative strategies to avoid terminating core staff, even as they sought over time to reduce the number of workers with long-term employment guarantees. The recruiting of new core employees was cut drastically, and early retirement packages (in some cases, for workers as young as age 40) were offered to (or impressed upon) staff; employees were transferred to subsidiary or related firms; overtime was restricted or eliminated; natural attrition was used to trim employment rolls; in some extraordinary cases, wages were temporarily reduced and workers were asked to take unpaid leave (see Jacoby, 2005, p. 71; Kato, 2001; Keizer, 2010, pp. 44–45; Matanle, 2003, p. 78).

Many Japanese managers (like those at Nikkeiren who encouraged systemic change) had deep misgivings about the continued commitment to permanent employment. According to Peter Matanle (2003), corporate leaders privately expressed “a feeling and a realization that the system’s normative power may not be suited to the new circumstances they find themselves within and that its mechanics may be something of an incongruity in an era characterized more by fluidity, change, and globalization than by rigidity, constancy, and internationalism” (p. 96). Nevertheless, major Japanese employers continued, and still continue, to support permanent employment, both in their public pronouncements and in actual practice. One reason was simple pragmatism, as long-term employment guarantees proved to be critical, not just to workplace harmony and worker contentment, but to many important aspects of the mature model of Japanese labor management, including “intensive training, flexible job assignments, job rotation, organizational learning, the development of multiple skills, the accumulation of knowledge and planned career development” (Pudelko, 2005, p. 188). Moreover, as Sanford Jacoby (2005) has noted, labor management is “socially embedded” (p. 4), and permanent employment is endured in deflationary Japan because the practice aligns so strongly with what is generally considered appropriate, fair, and “Japanese.” Employers, Jacoby (2005) concluded, “are responsive to the constraints imposed by law, by unions, and by concern for public image. The legacy of the postwar years—when large companies functioned as a kind of private welfare system—is still felt as a sense of social obligation, albeit to a shrinking core of regular employees” (p. 167).

Even as Japanese firms sustained permanent employment, the legal framework that had supported it through the postwar decades was slowly eroded, starting in the late 1980s, by new legislation and shifts in judicial interpretation. A series of new and revised laws—the Equal Employment Opportunity Law (1985, revised 1997), the Worker Dispatch Law (1985, revised 2015), the Labor Standards Law (revised 2003)—allowed firms to exercise greater flexibility in employment, facilitating the dismissal of core employees and the more-extensive utilization of agency, temporary, fixed-term, and part-time workers (see Schaede, 2008; Watanabe, 1998). Further legal changes privileged the interests of shareholders over those of other stakeholders (especially workers) in Japanese firms (Jacoby, 2005, p. 39). In this shifting legal environment, Japanese employers rapidly accelerated the use of “irregular” workers, staff who did not enjoy the guarantees of the Japanese employment system, a growing proportion of whom were female (Mizobata, 2011, p. 285; see also Gordon, 2017; Osawa & Kingston, 2015). The increasing reliance on contingent labor became an important means of preserving permanent employment for a contracting “aristocracy” of core workers. Not only did irregulars provide flexibility in volatile economic times, but as Arjan Keizer (2010, pp. 156–167) has revealed, they provided companies with substantial cost savings over regular employees.

The weakening commitment of Japanese corporations to their workers was paralleled by significant changes in the outlooks and aspirations of young Japanese entering the workforce at the millennium. As numerous surveys have shown, despite the “embeddedness” of permanent employment in Japanese society and Japan’s corporate culture, workers have come to have very mixed feelings about the status quo in Japanese corporate workplaces. For example, comparative studies have found that Japanese workers are less satisfied with their jobs and less committed to their employers than their counterparts in the United States (Kono & Clegg, 2001, pp. 278–279). Research has also documented fluctuating interest among job seekers in securing permanent employment: interest in “lifetime” jobs declined over the 1990s (to a low of about 50% in 2002) before rising again in the following decade (Keizer et al., 2012, p. 20). Other studies show that Japanese white-collar workers are increasingly invested more in their individual careers and less in the companies that employ them (Okabe, 2012). Surveys and ethnographic research further suggest that younger employees are placing declining value on the stability, predictability, and reciprocal obligations of the Japanese employment system and instead are more interested in self-actualization, personal autonomy, and individual fulfillment. As Matanle (2003) has observed, this “new consciousness” includes

a steadily increasing desire for individual self-determination in controlling one’s career trajectory as well as one’s life biography in general; a greater desire to experience individual self-development and self-fulfillment through deep involvement in the content of one’s work and at the expense of long-term absorption and participation in organizational socialization; and an increasing desire by younger employees to enjoy . . . family and other relationships as well as leisure pursuits external to the corporation. (p. 113)

Pressures for increasing market orientation may not have transformed the Japanese practice of permanent employment, but they did appear to have a more profound impact on wage and promotion systems in large Japanese firms after 1990. Although the appraisal of one Matsushita Electric executive that a newfound emphasis on performance, accountability, and efficiency was “nothing short of a cultural revolution” (quoted in Schaede, 2008, p. 14) may well be hyperbolic, Japanese employers did seem eager to transition away from established seniority practices and to experiment with new compensation systems. Performance-based (seikashugi) human resource management techniques “initially emerged as a management fashion, became diffused, legitimized and institutionalized, so that most Japanese firms [came to] consider them taken-for-granted” by the second decade of the 21st century (Keizer, 2010, pp. 49–51; Sekiguchi, 2013, p. 475). Merit-based wages were hardly novel in Japan. Managers had long favored productivity as the yardstick in wage determination, even after the compromise with labor on seniority in the 1950s. Nikkeiren introduced the concept of “ability-based management” (nōryokushugi kanri) in 1969, and during the 1970s, a majority of employers reported using synthetic wage systems that considered both “personal characteristics” (seniority and education) and “competence” (Tsutsui, 1998, pp. 167–176; see also Gordon, 1998). In the 1970s, as in the Lost Decade, the bottom line was almost certainly as important in managerial thinking as the psychological or philosophical appeal of compensation incentives. As some commentators have pointed out, performance-based management was a “cover for wage restraint” (Vogel, 2006, p. 13), as well as a “means to offset the costs of no-layoff policies” (Jacoby, 2005, p. 63).

The component of the Japanese Employment System that may have changed the least since the collapse of the Bubble Economy is company unions, which have grown weaker over the past quarter century but not been supplanted or transformed structurally. Japan’s unions, long cooperative with management, have been further defanged and marginalized since the 1980s. Faced with a business push for more flexible employment practices, the labor movement chose to focus on job security, holding off on wage demands, working with companies to improve results, and avoiding disruptive confrontation. The Japanese Trade Union Confederation, or RENGO, for instance, shied away from major conflicts, even on the divisive issues of performance-based wage systems and the increased use of irregular workers (Keizer, 2010, pp. 172–173). In any case, the bargaining power of unions has been weakened by declining membership, which fell from more than 30% of the workforce in the 1970s to only 17.1% in 2017 (Aoki, Delbridge, & Endo, 2014, pp. 25–60; OECD & Visser, 2018). Labor activists have bemoaned a decline in worker commitment to company unions, which have experienced a “hollowing out” and are increasingly irrelevant in shaping the terms of employment in Japan (Ōhki, 1998, pp. 230–231).

After twenty-five years of handwringing and hubbub over the unsuitability of the Japanese Employment System in a global economy characterized by disruptive innovation and American free-market capitalism, change to the distinctive core practices of Japan’s postwar labor management regime appears surprisingly minimal. As farsighted analysts recognized even in the 1990s, the “ahistoric, shallow rhetoric of sudden change and collapsing institutions is deeply flawed” (Gordon, 1998, p. 211). Today, the custom of permanent employment endures, even as its demise is regularly predicted and the proportion of the workforce it covers declines annually. The wage and promotion system, as it has since the 1960s, continues to give ever greater weight to ability and performance, although seniority remains a much more prominent element than in the United States or Europe. Company unions, though packing less clout than in decades past, are still the norm. And corporate welfare facilities have been widely maintained, even as firms have struggled to bear the expenses (Mizobata, 2011, p. 287). After more than two decades of economic uncertainty, a shifting legal landscape, and shop-floor experimentation, employers have learned how to work around the rigidities of the Japanese employment system, reaping the system’s benefits while minimizing its costs and managing its associated inefficiencies (see Ornatowski, 1998).

Scholars, journalists, and practitioners have struggled to characterize what has occurred in Japanese labor management since 1990. The developments, according to one management expert, “have not been as revolutionary as could have been expected” (Keizer, 2010, p. 168); another described the changes as “evolutionary rather than revolutionary” (Ornatowski, 1998, p. 74); others have written of “creative adaptation” (Huchet et al., 1999, p. 1) and “incremental change,” often more “symbolic” than structural (Jacoby, 2005, p. 77). Some have argued that there is a new (and significant) synthesis in Japanese employment practices: “What has emerged in Japan is not an Americanized or westernized version of capitalism, but a distinctive hybrid model” (Endo, Delbridge, & Morris, 2015, p. 115). More-nuanced analysts stress the complexity (as well as the novelty) of what is emerging in Japan. Sanford Jacoby (2005) has concluded that “a single new hybrid is not emerging, but rather companies are finding different ways to adapt the traditional practices to pressures from markets, investors, and employees” (p. 77).

The current consensus in the academic literature is that, despite past assumptions of the desirability or inevitability of the “Americanization” of Japanese labor management, fundamental differences in Japanese practices persist and convergence has, at most, been minimal. Robert Boyer (1999) has described the recent history of the Japanese employment system as “an epochal change without any clear convergence” (p. 421). Jacoby (2005) acknowledges “borrowing from the United States” and a “stronger market orientation” in Japanese firms, but warns that “those who think that the large Japanese corporation will gradually morph into its American counterpart are mistaken” (pp. 77, 166). Numerous commentators have noted an increased diversity of practices in human resource management among Japanese firms, with distinctions appearing across different industries and sectors, but also “between firms operating in the same industrial sector and exposed to the same institutional environment” (Aoki et al., 2014, p. 2552). Others have suggested that the major changes of recent decades have derived less from macroeconomic challenges and the accompanying crisis of confidence in the Japanese employment system, and more from long-term sectoral shifts in the Japanese economy, which has moved steadily toward the service industries and away from manufacturing (Huchet et al., 1999, p. 3; see also Ornatowski, 1998, p. 2). All these observations indicate that our presumption of a coherent “Japanese model” of labor management, either before or after 1990, may well be ill-founded and that additional, more finely textured research on the history and evolution of Japanese employment practices is well warranted.

The History of Japanese Production Management

In production management as in labor management, the development of Japan’s distinctive practices was a lengthy process, stretching from the introduction of modern industry in the 19th century into the postwar decades of high-speed growth. Much of the scholarly literature has framed Japanese techniques like lean production or Total Quality Control as substantial departures from the dominant regime of American production management in the 20th century, scientific management (also known as Taylorism, after its creator Frederick Winslow Taylor). Historians such as Hazama Hiroshi (1978) have argued that Taylorism, which stressed systematic practices and the scientific analysis of the production process by professional managers, was inconsistent with Japanese culture and the emerging institutions of paternalism. Yet Japanese managers have looked to American models for inspiration and guidance from the very start of Japanese industrialization, imitating, experimenting with, and adapting scientific-management practices and other workshop strategies pioneered in the United States. The major Japanese innovations in production management, which attracted so much interest globally in the 1980s, evolved out of Taylorite methods in the specific economic, cultural, and technological context of Japanese industry (Tsutsui, 1998).

Prior to the development of Taylorism—Taylor published The Principles of Scientific Management in 1911—the work process was remarkably similar in Japanese and American factories. The autonomous oyakata who dominated the shop floor, like their counterparts in the United States, generally relied on rule-of-thumb practices and craft skills. Japan’s first professional managers, eager to assert their direct control over workshops, welcomed the first reports of scientific management—Taylor’s Principles was translated in 1915—which promised to enhance managerial authority, raise efficiency, and increase profits through specialization, standardization, and simplification. A movement of avid consultants, executives, educators, and hucksters preached the new Taylorite gospel though World War I and the 1920s, what has been called Japan’s “age of efficiency,” trumpeting the value of novel methods such as time-and-motion study, Gantt charts for process planning, functional foremanship, and “scientific” worker selection. Early reports of the successful implementation of aspects of Taylorism in Japanese factories, from large, technologically sophisticated workshops such as those at the naval arsenals and the major cotton spinners to smaller, more labor-intensive producers such as Lion Toothpower Company, fed the faddish fascination with American practices (Tsutsui, 1998).

Unlike in the United States and Europe, where Taylor’s methods quickly became associated with union-busting and the deskilling of labor, scientific management faced much more muted opposition in Japan. In the 1920s, production management was the subject of considerable public debate, and left-leaning Japanese intellectuals were widely parroting Western critiques of Taylorism at the same time its supporters were enthusiastically translating imported management treatises and echoing the rationales of American Taylorites. Critics faulted scientific management for its dehumanizing tendencies, antidemocratic proclivities, and dubious claims of scientific rigor (Tsutsui, 1998, pp. 39–49). But Japanese workers proved surprisingly accepting of Taylorism in actual practice, Despite several notable incidents of labor resistance, American incentive wage schemes were generally much more contentious than “scientific” changes in the production process (Tsutsui, 1998, pp. 37–39). This measured response was due, in large part, to managerial strategy in Japan, where the proponents of Taylorism attempted to learn from the more-contentious American and European experiences. Japan’s reformist managers sought to “humanize” scientific management rhetorically and in actual implementation, aligning it with corporate welfare practices and tempering “the mechanistic rigidity of rationalized production . . . with systematic attention to the physiological, psychological, and spiritual needs of the factory work force” (Tsutsui, 1998, p. 77). As the historian Okuda Kenji (1985) has argued, “In the case of Japan, the methods of U.S. Scientific Management were introduced but the contemptuous view of the worker which underlay them was denied” (p. 73).

In the 1930s, as Japan sought to pull its economy out of the global depression and the nation mobilized for military expansion in Asia, the state became more directly involved in the modernization of production management. The hand of the government was visible in the industrial rationalization movement (sangyō gōrika undō) at the start of the decade, as government bureaucrats promoted efficiency at the industry level through horizontal and vertical integration, cartelization, and concentration and at the shop-floor level through redoubled efforts at Taylorization (Tsutsui, 1998). The pressure to step up production (and productivity) heightened after the start of the China War in 1937 and again after the attack on Pearl Harbor in 1941. Under the technocratic wartime “New Order” (shin taisei), Japan’s managers were exhorted to bring systems and science to workshops that were increasingly disrupted by resource bottlenecks, labor shortages, and American bombing raids (Tsutsui, 1998). German approaches to shop-floor production, which had attracted substantial Japanese attention in the late 19th century, were the focus of renewed interest during World War II, but their impact was uneven and their postwar legacies for Japanese manufacturing were minimal (Wada & Shiba, 2000; see also Kudō, 1998).

Despite decades of advocacy by Japanese Taylorites, experimentation by Japanese factory managers, and support from activist bureaucrats, the application of scientific management in Japan remained uneven and far from universal, even in large manufacturers, prior to 1945. As one wartime commentator reflected, “One certainly can’t say that Scientific Management has permeated the industrial world or that the actual usage of its methods has progressed” (Neagari, 1942, p. 574). For all the success stories—in the workshops of the Japan National Railways, in the major cotton spinners—whole sectors of Japanese industry seemingly remained impervious to reform efforts. In most machine shops, skilled workers using multipurpose tools remained the norm and unsystematic, rule-of-thumb methods continued to dominate in smaller enterprises. Many factors accounted for the slow adoption of modern production management practices: the availability of inexpensive and plentiful labor; low investments in mechanization; the conservatism of managers and foremen; and the inability to achieve the scale, standardization, and coordination necessary for full assembly-line production (Tsutsui, 1998, pp. 65–67, 86–88). Yet Japanese Taylorites emerged from World War II well organized, convinced of the necessity of managerial reform to the nation’s postwar revival, and committed to a humanized adaptation of scientific management that achieved both high efficiency and supported labor (Tsutsui, 1998, pp. 115–121).

Three intertwined developments in Japanese firms and in the larger political economy during the postwar American Occupation and the 1950s set the stage for the emergence of Japan’s major postwar innovations in production management. First, the decade after the end of the war witnessed “the emergence of a professional managerial class steeped in the technocratic values and methodological approaches of Scientific Management” (Tsutsui, 1998, p. 151). This managerial ascendancy was the result of Occupation reforms that diminished the power of capitalists in society and of shareholders within the firm, and of labor policies that briefly empowered but then greatly constrained the postwar union movement. Second, postwar Japanese managers were given unprecedented opportunities for training in and exposure to advanced American management techniques. The Japan Productivity Center (Nihon Seisansei Honbu), founded in 1955 with financial support from the United States, sponsored educational programs and “productivity missions” that took thousands of Japanese managers on study tours of American industry. At the same time, Occupation-initiated programs—Training Within Industry aimed at foremen, the Management Training Program for middle managers, and the Civil Communications Section (CCS) course on the electronics industry—suffused a knowledge of American managerial best practices throughout Japanese business (Sasaki, 2004; Tsutsui, 1998). Third, as the Japanese economy flourished starting in the late 1950s, when strong exports and a surge of domestic consumption fueled growth, conditions at last became congenial to true mass production. With healthy markets for Japanese goods assured, technology from abroad readily available, and more capital available for investment, Japanese industry achieved the scale and levels of mechanization that highly incentivized (and even required) a thoroughgoing modernization of management practices (see Ueda, 2004).

After the war, as before it, Japan’s managers looked almost exclusively to America for strategic and methodological inspiration (Sasaki, 2004; see also Wada & Shiba, 2000). As Andrew Gordon (1998) has attested, although the postwar advances of Japanese production management were “inspired by American practice,” the imported models “were all modified as they crossed the Pacific” (p. 172). This certainly was the case with lean production, the complex system of manufacturing developed in the factories of Toyota Motor Company in the thirty years after World War II, widely regarded as Japan’s outstanding contribution to industrial management and a novel alternative to American Fordist mass production. Lean production grew from the obsessive work of a series of Toyota engineers—especially Toyoda Kiichirō, Ōno Taiichi, and Shingō Shigeo—who recognized the challenges of replicating conveyor-belt assembly lines in Japan and instead sought to devise a flexible, decentralized system that squeezed maximum efficiency from labor and a limited stock of technology (Fujimoto, 1999; Shimokawa & Fujimoto, 2009). They created a highly coordinated just-in-time process using flexible, multipurpose machine tools that minimized the need for costly inventories and, through the meticulous simplification and standardization of work routines, allowed workers to operate multiple machines simultaneously. Ōno and his colleagues solved a daunting range of technological challenges using a thoroughly Taylorite toolkit (time-and-motion study, layout design) and a thoroughly Taylorite mindset: “The most important objective of the Toyota system,” Ōno wrote, “has been to increase productive efficiency by constantly and thoroughly eliminating waste” (Ohno, 1988, p. xiii). As William Tsutsui (1998) has observed, lean production diverged from Fordist ideals that were ill-suited to Japanese realities, but affirmed the long-standing commitment of Japanese managers to the principles of scientific management:

Instead of depending on the conveyor belt as a mechanical means of ensuring worker discipline and productivity, Toyota engineers sought to optimize the efficiency of the production process and use Taylorite reform of work—rather than capital investment in manufacturing technology—as the primary means of cutting costs and extracting the most from shop-floor labor (p. 186).

Like lean production, Japan’s other important postwar innovation in industrial management—the quality-control movement—sought to address the specific challenges of Japanese factories through the creative application of techniques originally “made in the U.S.A.” Product quality had long been a concern of Japanese manufacturers, whose goods were known internationally as being “cheap and shoddy.” The Occupation sought to address this weakness by bringing the statistical quality-control specialist W. Edwards Deming to Japan, in 1947, to teach Japanese managers the latest American methods. Deming would later claim to have had a formative impact on the Japanese quality movement, but in fact, Japanese engineers were already well versed in statistical approaches to process control (Tsutsui, 1996). Moreover, these engineers soon discovered in practice that statistical quality control faced the same challenges in Japanese factories it had encountered in American ones: theoretical and highly mathematical models, such as those promoted by Deming, generally floundered in the complex reality of the shop floor. Thus frustrated, the leaders of Japan’s quality movement, who were all affiliated with the Union of Japanese Scientists and Engineers (Nihon Kagaku Gijutsu Renmeikai, abbreviated “JUSE”), made a series of creative breakthroughs in quality management. The first was Total Quality Control (TQC, usually known in the West as Total Quality Management), which sought to extend quality-control expertise beyond specialist staff to all managers and employees (including rank-and-file workers) and to expand the movement to encompass a wide range of managerial reforms, all essentially Taylorite in form. The second was to establish quality-control circles, voluntary small-group gatherings of shop-floor workers, who received training in quality-management techniques, that provided a forum for grass-roots discussions of improving the production process (Tsutsui, 1998; see also Gordon, 1998, pp. 68–72, 167–172). The quality-control movement was thus transformed over the 1960s from a narrow agenda of statistical analysis into a comprehensive campaign of management reform, promoting the long-retarded standardization and systematization of Japanese workplaces while encouraging seemingly unprecedented forms of labor participation, empowerment, and self-expression.

Lean production, TQC, and quality-control circles have been widely celebrated for delivering extraordinary efficiency, flexibility, and quality while democratizing the factory by engaging workers constructively and collaboratively in the management of production. Yet the widely held assumption that these innovations were a reaction against American paradigms of production management is, at best, only partially correct (see Gordon, 1993). Although Japan did not embrace Fordism with the enthusiasm of the United States or Europe—where markets were larger and mechanization was generally more advanced—the distinctive production management practices of Japanese industry were constructed over the 20th century from the building blocks of orthodox Taylorite thought and practice. Japanese managers did not simply mimic American models, however, but creatively adapted the imported practices to the specific micro- and macroeconomic realities they confronted. Significantly, they tempered the austere dictates of scientific management with humanizing elements, from the corporate welfare practices of the 1920s to the wartime spiritualism of Sanpō to small-group activities on the factory floor during the “miracle” economy. “Japanese standardized work and kaizen . . . are every bit as rigorous as Taylorism,” Fujimoto Takahiro (2007, p. 62) has concluded, but “we should think of them not as a rejection of Taylorism but as the democratization of Taylor’s principles.”

Nevertheless, the commitment of Japanese managers to the humanization and democratization of work remained stronger in rhetoric than in practice. Techniques like quality-control circles have cut both ways, appropriating the craft knowledge of workers even as they promise greater inclusion and respect for labor. As Andrew Gordon (1998) has observed,

Japanese managers from the 1950s through the present have not merely removed workers’ “brains” through industrial engineering that simplified work. . . . Managers maintained hegemony in the workplace by mobilizing workers’ intelligence toward corporate goals; they drew them into the analysis of work even as they imposed expert analysis upon them (p. 197).

So despite the vision of Japan as a “post-Fordist” paradise, with “empowered, multiskilled employees working in teams and participating actively in shop-floor decision making” (Tsutsui, 1998, p. 3), Japanese-style management has not, in fact, transcended the intellectual or methodological confines of scientific management (Tsutsui, 1998, pp. 236–244; see also Danford, 1999, p. 141; Kenney & Florida, 1993).

Japanese Production Management since 1990

American and European firms have seldom (if ever) been inspired to emulate the Japanese employment system, yet Japanese production management techniques became the objects of Western fascination—and widespread, faddish adoption—in the 1980s and 1990s. Caught off guard by the rise of the Japanese electronics and automotive industries, as well as by the high quality and low prices of Japanese products, the beleaguered managers of Detroit, Coventry, and beyond looked to lean production and Japanese quality control for salvation. Andy Danford (1999) tells the story of an executive in a troubled British aerospace company addressing his factory staff in 1987: “Right lads listen to me. This site’s in trouble. Our costs are too high, we don’t produce enough, and we don’t produce on time. We’re going to be ‘Japanized’” (p. xi). Faced with an economically ascendant Japan, novel practices such as kanban inventory tracking, poka-yoke “mistake-proof” design, and quality-control circles (among many others) were voraciously but haphazardly studied, tested, and implemented by manufacturers around the world.

More than a quarter century after being introduced abroad, Japanese production management has had a substantial global impact, though perhaps not the transformative one that its promoters promised and Western managers hoped for. As Japanese Taylorites found at the start of the 20th century, wholesale application of complex managerial systems is daunting, and even Japanese transplant factories in Europe and Southeast Asia struggled to apply deeply socially and organizationally embedded systems like lean production and TQC internationally (Abo, 2007b; Elger & Smith, 2005). After their flirtation with Japanese practices, American and European firms have now moved on to new managerial fashions, and not simply because Japan has struggled economically and its manufacturing models consequently command less respect. As many Western managers and workers discovered in the 1990s, Japanese production management often did not live up to the hype of unparalleled efficiency and incomparable empowerment of labor (Danford, 1999; Graham, 1995). Nevertheless, individual Japanese techniques have become part of the toolkits of industrial engineers everywhere, now familiar shop-floor methods “adopted into mainstream management practices” (Keizer et al., 2012, p. 7; see also Shimokawa, 2010).

Scholars and practitioners generally agree that innovation in Japanese production management “stalled” after the early 1970s and that by the early 21st century, Japan’s shop-floor practices were “largely mature and unchanging” (Schonberger, 2007, pp. 410, 404). Incremental, evolutionary adaptation has continued in certain industries and at exemplary firms like Toyota (Fujimoto, 2018), but even the observers most invested in Japanese management systems have characterized recent decades in terms of “sustained competitiveness” rather than invention, creativity, or global leadership (Heller & Fujimoto, 2018). Richard Schonberger (2007) concluded at the start of the new millennium that Japan’s “era of significant contributions to manufacturing management (and general management as well) appears to have long-since ended” (p. 409). Indeed, since 1990, as Japanese firms have addressed economic stagnation with outsourcing, organizational re-engineering, and the restructuring of production, strains have become apparent even in well-established practices like lean production and quality-control circles. Observers have reported breakdowns in the traditional supply chains in automobile production and struggles to manage inventories, even in sophisticated just-in-time systems (see Endo et al., 2015, p. 104; Schonberger, 2007, p. 413). Moreover, as the number of irregular workers has increased and “a reduction in the sense of reciprocity and shared interests” has become evident in many workshops, enthusiasm for (and participation in) small-group activities has apparently declined (Abo, 2007a, p. 32; Aoki et al., 2014, p. 2565).

While Japanese industry may have ceased to generate new advances in production management over the past quarter century, innovation has continued (and even accelerated) in the West, particularly in the United States. Many of the innovative systems, techniques, and standards that have emerged—Six Sigma (process improvement and defect elimination), ISO 9000 (quality-assurance standards), modularization, logistics and supply-chain management, and Design for Manufacture and Assembly (DFMA)—built upon earlier Japanese approaches to lean production or quality control (Abo, 2007a; Schonberger, 2007; Shimokawa, 2010). While postwar Japanese production management has thus served as “vital catalyst” to “developments that have far-reaching global significance on manufacturing practice” (Schonberger, 2007, p. 409), Japanese firms have not only failed to design effective “post-lean” production methods, but they have also struggled to adopt the latest methodologies from the West (Munakata, 1998). Even in automobile manufacturing, where Japanese firms remained highly competitive internationally and lean-production techniques continued to deliver world-leading productivity (Fujimoto, 2007), Japanese managers proved slow to react to information technology innovations, advances in value-chain modularization, and new models of global sourcing (Shimokawa, 2010; Sturgeon, 2007; Takeishi & Fujimoto, 2001). “Japanese industry,” one prominent American consultant lamented, “has generally not kept up with the state of the art in production management” (Schonberger, 2007, p. 416).

Interestingly, while commentary in the West on Japanese labor management since 1990 has largely focused on the question of convergence toward an American, market-oriented ideal, the same debate has not characterized scholarly research or media coverage related to Japanese production management. American and European interest in Japanese manufacturing methods has historically lagged behind interest in the Japanese employment system and, as Japan no longer seems to be a source of fresh innovation or an exemplar of best practices, attention to Japanese production management has further declined. Moreover, Western observers have come to realize that (as with labor management) the reality of Japanese shop-floor practices is more complex than seemed to be the case during the euphoria of the 1980s and early 1990s: given the variations among firms and industrial sectors, the very notion of a unified and coherent Japanese model of production management converging in any particular direction is highly suspect (Endo et al., 2015). Perhaps most importantly, the lack of a convergence debate reflects the fact that the foundational approaches and techniques of Japanese and Western production management have historically not been all that different. The organization of work in modern manufacturing—in Japan, the United States, and globally—has long been and remains rooted in a common vocabulary, methodology, and mindset derived from Taylor’s scientific management theory. The evolution of production practices has long been a transnational conversation within the Taylorite idiom, and in the 21st century, as globalization continues to accelerate, this cross-fertilization across firms, industries, and national borders seems certain to continue (Fujimoto, 2007, pp. 139–141; Tsutsui, 1998).


Those who seek to impose neat, unambiguous, linear narratives on the history of management in modern Japan—or on developments since 1990—are sure to be disappointed by the increasingly nuanced scholarship that has appeared over the past quarter century. The time-honored interpretations of Japanese-style management’s origins—either that it grew organically from the nation’s preindustrial cultural heritage or that it was plagiarized wholesale from American practice—have now long outlived their utility. The evolution of Japanese labor and production management cannot be reduced to a simple story of cultural determinism, slavish imitation, or inevitable convergence. The impact of culture on Japanese practice—through the status anxieties of Japan’s first factory workers or the social embeddedness of institutions like permanent employment—cannot be ignored, but it was not the seamless inheritance of tradition asserted by paternalist managers or assumed by later commentators. Similarly, while neither lean production nor TQC were knock-offs of the teachings of Frederick Winslow Taylor or W. Edwards Deming, American models have exerted a profound influence on Japanese workshops and wage systems since the end of the 19th century. In place of misleading caricatures, the historical unfolding of Japanese-style management can now be understood as a process of constant experimentation, negotiation, and change, of innovation by managers and firms, of creative tension with workers and unions, and of active global discourse on passing fads and best practices. Significantly, that discourse—largely a dialogue between Japan and the United States through most of the 20th century—was a “bi-directional trading of ideas and practices,” in which the two nations both taught and learned across the Pacific (Jacoby, 2005, p. 173; see also Tsutsui, 1998). And today, of course, as numerous observers have noted, that conversation and cross-fertilization around the techniques of labor and production management is truly global in scale (Shimokawa, 2010).

Just as scholarly research has complicated our understanding of the history of Japanese-style management, so it has cast doubt on many of the predictions confidently made about the fate of Japan’s distinctive practices in the country’s tenacious Great Recession. Thus, despite widespread assumptions of the convergence of the Japanese Employment System toward the Anglo-American, market-oriented model, this much-anticipated transformation has yet to materialize. Some analysts have detected an “inflection point” for the Japanese corporate system, and noted that “elemental,” “irreversible” changes are underway (Schaede, 2008); others have posited the emergence of a “new hybrid model of capitalism” fusing Japan’s customary practices with “elements of the more dynamic American or Anglo-Saxon variety of capitalism” (Going Hybrid, 2007, p. 3). Yet such sweeping pronouncements underestimate historical continuities and the flexibility of the status quo, even as they overestimate the magnitude of recent transitions in Japanese management and the uniformity of change across firms and industries (Fujimoto & Ikuine, 2018). A few scholars have also begun to cast doubt on the generally unchallenged presumption—one vigorously promoted by many Japanese political leaders—that Japan’s lackluster economic performance over the past quarter century is the result of pervasive structural problems (including rigidity in labor markets and stifling regulation) that have hamstrung the nation’s industrial competitiveness. As Steven Vogel (2006) has suggestively noted, “The Japanese economic crisis is more the cause of Japan’s structural problems than the result of them” (p. 38).

If recent academic work on Japanese labor and production management has taught us anything, it is that Japanese practices are more diverse today—and have historically been more varied—than almost any observers in the United States and Europe have before acknowledged. Harkening back to the “discovery” of Japanese-style management by Abegglen, Dore, and other pioneers, Takahiro Endo, Rick Delbridge, and Jonathan Morris (2015) have maintained that “the initial discourse of the uniqueness of the Japanese model gave the misapprehension that Japan and its firms were largely homogeneous, never an accurate picture, and developments over the last two decades have seen increasing variation” (p. 113). Such realizations remind us that much more research is needed in disaggregating monolithic conceptions of “Japan” and “Japanese practices” and moving beyond persistent stereotypes and expedient (if often faulty) assumptions. Scholars need to explore the world of work in Japan beyond manufacturing, the automotive industry, and interwar textile mills; beyond a narrow geographical slice of the nation’s economic heartland; beyond a presentist approach; and beyond large firms, male workers, and cosmopolitan engineers. Even though a more diverse range of case studies (especially of the contemporary scene) has appeared in recent years (Cusumano, 1991; Fujimoto & Ikuine, 2018; Kudo, Kipping, & Schröter, 2004; Nakano, 2018), more granular analyses of firms and fashions past and present will provide invaluable insight into the extent and meaning of Japanese difference. They will also help us fully appreciate Japanese-style management as a moving target, continually “modified and renewed” (Gordon, 1998, p. 211), in a landscape of disruptive market change, profound demographic shifts, volatile political winds, and a constantly evolving global discourse of managerial thought and practice.


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(1.) In an admittedly unscientific review of 10 articles on Japanese-style management published between 1998 and 2014, all in peer-reviewed business and human resource management journals, only one cited the standard historical source on the Japanese employment system, Andrew Gordon’s paradigm-changing The Evolution of Labor Relations in Japan (1985).