This book examines corporate reform in Japan by focusing on corporate
governance and the employment system. Contrary to a prevailing assertion
of radical change, it is revealed that actual change is gradual, and a
new type of Japanese firm is generated by reform with gradual change.
Throughout the book, Japanese firms are seen to be evolving through
gradual institutional change. Chapter 1 discusses how Japanese corporate
governance changed incrementally and cumulatively to rebuild management
and restore corporate performance. Chapter 2 focuses on reform in work
organization and discusses how performance-related pay was introduced in
tandem with corporate governance reform. It is shown that the practice
of long-term employment has been maintained despite the prolonged
depression and mounting pressure to shift to shareholder-oriented
corporate governance. Chapter 3 investigates how Japanese firms are
diversified into four types, based on whether performance-related pay is
introduced and whether long-term employment is maintained. The author
demonstrates that major Japanese firms reconstruct their organization as
hybrid structures based on a combination of long-term employment and
performance-related pay. Chapter 4 investigates how performance-related
pay actually operates. It is analyzed by distinguishing the three main
objectives to be attained by performance pay: succeeding in individual
performance, contributing to overall organization performance, and
meeting the challenge of new tasks. Finally, Chapter 5 investigates how
employees react to changes in corporate governance. Using survey data,
the book shows that Japanese employees approve of increasing shareholder
value, regarding it as corporate value. They not only approve the
monitoring of management by shareholders, but also demand a part in the
monitoring. Employees seek to be engaged in corporate governance--a true
challenge for a Japanese corporation.
