55
MANAGEMENT IN JAPANESE
CAPITAL-AFFILIATED BUSINESS
CORPORATIONS: EXPERIENCE IN
THE PHILIPPINES (2)
by
Teruhiko Tomita
/III. FEAT(JRES OF THE CORPORATIONS SURVEYED
Based on the two types of questionnaires prepared respectively forJapanese top managers stationed in the Philippines and local middle managers,
the surveys were conducted in September 1981 and April 1982. 0ut of a
total 649 Japanese capital-affiliated corporations operating in the Philippines
9)
as of July 1981, questionnaires were sent to 111 corporations which have more than 20905 Japanese equity. Forty eight Japanese top managers from 48 corporations and 173 Iocal middle managers (96.4%o of whom were uni-versity graduates) from 53 corporations replied to the questionnaires. (There
were an additional 6 corporations from which only local employees replied, and 1 corporation from which only Japanese responded to the questionnaires.)
Twenty eight Japanese top managers and 65 local middle managers were
interviewed. Most of the corporations surveyed were located in Luzon
- 9) Japan Trade Center (JETRO). A DirectorN of Jmpanese
Domestic Corporations and Wholly Owned Ja2anese E7tter.P. rises M.anila: Japan Trade Ce4ter. 1981,
E'
Capital-Affiliated
56 P...$R.imue
ee232Ill-centering around Metro Manila and Bataan with some in Mindanao. Some
features of the corporations surveyed were as follows:
1. The majority of the corporations (35 ,or 72.9%) were in manufac-turing industry as shown in Tabie 3-1. Most of the manufacmanufac-turing firms produced standardized commodities. About 74% of the manufacturers used capital and/or technology intensive methods of production rather than labor intensive. They were producing.transport equipment (1 corporation), elec-trical machinery (7), chemical and chemical products (3), textiles (3), basic
metal products (2), metal products (1), non-metallic products (1), food (1) and
printing, publishing and other applied products (1). Those in which labor would be more intensively used than other resources were footwear, other wearing apparel and made-up textile goods (4), miscellaneous manufacturing (4), and leather and leather and fur products (1). Other corporations were
Table 3-1. Japanese Capital-Affiliated Corporatons in the
Philippines and Scope of Survey
unit: Number of Corporations, %o in ()
. Japanese Joint Questions Questions
Subsidiaries Ventures Sent Collected
Agriculture,Forestry,Fishery 1( 1.2) 85( 13.1) 7( 6.3) 2( 2)( 4.1)
Mining and Quarry 5( 6.0) i9( 2.9) 1( O.9) O( O)
Manufacturing 28( 33.8) 236( 36.4) 70( 63.1) 35(39)( 72.9)
Construction 3( 3.6) 33( 5.1) 3( 2.7) 1( 1)( 2.1)
Wholesale & Retail 33( 39.8) 169( 26.0) 17( 15.3) 4( 4)( 8.3)
Finance&Banking 4( 1.8) 15( 2.3) 4( 3.6) 3( 3)( 4.2)
Real Estate O 10( 1.5) O
Transportation 4( 4.8) 13( 2.0) 1( O.9) 1( 1)( 2.1)
Other Services 5( 6.0) 69( 10.6) 8( 7.2) 2( 3)( 6.3)
Total 83(10e.O) 649(100.0) 111(100.0) 48(53)(100.0)
(Source) Japan Trade Center (JETRO). A Directory ofJapanese Capital-Affiliated
Domestic Corporations and Wholly Owned Japanese Enterpnses in the
PhiJippines. Manila: Japan Trade Center. 1981.
MANAGEMENT IN JAPANESE CAPITAL-AFFILIATED BUSINESS
CORPORAT!ONS: EXPERIENCE IN THE PHILIPPINES (2) 57
classified into agriculture, fisheries and forestry (2), construction (1), wholesale
and retail trade (4), banking and non-banking institutions (3), transport (O,
and service (2). The 6 corporations from which questionnaires were collected from only local middle managers were 1 service corporation and 5 manufac-turing corporations: one each from made-up textile goods, chemical products, electrical apparatus, non-metallic mineral, and transport equipment.
2. The aggregate Japanese equity investment of the 48 corporations (there were 46 valid observations) accounted for 74% of the Japanese cumu-lative direct investment of about 1.9 billion pesos, on the basis of the 10)
1968-1981 Board of Invesrment's approved statistics.
3. Most of the corporations surveyed were incorporated fairly recently,
mostly after 1974, when the RP-Japan Treaty of Amity, Commerce and
Navigation became effective and social security was significantly assured due to the implementation of martial law. The average year of inauguration was 1976.
4. Seventeen of the 48 corporations were ranked among the
SEC-Business Day's 1000 largest corporations in terms of gross revenue in
11)
1981. But a not inconsiderable number of corporations, inclnding a few which were once ranked among the top 1000 corporations, were reportedly in bad shape. Years of operations of the joint venture had !ittle to do with corporate performance. But the corporate size of Japanese partner(s) and the business experience of the Filipino partner(s) seemed to have considerable
lmpaet on lt.
5. The number of Japanese equity participant(s), their business strength lo) Board of Investment, "Amount of Investment Approved under R. A's 5186,
6135, P. D. 1159 and R. A. 5455 by Nationality 1968-1981", Mani!a: 1982.
11) SEC-Business Day. 1000 ToP CorPorations in the PhiliPPines, Volume XIII
58 Yv tR Efiue- ng 232 g
in Japan, and the proportion of Japanese equity participation varied to a
considerable extent. Twenty eight Japanese capital-affiliated business ventures
had one Japanese equity participant as a partner of the venture. The rest of the 20 ventures had plural Japanese partners: 2 Japanese partners in 14 ventures, 3 in 5 ventures and 5 in 1 venture. Among them, 9 ventures had s6g6 sh6sha, an integrated and diversified trading firm, ras one of the co-Japanese partners. co-Japanese partners which made investments in 37 ventures were large corporations, most of which were listed on the lst stock exchange market in Japan, while unorganized entities and small to medium sized enterprises invested in 11 ventures. In 13 ventures, Japanese partners held majority equity ranging from 70% to 100% with 1 venture holding 50e06
.eqmty.
6. Many of the ventures, including those with Japanese minority equity participation, were allegedly dependent, in one way or another, on the head office of the Japanese partners in terms of (a) financing long-term credit loans, (b) using key technology and know-how, (c) procuring raw materials and parts essential to their operations, and (d) utilizing Japanese channels
of distribution for the sales of their products.
gV. JAPANESE MANAGEMENT AS APPLIED IN
THE PHILIPPINES
Through the responses made by Japanese top managers of Japanese
capital-affiliated corporations, this section tries to examine the style of industrial relations of Japanese management implemented in the Philippines. Internal and external factors, and their interrelation, are assumed to be of importance in determining the style of management used. In this regard the following three views, among others, will be examined in connection with basic management policy, the framewQrk of industrial relations, and manpower
MANAGEMENT IN JAPANESE CAPITAL-AFFILIATED BUSINESS
CORPORATIONS: EXPERIENCE IN THE PHILIPPINES (2) 59
development strategies.
First, testing the explanatory value of the concept of `interfirm
non-compatibility' of employees. As described earlier, industrial relations
structur-ed on the Japanese management `framework', i. e., so-callstructur-ed `stereotype' Japanese management are more often observed in corporations where `inter-firm non-compatibility' of employees is more needed for corporate operations, and employees tend to consider themselves `non-compatible' with other organizations. To clarify whether this situation is also applicable to the Japanese corporations in the Philippines is a chalienge. In examining this
problem, size of enterprig..e is selectecl as a critical factor in determining the
degree of compatibility of employees. We assume that relative to smaller ones, capital intensity in larger corporations is higher, and the technology and know-how employed are more firmly established and routinized; hence the productlvity of machines and administration is more closely related to the existence of ennployees who appreciate corporate purpose and culture. We also assum.e that their corporate reputation is better, and thus employees' pride in the corporation is stronger relative to those of the smaller ones.
Second, examinin.a to what extent Japanese style industrial relations will
be affected by the ethnicity of top management who hold decision makin.g
authority. The proportion of equity 1ield by JTapanese and Filipinos is selectecl
as the criterion for this purpose, even though actual operations are signifi-cantly dependent on Japanese partner(s) as described in section I[. Through examination of this proposition, we may be able to get some idea of the scope of relevance of Perlmutter's conceptions of two oLF the three types of 12)
multinational enterprises on managerial attitudes and organizations, which are
12) Perlmutter grouped multinational corporations into three types: ethnocentric,
polycentric and geocentric. See Perlmutter, Howard V. L' Entreprise
60 ;iREA,ue Adi232S!}
summarized by Roberts as foliows: " `Ethnocentric' multinational corporations
generally wholly own their overseas subsidiaries which are managed by nationals of the country in which the parent corporation is based. They are in effect a cukural, as we!1 as an economic, extension of the parent
corpo-ration. `Polycentric' multinational corporations often have local participation
in the capital ownership of their subsidiaries, which are managed by citizens
of the countries in which they are located. The culture pattern of 13)
ment is predominantly that of the country in which they are situated."
Third, observing how the cultural and social environment of the
Philippines will affect the style of Japanese management. This may help to clarify to some extent an approach to industry-community relations which is called the `community-influence hypothesis' that advocates "community norms and values exert influence on industrial structure and behavior" and "management has to adjust its practices to the social and cultural realities 14)
of communities in which it operates."
Classification of CorPorations Stsrweyed
The corporations surveyed were classified into two groups according to the nationality of majority equity ownership: Japanese majority corporations and Philippine majority corporations. One company, in which equlty was May 1965. pp. 151-166; and, Toward Research on and Development of Nations,
Unions and T,irms as Worldwide Institutions: Transnational Industrial Relations, edited by Hans Gtinter. London: Macmillan. 1972. pp. 21-50.
13) Roberts, B. C. Factors Influencing the Organization and Style of Management
and Their Effects on the Pattern of Industrial Relations in Multi-National
Corporations: Transnational Jndtsstrial Relations, edited by Hans Gtinter. London: Macmillan. 1972. p 117.
14) Parker, S. R. Industry, the Community and the Pollty; The Sociology of dustry, edited by S. R. Brown, J. Child; and M. A, Smith. London: George Allen and Unwin. 1967. p- 65.
MANAGEMENT IN JAPANESE CAPITAL-AFFILIATED BUSINESS
CORPORATIONS: EXPERIENCE I]i>{ THE PMLIPPINES (2)
Table 4-1 Classification ef Japanese Capital-Affiliated Corporations
by Size and Equity Holding
61
Majority Equity Participation
Size of Enterprise Japanese f l Large 1 Valid Observations I Japanese Holding Share (0/0) of Equlty
Number
of Employees Paid-up Capital (thousand pesos) 4 89.4 4 860 158, 714 6 (49, 952)*2
S/M
8 87.9 5 232 8, 962 Filipino Year of Inauguration 1 t 1977 Large 1*3
S/M
13 36.7 896 33, 203 H 1979 l l 1972 23 35.5 227 20, 600 7 (7, 660) 1975 Total 48 49. 5 454 33, 02g 8 (18, 330) 1976 (Notes) * 1. 2. 3. 4. 5. 6. 7. 8.SIM denotes small to medium si.7.ed enierprises. (This abbreviation
is used iri the following tables.)
All the Japariese partners in this group are large and representative
corporations in Japan.
Four of tke Japanese partners ai,"e large corporations, The ether four japanese partners are either sinall' cori]orations or inctividual entities.
Sixteen oi the japanese part'ners are la-rg6 to mediurn sized
rations. "tT"he otlrker 7 corpor/ a'rviGi".s ar•e eit.hser smail cor, poxationi :- or
indiv;'duai entities.
Or,e hunclred per cent equity fot" 2 corporations, 80.9% and 76.77%
for the other 2 coxporations respt'ctively.
One hundred per cent equity ior 5 coirporations, ,75% for 1 ration and 70% for 2 corporations.
The paid-up capital of ene company in this group is extrerr?.ely large-the largest in the Philippines as a matter of fact. Because
of its extraordinary size, the average figure in the paid-up capiLLal
of this corporate category is extremely biased. The figure which excludes its paid-up capita! is shown in the parenthesis.
The paid-up capital of two corporations (engaged in agricultural
development and hotels respectively) is large and gives a significant
bias in the average fi.crure, The figure shown in the parenthesis excludes the paid-up capital of these two corporations.
The figure shown in the parenthesis excludes the three corporations mentioned in notes 6 and 7 above.
62 JY-.iR:fmaXift ij232e
eqttally held by both nationalities, was put into the latter group. These two
groups were further divided into two groups respeetively, on the basis oi their gross revenues which in effect in our sample correspond with size of enterprise in terms of number of employees and capital: those which were ranked among the SEC-Business Day's 1000 largest corporations and those which were not. Our sample was thus divided into four groups as shown in Table 4-1: Japanese majority ownership large corporations, Japanese majority ownership small and medium sized corporations, Philippine majority ownership Iarge corporations, and Phiiippine majority ownership small and medium sized corporations.
Composition of Managerial Personnel
Regarding the composition of the managerial staff, several features are Table 4-2 Composition of japanese and Filipino in Management uniti Persons, 9(o in ( )
Majorit'y Ownership Size of Enterprise Composition of the Board Members (Full-time) Japanese Filipino (Part-time) Japanese Filipino Personnel Managers Japanese Filipino Other Managers Japanese Filipino Supervlsors Japanese Filipino Japanese Large 1 3.8(68.2) 1.8(31.8) 2.0(61.5) 1.3(38 5) 1.7(56.7) 1.3(43.3) 7.0(28.6) 17.5(71,4) 3.0( 6.9) 40.5(93.1)
S/M
1.4(71.4) O.7(28.6) 3.1(75.6) 1. 0 (?"4. 4) O,8(.40.0) 1,2(60.0) 1.0(18.9) 4,3(81.1) O.5( 6.1) 7.7(93.9) Filipino Large 1,6( 39 0) 25( 61.0) 1.8( 44.6) 3.4( 65 4) O.3( 10.0) 2.7( 90.0) 3.1( 6.6) 43 6( 93,4)o( o)
81.4(leO.O)S/M
1,5(50,O) 1.5(50.e) 1.IC32.4) 2-3(67a6) O.2(12.5) 1.4(87,5) 1.3(19.4) 5.4(80.6) O.5(14.3) 3.0(85.7) Total 1 7(48.6) l.8(51.4) 1.8(42.9) 2,4(57.1) O.6(24.0) 1.9(76 G) 2.8(14.4) 13.1(85.6) O.8( 2.5) 31.6(97.5)MANAGEMENT IN JAPANESE CAPITAL-AFFILIATED BUSINESS
CORPORATIONS: EXPERIENCF. IN THE PHILIPPINES (2) 63
noted. Tabie 4-2 shows that the proportion of equity holding between
Japanese and Filip2nos exerts decislve influence on the composition of the managerial staff ofa company. In the corporate groups of Japanese majority equity participation, the rnajority of top management is held by Japanese, whereas in those of Filipino majority, more or less inverse relations are
observed.
The impact of corporate size on the composition of the managerial staff is i".niuch less evident than that of equity proportion. Though large
corpora-tions of Japanese majority are inclined to control not only the
decision-making body but also personnel management, and also seem to be more
inctined to assign Japanese to `other' management positions (see Table 4-2) relative to small to medium sized Japanese majority firms, their stronger inclination to assi.crn Japanese to manageTial positions does not seem to be attributabte to corporate size itself. The much smaller proportion of Japanese
assigned to managerial positions in Filipino majority large corporations clearly shows that size itself has practically no si..c niflcance.
In the same token, equally shared board membership between the two nationals in smaller sized corporations with Filipino majori'cy does not seem
to be attributable to their smallness but largely to inexperlence in business
management on the part of the Filipino partner(s), 2tnd inexperience and lack of confidence in overseas business operations on the part of Japanese partner(s). Thus even holding majority equity, Filipino partner(s) in the smaller corporate group may prefer part-time status, which is less involved in day-to-day management rather than full-time positions. Japanese partner(s),
on the other hand, may be inclined to retain at least a critical minimum number of staff in each level of management to lessen uncertainty and to smooth business operations.
64 2tRE"neue ee232v"
management positions is considerably developed in the respective groups.
Basic Management PolicN
The basic management policy of Japanese capital-affiliated corporations in the Philippines will be better understood by first looking at the degree
of emphas}s they place on localization policy and on Japanese management philosophy (see Table 4-3).
Localization policy includes acclimatization of management style to local
practices, as well as naturalization of personnel needed for business operations.
Our survey revealed that the degree to which a localization policy is adopted
varies significantly in accordance with the proportion of equity participation
by both nationals. Strong emphasis is placed on localization by the corporate
groups in which the majority of equit•y is owned by the local partners. It is important to note, however, that about 60% of the corporations with Japanese majority ownership adopt a localization policy rather than
univer-salism.
3apanese management philosophy is also carried over into Japanese
capital-affiliated corporations in the Philippines to a considerable degree. Japanese
Table 4-3 Basic Management Policy unit: 9o Majority Ownership Size of Enterprise Valid Observations Localization Policy Universalism Emphasis on Management
Philosophy and Objective
Japanese Large 4 62.Jr 37.5 100.0
S/M
6 58.3 41.7 71.41 Filipino Large 11 89.2 10.8 72.7 S/-M 18 78.7 21.3 1 72.72 Total 77. 0 33.0 71.7(Notes) 1. Valid Observations 7 corporations.
MANAGEMENT IN JAPANESE CAPITAL-AFFILIATED BUSINESS
CORPORATIONS: EXPERIENCE IN THE PHILIPPINES (2) 65
management philosophy, which has been developed in the socio-economic environment of Japan, can be interpreted as a complex abstract on which basic management policies are supposedly constructed to bring about good business results. All the corporations classified as large enterprises with
Japanese majority ownership seemed to regard the Japanese management
philosophy as vital for their management. On the other hand, almost one-quarter of the small to medium scaie enterprises with Jicpanese majority
equity were not concerned about instilling the Japanese managemement
philosophy into their organizations. The de.aree of emphasis they placed on
it was even less than that of the Philippine rnajori'ty corporations.
These findings on implementation of a localization policy and the basic Japanese management philosophy may imply that,while Perlmutter's hypothesis on the management pattern of `poycentric' corporations is presumably fairly well endorsed, his `ethnocentric' conception, which according to him is a cultural extension of the parent company, does not seern to be particularly relevant to Japanese capital in the Philippines. This may suggest that the attitude pattern of Japanese businessmen in running overseas business ventures is not quite similar to that of their Western counterparts, on which his observations are supposediy based. In other words, though there are variations
in degree clue to their respective rational calcuiations for running a business,
the basic management policy of Japanese capital-affiliated corporations in the Philippines seems, metaphorically, to aipn at growing a hybrid plant called pomato: potatoes under the ground and tomatoes above the ground.
imPJementation of JaPanese Management Frameworfe
The annual-across-the-board recruiting system, which is an essential
component of Japanese management framework, is non-existent in the
66 2tE.7-Amaif
ge.'232-El-which hires employees whenever necessity arises.
Stable employment, and seniority-based or length-of-service-based reward practices are considerably adjusted to the local environment. As illustrated in Table 4-4, a little more than half of the corporations adopt the Iifetime employment practice and about one third of them employ length-of-service-based pay raise and promotion practices. The degree to which these practices are implemented vares significantly among the groups of corporations classi-fied. They are introduced to the largest extent in the Japanese majority large corporations followed by the Philippine majority large corporations, with the exception of stable employment. It seems that small to medium t
scale enterprises, irrespective of the nationality of the major equity
partici-pants, are not much concerned with promoting seniority-based practices to the
same extent as the larger ones.
As for the provision of welfare facilities, a similar tendency is observed
Table 4-4 Institutional Framework of Japanese Management unit: Number of Corporations, % in ()
Majority Ownership
Size of Enterprise
Stable Employment
Seniority-based Pay Raises Seniority-based Promotion
Labor Union In-house Union
(included in above) Canteen
Restaurant for Managers Employees' Dormitory Commuting Bus Dispensary Sports Facilities Lockerroom Working Uniforms Japanese Filipino 1 Large i
S/M
3( 75) 2( 50) 2( 50) 2( 50) 1( 25) 4(100) o( o) 2( 50) 2( 50) 4(100) 4(100) 4(100) 4(100) 4(57.1) 2(28.6) 2(28.6) 2(28.6)o( o)
4(57.1)o( o)
2(28.6) 1(14.3) 6(85.7) 2(28.6) 2(28.6) 5<71.4) Large 5(45.5) 5(45.5) 4(36.4) 10(76.9) or (38. 5) 10 (83. 3) 5(41.7) 1( 8.3) 6(50.0) 9(75.0) 6(50.0) 6(50.0) 10(83.3)S/M
11(50.0) 6(27.3) 5(22.7) 8(36.4) 3(13.7) 15(68.2) 3(13.6) 1( 4.5) 2( 9. 1) 10 (45. 5) 7(31.8) 11(50.0) 18(81.8) Total 23(52.3) 15 (34. 1) 13(29.5) 22(47.8) 9(19.6) 33(73.3) 8(17.8) 6(.13.3) 11(24.4) 29(64.4) 19(42.2) 23(51.1) 37(82. 2) /MANAGEMENT IN JAPANESE CAPITAL-AFFILIATED BUSINESS
CORPORATIONS: EXPERIENCE IN THE PHILIPPINES (2) 67
among the groups, except for employees' dormitories and corporate
dispen-saries which are more numerous among small to mediurn sized firms of
Japanese majority than large corporations of Philippine majority. One feature which is uncommon in ordinary Japanese corporations is the providing of
managers' restaurants which are found in some of the corporations of
Philippine majority ownership.
Labor uniens are more often founcl in the large corporations than in the sr all to medium ones. However, even if the type of union is a `house' union,
its funct•ions reportedly differ greatly from those of Japanese counterparts.
ManPoxver Dez,eloPment Strategieg
Both human relations policies and policies related to development of and optimal utiiization of employees' expertise are used most intensively in large enterprises of Japanese majority ownership as observed in Tabie 4-5. In other groups, the use of these policies is more diverse. For example, in Table 4-S ]VIanpower Development Policies
unit. Number of Corporations, 9(y in ()
Majority of Equity I)articipation
Size of Enterprise
Japanese 1 Fiiipino 1
Large
Valid Observations 4
Harmonization between Managers & Managed
Small Status Differentials
between Managers & Managed
Difference in Remuneration'
Managers/Managed (times)
Group Decision-rnaking Rmgi 1
Group Responsibility Continuous In-house Training In-house Promotion F t : 4(100) 2( 50) 2,9 3( 75) 3( 7Jr) 2( 50) 3( 7or) 3( 75)
S/M
8 6 (8b-' . 7) 4(57,1) 2.2 2(28.5) 1(14.3) 1(14.3) 4(57.1) 4(57.1) Large 13S/M
1 1 23 7 (58. 3) 4(36.4) 3.8 Jr (45. 5) 4(36.4) o 9(75.0) 8(66.7) I I s(4o.o) 3(13.6)3.3
10(45.5) 7(31.8) 5(22.7) 12(60. 0) 15 (75• . O) Total 48 : l ' / 1 25(58.1) 13 (29. Jr) 20(45. 5) 15(34. 1) 8(18.2) 28(65.1) 30(69.8) (Note) 1. For definition, see footnote 14.68 enR:kK ee232mE"
enterprises of Philippine majority, while continuous training and in-house
promotion poiicies are positively pursued, human relations policies are practiced
moderately. In small to medium firms with Japanese majority, the policies of harmonization and small status differentials between managers and man-aged are adopted to a considerable extent, but implementation of the policies
related to group-orientation is not noticeable.
The extent to which human relations policies and manpower development strategies is implemented depends to a Iarge extent on two primary factors: (1) the composition of equity participation of host and investing countries which is, in effect, a power mix of board members of both nationalities who have different socio-economic and -cultural values, and (2) the size of the corporations. In the corporations where majority of equity and board is held by Filipinos, Japanese top managers seem to consider that transplanting some of the human relations poiicies into the Philippine environment is not quite viable. This is probabiy due to different perceptions of human relations
between the two peoples. The way they implement the group responsibility scheme is a good example. It is totally non-existent in Iarge enterprises of Philippine majority ownership. This is perhaps a reflection of the attitude pattern of the Fiiipino partners, who are inclined to consider that
responsi-bility for the job must be taken by each individual, and not by the group. 14)
The limited employment of group decision making, ringi and group
14) Ringi is the system of circulating an intra-ofiice memorandum (ringi-sho) to obtain the approval of all concerned for a proposed course of action which could range from, say, the purchase of a word processor to a merger. Corporate sions and actions seldom take place without ringi. Depending on the nature ot' the proposal, the ringi-sho may circulate vertically from the bottom up or zontally among managers and directors of related sections and divisions before coming up to the managing directors or the president, depending on the tance of the subject matter. Each person puts a seal (hanko) of approval on it,
MANAGEMENT IN JAPANESE CAPITAL-AFFILIATED BUSINESS
CORPORATIONS: EXPERIENCE IN THE PHILIPPINES (2) 69
responsibility policies by smal1 to medium firms of Japanese majority owner-ship, on the contrary, seems to be largely attributable to their smallness in
size, rather than to the equity composition. In smaller sized corporations, the decision making and group responsibility practices are generally more
centralized than those in larger firms. The amount of emphasis put on
continous training and in-house promotion also seems to be related more to corporate size than socio-cultural factors. As has been assumed, specific expertise is likely to be more needed when corporate size becomes larger. Hence, in large corporations, internal training and promotion are more
neces-sary to mairte the employees' q'u"ality `non-compatible' with other
organiza-tions and to utilize their expertise to the maximum extent, thus avoiding recurrent costly investments on training new recruits. Figures on training and promotion in large corporations shown in Table 4-5 fairly solidly support
our assumptlon.
Reiteration
We can safely sum up our findings as foilows. The accepted notion of Japanese industria! ralations is transferred mest noticeably into Japanese
majority large corporations, followed by Philippine majority large corporations.
Small to medium sized enterprises seem to be less coneerned about lnstilling Japanese style labor relations. However, it is worth noting that Japanese majority smaller corporations put strong emphasis on harmonization, and on narrow differentials between management and labor, which are generally considered in Japan as effective means of motivating employees in a non-pecunlary way.
which is the 3apanese equivalent of the signature in the Western world. CExcerpt
from Mitsubishi Corporation, JaPanese Business Glossaror Tokyo: T6y6keizai
70 P-tREmsif rg232g
These findings suggest that the management style of Japanese capital-affiliated corporations in the Philippines is basically constructed within a certain range of interactions between the tendency of top managers of investing and host countries to make employees `non-compatible' with other organizations on the one hand, and, on the other, their inclination to carry their respective soclo-cultural values into management practices. We can thus
infer that both `interfirm non-compatibility' of employees and the `commu-nity-influence' seem to be assured to a considerable extent. The degree of relevance of these two hypothetical concepts, however, varies in accordance with the size of the corporations on the one hand, and on the other, with the proportion of equity participation of both nationals, which exerts a significant influence on management authority of respective partners who naturally have different perceptions on the efficacy of various management
practlces.
Business Performance
One measure for evaluating the effectiveness of management will be absenteeism and turnover ratios, as welJ as corporate profit, which is perhaps
Table 4-6 Absenteeism, Labor Turnover and Profit Ratios unit: %
Majority Ownership
Size of Enterprise Valid Observations
Absenteeism (per month) Turnover (per month)
Earnings/sales Japanese Large 4 4.9 O.7 9.85
S/M
7 4,O O.9 n.a. Filipino Large 13S/M
22 6.7L3
7.771 5,9 1,8 7.542 Total 46 5.8 1,5 n.a,(Notes) 1. Valid Observations 12 corporations. 2, Valid Observations 14 corporationS,
MANAGEMENT IN JAPANESE CAPITAL-AFFILIATED BUSINESS
CORPORATIONS: EXPERIENCE IN THE PHILIPPINES (2> 71
the ultimate concern of business management everywhere. As illustrated in Table 4-6, in each group classified according to the
proportion of equity holding by two nationals, absenteeism is lower in smaller
firms, in which personal contact may be closer as a rule. On the contrary, turnover ratio is lower in larger firms where work conditions and future prospects are supposed to be better. Besides these features, one other finding
which interests me is that two eorporate groups of Japanese majority equity participation enjoy not only lower absenteeism and turnover, but also higher profit ratios relative to those of Filipino majority. In fact, their average +.urnover ratios which sugges'L the degree of internali'zatioit of the Iabor market of a firm, are comparable with those of average Japanese enterprises as of 1980, standing at O. 5% for corporations with more than 1000 employees, O.8% for those with leO to 999 employees and 1.1% for those with 5 to 15)
99 employees.
As far as absenteeism, turnover and profit ratios are concerned, manage-ment by Japanese majority ownership seems to be more effective than that of Philippine majority corporations. However, the question to be addressed is how Iocal middle managers, the key personnel in Japanese management, evaluate the management styles thus far found in each group of corporations.
ls) Ministry of Labour. ROd6 Hakusho (An Analysis of Japanese Labour Economy)
