1986 Reports

Japan's small-scale family enterprises

Patrick, Hugh T.; Rohlen, Thomas

Large firms are deemed to have powered Japan's growth through their real successes in generating output, raising productivity, absorbing and creating innovations through large-scale R&D, and creating and developing "the Japanese management system" of industrial relations, internal decisionmaking and close intragroup affiliations. Big business plays a highly visible, broad political and social role, financing political leaders and their factions, influencing national economic and other policy, serving as a role model, and preaching its business ideology. It is a system of male managerial elites dealing on equal footing in carefully developed formal and informal networks with counterpart elites -- central government bureaucrats, elite politicians, and others holding power at the top of the pyramid of Japan's hierarchical society. Some characterize big business as the brain of Japan's economy. If that is the case, then small enterprise is the heart and the backbone of the economic, political, and social realms in Japan. In particular small-scale family enterprises have long been and continue to be a large and dynamic element in the political economy of Japan -- in entrepreneurship, job creation, output and political clout. Small business makes up the bottom two-thirds (or more) of Japan's social and economic pyramid.