Information, Incentives and Bargaining in the Japanese Economy: A Microtheory of the Japanese EconomyThis book is not another parable of Japan's economic success; it provides rich and systematic descriptions of Japanese microeconomic institutions and interprets their workings in terms familiar to Western economists. A systematic, in-depth analysis of Japanese institutions of this kind has never been available before. In making his comparative analysis of the Japanese system, the author critically examines conventional notions about the microstructure of the market economy that have strongly shaped and influenced economists' approach to industrial organization. While these notions may constitute an appropriate foundation for the analysis of the highly market-oriented Western economies, the author has found that a more complete understanding of the Japanese economy requires us to broaden such "specific" notions. Topics include the internal information structure, incentive scheme, and capital structure of the Japanese firm; corporate and bureaucratic behavior from the viewpoint of bargaining game theory; subcontract design; functions of corporate grouping; the pattern of innovation; and the possible impacts of cultural factors. |
Contents
Introduction | 1 |
The information structure of the Jfirm | 7 |
United States versus Japan | 11 |
B Centralized coordination versus the kanban system | 20 |
2 The traditional paradigm of the hierarchy | 26 |
3 Horizontal information structure | 32 |
4 Concluding remarks | 43 |
The ranking hierarchy of the Jfirm as incentive scheme | 49 |
an illustration of the weighting rule | 192 |
Appendix 2 Gift exchange of effort and job security | 197 |
The changing nature of industrial organization | 204 |
1 The subcontracting group | 208 |
B The relational quasi rent and its stratified division | 213 |
2 The insurance function of corporate grouping and its waning | 223 |
3 The direction and organization of RD | 234 |
isomorphic structure of manufacturing and RD | 237 |
1 Stylized facts | 54 |
B The extent of lifetime employment | 60 |
2 The ranking hierarchy and reputation | 69 |
3 Contractual incompleteness and enterprise unionism | 86 |
Appendix An illustration of ranking hierarchy | 94 |
Corporate finance stockholding returns and corporate governance structure | 99 |
1 Stylized facts | 102 |
B Returns to stockholding | 113 |
C Stockholding structure | 116 |
D A historical note on stockholding structure | 124 |
2 Debt versus equity financing | 127 |
3 The bank as a monitoring agent | 142 |
Bargaining game at the Jfirm | 150 |
1 The structure of the bargaining game | 154 |
2 Some behavioral implications of bargain outcome in the Jfirm | 164 |
B Dilemma of industrial democracy | 166 |
C Gift exchange of higher effort and job security | 174 |
D Flexibility of earnings and work sharing | 176 |
3 Historical formation of Japanese management | 181 |
B The chainlink model | 242 |
C Emerging intercorporate RD linkage | 248 |
4 Business organizations and social ranking of top management | 252 |
Bureaupluralism | 258 |
1 Two faces of the bureaucracy | 263 |
A Stylized facts | 264 |
B Why two faces? | 268 |
2 The bureaucratic process | 270 |
B Quasipluralistic bargaining nested within the bureaucracy | 274 |
the Jfirm and the bureaucracy | 283 |
3 Bureaupluralism | 288 |
B Bureaupluralism at bay and its dilemma | 293 |
Culture and economic rationality | 298 |
1 Culturalists versus rationalists | 300 |
2 Is group orientation sufficient and necessary? | 306 |
315 | |
317 | |
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Information, Incentives, and Bargaining in the Japanese Economy Masahiko Aoki No preview available - 1988 |
Common terms and phrases
administrative adverse selection amakudari assets bank bargain outcome body of stockholders bureaucrats bureaupluralism capital central Chapter companies competitive contextual skills cooperative coordinating office corporate grouping cost decision earnings economic effective efficient effort employment engineering enterprise-based union equilibrium function Game Theory growth Hitachi horizontal coordination incentive increase individual stockholders industrial information structure innovation interests internal intershop investment J-firm Japan Japanese automobile industry Japanese firm job rotation kanban kanban system Kazuo Koike keiretsu labor large firms long-term managerial marginal ment midcareer ministry moral hazard Muramatsu Nash operating organization organizational output percent period political potential prime manufacturer production profit promotion quasi-permanent employees ranking hierarchy ratio relative risk risk aversion role scheme Section separation payment shopfloor sokaiya stockholders strategic subcontracting group subcontractor supplier technological tegic tion Tokyo Stock Exchange United utility variables wage workers zaibatsu