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Business Groups and the Big Push: Meiji Japan's Mass Privatization and Subsequent Growth

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  • Morck, Randall
  • Nakamura, Masao

Abstract

Rosenstein-Rodan (1943) and others posit that rapid development requires a 'big push' -- the coordinated rapid growth of diverse complementary industries, and suggests a role for government in providing such coordination. We argue that Japan's zaibatsu, or pyramidal business groups, provided this coordination after the Meiji government failed at the task. We propose that pyramidal business groups are private sector mechanisms for coordinating and financing 'big push' growth, and that unique historical circumstances aided their success in prewar Japan. Specifically, Japan uniquely marginalized its feudal elite; withdrew its hand with a propitious mass privatization that rallied the private sector; marginalized an otherwise entrenched first generation of wealthy industrialists; and remained open to foreign trade and capital.
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  • Morck, Randall & Nakamura, Masao, 2007. "Business Groups and the Big Push: Meiji Japan's Mass Privatization and Subsequent Growth," Enterprise & Society, Cambridge University Press, vol. 8(03), pages 543-601, September.
  • Handle: RePEc:cup:entsoc:v:8:y:2007:i:03:p:543-601_00
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    1. repec:hrv:faseco:30728041 is not listed on IDEAS
    2. Tarun Khanna & Yishay Yafeh, 2005. "Business Groups and Risk Sharing around the World," The Journal of Business, University of Chicago Press, vol. 78(1), pages 301-340, January.
    3. La Porta, Rafael & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1997. " Legal Determinants of External Finance," Journal of Finance, American Finance Association, vol. 52(3), pages 1131-1150, July.
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    Cited by:

    1. repec:nbr:nberch:14056 is not listed on IDEAS
    2. Glaser, Darrell J. & Rahman, Ahmed S., 2016. "Ex Tridenti Mercatus? Sea-power and maritime trade in the age of globalization," Journal of International Economics, Elsevier, vol. 100(C), pages 95-111.
    3. Julian FRANKS & Colin MAYER & MIYAJIMA Hideaki, 2009. "Equity Markets and Institutions: The case of Japan," Discussion papers 09039, Research Institute of Economy, Trade and Industry (RIETI).
    4. Randall Morck & Bernard Yeung, 2009. "Never Waste a Good Crisis: An Historical Perspective on Comparative Corporate Governance," Annual Review of Financial Economics, Annual Reviews, vol. 1(1), pages 145-179, November.
    5. Khanna, Tarun & Thomas, Catherine, 2009. "Synchronicity and firm interlocks in an emerging market," Journal of Financial Economics, Elsevier, vol. 92(2), pages 182-204, May.
    6. John P. Tang, 2011. "Technological leadership and late development: evidence from Meiji Japan, 1868–1912," Economic History Review, Economic History Society, vol. 64, pages 99-116, February.
    7. Morck, Randall & Nakamura, Masao, 2018. "Japan's ultimately unaccursed natural resources-financed industrialization," Journal of the Japanese and International Economies, Elsevier, vol. 47(C), pages 32-54.
    8. Langlois, Richard N., 2013. "Business groups and the natural state," Journal of Economic Behavior & Organization, Elsevier, vol. 88(C), pages 14-26.
    9. Randall Morck, 2011. "Finance and Governance in Developing Economies," Annual Review of Financial Economics, Annual Reviews, vol. 3(1), pages 375-406, December.
    10. Randall Morck, 2009. "The Riddle of the Great Pyramids," NBER Working Papers 14858, National Bureau of Economic Research, Inc.
    11. Randall Morck & Gloria Y. Tian, 2015. "Business Groups in Canada: Their Rise and Fall, and Rise and Fall Again," NBER Working Papers 21707, National Bureau of Economic Research, Inc.
    12. Morck, Randall & Deniz Yavuz, M. & Yeung, Bernard, 2011. "Banking system control, capital allocation, and economy performance," Journal of Financial Economics, Elsevier, vol. 100(2), pages 264-283, May.
    13. Joseph Fan & Randall Morck, 2012. "Capitalizing China," NBER Books, National Bureau of Economic Research, Inc, number morc10-1, December.
    14. repec:kap:iaecre:v:21:y:2015:i:1:p:81-103 is not listed on IDEAS
    15. Joseph P. H. Fan & Randall Morck & Bernard Yeung, 2012. "Translating Market Socialism with Chinese Characteristics into Sustained Prosperity," NBER Chapters,in: Capitalizing China, pages 1-32 National Bureau of Economic Research, Inc.
    16. Claessens, Stijn & Yurtoglu, B. Burcin, 2013. "Corporate governance in emerging markets: A survey," Emerging Markets Review, Elsevier, vol. 15(C), pages 1-33.
    17. Cristopher Spencer & Paul Temple, 2013. "Standards, Learning and Growth in Britain 1901-2009," School of Economics Discussion Papers 0613, School of Economics, University of Surrey.
    18. John Tang, 2014. "A tale of two SICs: industrial development in Japan and the United States in the late nineteenth century," Working Papers 14002, Economic History Society.
    19. Del Hierro, Patricia & Alarco Tosoni, Germán, 2010. "Growth and concentration among the leading business groups in Mexico," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    20. Johan Eklund & Johanna Palmberg & Daniel Wiberg, 2013. "Inherited corporate control and returns on investment," Small Business Economics, Springer, vol. 41(2), pages 419-431, August.
    21. repec:bla:stratm:v:38:y:2017:i:5:p:1082-1100 is not listed on IDEAS
    22. Randall Morck & Bernard Yeung, 2017. "East Asian Financial and Economic Development," Working Papers id:12112, eSocialSciences.
    23. Vikas Mehrotra & Randall Morck, 2017. "Governance and Stakeholders," NBER Working Papers 23460, National Bureau of Economic Research, Inc.
    24. Masao Nakamura, 2015. "Economic Development and Business Groups in Asia: Japan’s Experience and Implications," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 21(1), pages 81-103, March.
    25. Morck Randall K & Yeung Bernard, 2010. "Corporatism and the Ghost of the Third Way," Capitalism and Society, De Gruyter, vol. 5(3), pages 1-61, December.

    More about this item

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • N15 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Asia including Middle East
    • N25 - Economic History - - Financial Markets and Institutions - - - Asia including Middle East
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • O2 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy
    • O21 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Planning Models; Planning Policy
    • O2 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy

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