Perceptions of anticompetitive practices in Japan and the market performance of foreign firms

Based on an extensive survey of corporate executives living and working in Japan, this study examines the relative rate of occurrence of anticompetitive behavior and its impact on the performance of U.S. companies operating in Japan. By anticompetitive behavior, we refer to illegal commercial activity outlawed by both U.S. and Japanese statute, such as big rigging, price fixing, and market allocation. Thus, this work goes beyond the extensive body of literature addressing Japan's infamous, but largely government sanctioned, barriers and alleged barriers to trade and looks specifically at activity that even the Japanese government decrees to be criminal and punishable by law. The study finds that the occurrence of anticompetitive behavior is perceived differently by the nationality of the managers surveyed: American executives believe that illegal competitive behavior does occur more frequently in Japan than in the United States, while Japanese executives (and those of other nationalities to some lesser extent) do not perceive such a difference. Second, despite their contrary opinions regarding occurrence, the executives as a general group, regardless of nationality, indicate that anticompetitive behavior has not had a significant negative impact on their business performance in Japan. This work also confirms that foreign companies with the best performance in Japan are those that offer superior products and exceptional service backed by scale economies or other sources of bargaining strength, and that long-term growth and performance depend upon the development of sufficient local autonomy and flexibility to facilitate timely adaptation to local needs and demands.