The Japanese Management Structure as a Competitive Strategy: The Importance of a Nexus of Long-term Treaties, Common Knowledge and Firm-Specific Learning

This paper discusses the management structure of large Japanese firms from the point of view of competitive strategy. Some modern theories will be used to give a conceptual explanation of the importance of basic factors contributing to the success of Japanese companies.1 The term ‘strategy’ will appear frequently. The common use of the word is now so wide and undefined that it is rendered almost useless, but it is employed here in the sense of a plan through which to achieve the goal or goals of the firm in an uncertain environment.2 The aims of Japanese firms, such as the organisation’s earnings or market share, can only be optimised by competing successfully in Japanese and foreign markets. Therefore a competitive strategy is a plan to achieve the firm’s goals in markets rendered problematic through uncertainty. The Japanese management structure can be seen as a means of minimising the uncertainty and adjusting to it. In other words its purpose is to enable a firm’s employees to concentrate on the essential tasks for the firm’s success.