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2020 | Book

Introduction Read chapter Read first chapter

Nonmarket Strategy in Japan

How Foreign Firms Lobby “Inside the Castle”

Author: Prof. Eric Romann

Publisher: Springer Singapore

Part of: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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About this book

This book focuses on foreign firms’ nonmarket strategies and lobbying in Japan, in which important readjustments in traditional power configuration have taken place, giving more leeway to various stakeholders. The author analyzes in-depth how firms deploy their influence in a country that used to be dubbed "the castle" due to its difficulty of access, a theme on which minimal information currently exists. As professionals acknowledge, and contrary to what is usually assumed, similarities with the United States or the European Union outweigh local differences that though must still be addressed are no longer insuperable. With globalization and the rise of economic interdependence, it is now easier for foreign players with valuable assets to be part of the game.
A significant feature of the country is the weight of collective action and the reluctance towards individual or direct lobbying as reflected in the perceptions and firms’ organization. The consequence for foreign firms is that they are often compelled to circumvent with soft strategies. This book will take the reader over 20 cases that display a striking multiformity and highlight conditions for success for foreign businesses in Japan and will be of interest to scholars as well as practitioners.

Table of Contents

Frontmatter
Chapter 1. Introduction
Abstract
After having observed the two big poles of the US and the EU, that have already given birth to an extensive literature, it appeared that it might be of interest to examine the case of a third country with a similar level of political and economic development, preferably different from the Anglosphere, for a better and contrasting perspective. Moreover, the focus would be on firms active on the international and global scene, that is, an international business (IB) angle, and not on domestic affairs. In the EU or the US, this distinction is often blurred since the presence of international companies and the weight of FDIs are substantial, with the participation of foreign firms in political life a long-established reality. In this context, Japan seemed to offer an interesting study field and a gap to be filled.
Eric Romann
Chapter 2. How to Approach Nonmarket Strategy and Corporate Political Activity
Abstract
This chapter presents an overview of the theoretical approaches through which the corporate political activity (CPA) phenomenon can be analyzed. The number of related fields and disciplines, such as economics, political science, sociology, management, as well as the volume of literature is so extensive that the choice was made to only briefly review the fundamentals and focus for this book’s analysis on a combination of political science and strategic management.
A discussion of the concept of power leads to the adoption of the broader and better-suited notion of influence as an elemental analytic dimension that can be understood as ranging from pressure to persuasion. This dimension is substantiated in a tool, the Balance of Influence matrix.
A second central dimension underlying any CPA situation consists of the conceptual pair Representativeness/Credibility. These notions encompass the more traditional ideas of Collective/Individual actions but are meant to describe better and comprehensively a nuanced reality. They give birth to the second essential tool, the Balance of Coalition. These two dimensions could be seen as the conceptual infrastructure on which the practical CPA tactics are built in the framework, that is the subject of this chapter.
Eric Romann
Chapter 3. Framework
Abstract
Following the theoretical and conceptual dimensions of Chap. 2 related to power, influence, and coalition, this chapter focuses on the operational side of the analysis. Indeed, the framework presented here is intended to organize and recapitulate the various building blocks available for investigating CPA, not only from an academic standpoint but also from a practitioner’s point of view. The elements introduced here have their source in the literature, but they are reassessed and reorganized in a single process so that they might offer a workable scheme. The building blocks are: the 3 main drivers (issues, institutions, interests), political resources, and the tactical apparatus (targets, arguments, technics).
Eric Romann
Chapter 4. General Features of Domestic Lobbying in Japan
Abstract
This chapter reviews the main characteristics of Japan’s political economy, political system, and lobbying patterns from a traditional domestic standpoint with the implications for foreign firms attempting to navigate this landscape.
A prime general feature is that, as a power game, Japan is not so different from other parts of the world, but nevertheless, presents some institutional, organizational, and cultural specificities: prior consultations, behind-the-scenes consensus building, early consolidation of bills before vote, weight of the bureaucracy. In Japan, the traditional channels for influence are collective (industry or peak associations) or pecuniary via contributions to parties. Direct individual lobbying is less developed and often takes the form of solicitations to the authorities rather than proactive propositions of alternatives. From an organizational point of view, rare are the firms having a specific public affairs section despite the close but more ambiguous and dispersed concept of shôgai. For foreign firms in Japan, the accurate understanding of the behind-the-scenes processes is a real challenge that requires investment not always judged worth in terms of business return. Moreover, grassroots or public advocacy strategies are limited, while foreign firms are not allowed to activate financial leverages. Consequently, they have to concentrate on collective action, hire/use well-connected people, and provide valuable information/expertise.
Eric Romann
Chapter 5. The Context for Foreign Firms: Trade, Investment, and Business Issues
Abstract
This chapter is devoted to categorizing the various issues foreign firms used to and still encounter when doing business in Japan. The documents and archives provided by the two main international Chambers of Commerce, the ACCJ and the EBC, constitute the major material to refine the picture of foreign firms’ demands from the 1980s until recently.
Over the long time and very roughly, firms’ top claims may be grouped as regulatory environment, standards/specifications/technical requirements, taxation systems, and customs clearance procedures. Since the 1990s, structural reforms have been undertaken, and trade/investment agreements signed or negotiated, but many issues of the same spirit remain. American and European claims are fairly similar in industries such as automotive, medical devices/pharmaceutical, insurance, express delivery, and food industries. The focus differs slightly in areas such as intellectual property where the Americans concentrate on digital piracy versus luxury goods for the Europeans.
The perceptions and evolution in time of the ACCJ and a number of practitioners are analyzed in the following part. There used to be gaiatsu and external pressures in the past, but due to the domestic crisis, globalization, and the rise of China, the attitudes have changed for foreign business, which is now “inside the castle,” leading to more direct interactions between business and government. Before, trade issues were central, whereas nowadays, in globalization times, the major problems occur from laws and legislations that have become obsolete in regard to the technical and economic acceleration. Many issues are therefore related to the modernization or adaptation of old regulations to new products or services.
Eric Romann
Chapter 6. Case Study
Abstract
Issues may be categorized over the cases in two stances (adjustment, strategic) and three types of action (active, reactive, proactive), some seeking operational approval in the Japanese market, whereas others (sometimes the same) offering more strategic and environment-shaping perspectives. Attempts to reactively modify or block laws or regulatory initiatives are also present, hence allowing the whole range of possible CPA stances to be covered.
From the perspective of the Balance of Coalition tool, the most important observation that can be made is that, despite the priority given to firms as individual, pure individual CPA is rare or limited to certain issues. This is also in line with a general feature of CPA, that is, being extremely local in its implementation, not easily transferable or globally manageable, although the general process can be understood as universal. The necessity of a local partner is reinforced by the liability of foreignness: to gain interest from a local politician, a local constituent must be implied, and this is often done by the Japanese clients of foreign firms who will benefit from the CPA actions and are the best lobbyists.
The Balance of Influence tool indicates that most of the cases are situated on the persuasion rather than pressure side. Widely shared phantasms and prejudices in many cultures are that CPA and lobbying are about pressure and money. When asked about the phenomenon, many people tend to imagine bribery and almighty multinational companies leading the world from under the surface in a perfect illustration of conspiracy theory.
Eric Romann
Chapter 7. Implications for Business Strategy and Lessons from Japan in a Global Business Perspective
Abstract
Finalizing the case study analysis, this chapter highlights the six categories of business objectives/strategies found across CPA instances: Creating a new business framework, Boosting sales/enhancing business, Reducing or neutralizing threats for business, Support for investment decision-making, Norms and rule setting, Global strategy/meaning of Japan. Four generic strategies and their respective major resources are proposed with objectives ranging between the two poles of Threat for business and Norm setting/Creation of a business framework: Hard pressure: state power, economic power; Soft pressure: public opinion, legitimacy; Direct persuasion: informational/expertise, legitimacy; Indirect persuasion: stakeholders/influencers.
Eric Romann
Chapter 8. General Conclusion
Abstract
Compared to what can be seen in the West, whether Washington or Brussels, as measured, for example, by the degree of media treatment, the general impression regarding CPA or lobbying is that of “low-key.” Beyond this low-key perception, another general feature is that, as a power game, Japan is not so different from other parts of the world, but nevertheless, presents some institutional, organizational and cultural specificities. The conditions of success in Japan are summarized as well as a number of lobbying actions linked to their corresponding business objectives and resources.
Eric Romann
Chapter 9. Annexes
Abstract
This chapter details the cases founds in the book.
Eric Romann
Backmatter
Metadata
Title
Nonmarket Strategy in Japan
Author
Prof. Eric Romann
Copyright Year
2020
Publisher
Springer Singapore
Electronic ISBN
978-981-15-7325-5
Print ISBN
978-981-15-7324-8
DOI
https://doi.org/10.1007/978-981-15-7325-5