Japanese Corporate Culture

Decision-Making
Class Codes:
CB42119, CM42102, CD42102

Class 3
Chiaki Suematsu
April 25, 2024
chiaki.suematsu.d2@tohoku.ac.jp
 Today’s Theme

● Knowledge Transfer
● Western Decision-Making
● Agency Theory
 Assignment 1

● Q1:What are four non-transferable

social elements?
● Explain the first one(and the second,
and the fourth ones).

What is non-transferable?
 Non-Transferable
● What is non-transferable?
● The first type is the one you take it for
granted.
●You do not think why you do it carefully.
● The second type is the one you do not
want to teach.
●It takes too long to gain and too valuable
to share.
 Assignment 1
● Non-transferable social elements
identified by Ishii are:
1 Group, corporate or collective
consciousness
2 Vertically-based egalitarianism
3 A flexible structure coupled with
responsibility
4 Labor relations viewed in terms of a
corporate union with a united purpose
 Non-transferrable

● The idea of Japanese group, groupism

● Members must have strong sense of
belonging to the group.
● Harmony is everything.
● Have ranking to maintain the harmony.
(According to the author, the members must
have Amae, Ninjo, and Giri, however I do not
agree. )
 How Do You Evaluate the
Alternatives?
You must be able to:
●List the alternatives.
●Know what attribute comes with them.
●Know what attribute weighs more.
●Know the things that have happened to the
attributes.
●Get the latest information about them.
Namely, you must possess the expertise.
 Decision Made by Leader
Discussions Last Week

● In the limousine company President

decided to choose Car No. 1 and told the
decision to General Manager.
● How did you react to it?
Japanese Decision-Making

Decision-making is just a part of the execution.

Western Decision-Making

Decision-making is the most important job of the

 Strong Leaders in Western
World
● Leaders, or managers are
decision-makers, who have strong
authorities and power.
● They must possess the abilities of making
decisions. They know the
decision-making processes, possess
expertise, and obtain necessary
information.
● There are institutions that provide
potential leaders with necessary skills.
● If you come up with an issue on which
 Decisions on Unfamiliar
Issues

● You must possess the expertise on issues

you decide. However, you would
sometimes face new issues you have never
worked on.
● How are you going to decide? Any
suggestion?
 Agency Theory

● Backbone of the decision-making in the

Western Style Management.
● Two key items are specific knowledge
(expertise) and agreement (contract).
● You, the principal, are to utilize the specific
knowledge the expertise holder, the agent,
possesses.
Agency Theory:
Hiring an Agent
 Three Requisites of
Agency Theory

● 1. Allocate the authority where the specific

knowledge exists. Decision-making process and
pertinent information
● 2. Establish the principal-agent relationship
b/c other people are not trusted. .Sign a
● 3. Reward the agent when it workscontract.
well for
you, however punish him/her when he/she
fails to meet with the target.
Describe the details about exceeding the target or failing to
meet it. REWARDS AND PUNISHMENTS
 Why Do You Need Specific
Knowledge, Contract, and R+P?

1. The specific knowledge is hard to transfer.

2. The human beings are driven by the self
interest. (Human being is REMM, Resourceful,
Evaluating, Maximizing Man.)
●Even if a contract is signed, the REMM will find
out ways to satisfy his/her interest most.
●In a company the top of the organization may
try to build the empire.
●Control the self interest by Rewards and
Punishments.
 Apply the Agency Theory
to the Limousine Co. Case
● The principal is General Manager.
● Who is the agent(s)?
● What kind of specific knowledge that the
agent possesses does the principal want?
● Who is not an agent?
● Why are the people you list not agents?
● What kind of contract would you sign?
● What kind of rewards and punishments
would you provide?
 Apply the Agency Theory
to the Limousine Co. Case
● Form new groups.
● Discuss and answer the questions listed in
the previous slide. How are you going to
apply the agency theory?

● Allocate the authority.

● Sign a contract.
● Give rewards and punishments.
 Self-introductions, please!

● Please introduce yourselves briefly while

covering the following:
1. Where you are from.
2. The biggest decision you have ever made as
a leader.
3. If not, the biggest decision about yourself.
 May 2, the Next Week is off.

● There is no class on May 2.

● Enjoy the Golden Week.
 Organization Chart

President

General
Manager

Maintenan
Operations Sales Finance
ce
Dept. Dept. Dept.
Dept.
 Simple Case 1 Limousine Co.
Alternatives and Attributes
Car 1 Car 2 Car 3 Car 4
Style 5 2 3 3
Interior Space 2 5 3 2
Interior Luxury 5 5 3 2
Fuel Efficiency 1 1 3 5
Ride Quality 5 4 3 1
Drivability 5 3 3 2
Max. Passengers 2 5 3 2
Spare Parts Avail 1 2 3 5
Price 1 1 3 5