Case Study 1: Matsushita’s Culture Changes with Japan

Case Study 1: Matsushita’s Culture Changes with Japan

Japan suffered one of the worst economic hit in history when the economic bubble deflated steeply in the 1990s. Stock prices and real estate slumped enormously mostly due to domestic monetary policies. As a result, companies in Japan faced financial trouble which triggered the cultural change in Japan.

Before the Economic crisis, employee and the company have a particularly close relationship. The company is involved in the live of the employee. For example, a lot of companies require their employee’s manager to sign before they can rent an apartment. On the other hand employees are also very loyal and obliged to their company. With the company’s guaranteed lifetime employment policy, few employees will fancy changing jobs. Moreover they work hard in response to the generous benefit by the company.

However after the economic crisis, companies cannot afford to pay that many benefits to the employees so they finally had to lay them off, which they never did. This cultural change propagates to traditional value change eventually when employees see that loyalty does not guarantee anything. Since then, younger employees started to think more about individual as opposed to group.

Japan is moving towards more individualism than collectivism after the economic bubble. Nonetheless, this is a good opportunity for Japan to adapt to the globalization world and be more competitive. The cultural change will lead to greater mobility of employees, which means people will move around jobs more than before. As a consequence, company loses loyal employees but what they get by recruiting other people is the experiences. When people have mobility, they tend to gain experiences among a lot of companies and build social network among various groups of people. When this happens, new ideas emerge and startups will be built around the new ideas. Hence by moving towards individualism, Japan would create more new business than the past.

Matsushita, a giant Japanese electronics company, was founded in 1918. After the World War II, they mainly supply radios and other appliances to the Japanese. Between the 1950s and 1980s when Japanese culture was still in the traditional way following Confucian’s value, Matsushita has the advantage over other companies due to it’s high technology nature. Since their products are top of the line in terms of technological advancement, research is carried out and training has to be provided. Once they recruited a young employee, Matsushita trained them for specific jobs, and he will carry out the work for years to come. Loyalty and obligation here means better division of labor and lack of professionals’ lost.

After the 1990s, company’s performance was not as good as before. However they still did not abandon the traditional values immediately. I think this is not because of the liability about the traditional values they are bearing, but due to the fact that the employees are all trained professionals. If in any case, the company wants a turnaround, R&D is the most important assets of the company and at least half of the company’s employees are R&D related. Hence, it still kept it’s traditional practice until 1998, and did not have layoffs until 2001.

In the late 1990s and early 2000s, Matsushita made several human resources announcements. For example, changing management, bonuses scheme and most of all, options in signing contract. With these changes, Matsushita was trying to get the best of both worlds by offering traditional long term contracts and at the same time, provide options to younger employees for a more challenging career. The reason that Matsushita has to move slowly is because there are still a lot of experienced and elder worker in the company, so they had to take care of them. Also, Matsushita is known for it’s traditional values, so if they moved too quickly into the modern ways of managing, the value and image of the company will be lost.

I think that societal cultures can affect business in a very significant way. When societal culture changes, which is happening everywhere, company’s high management has to figure out ways to cope with the change and at the same time, maintaining gains to it’s core business, which is very challenging.