|MIYAJIMA Hideaki (Faculty Fellow, RIETI)
|June 2009 09-J-017
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The goal of this report is to overview the characteristics of the evolution and current status of corporate governance of Japanese companies from the 1990s to recent years, by focusing on two keywords: diversification and hybridization. We also seek to identify the policy implications with respect to the direction of future reform. First, we will present our view on the dispute as to whether the evolution of the enterprise system will converge into one system or whether it will continue to exist in different forms. We will emphasize the fact that the evolution of Japanese companies is not considered as simply converging with the American style, because it has not shown the uniformed pattern; rather, it is manifesting a hybrid evolution, the combining of the two different modes of a market-based system and a relationship-based system. Second, we will examine the process of the evolution of the enterprise system that commenced in the 1980s and accelerated from the middle of the 1990s, by focusing on the company called the Type I Hybrid in this report. In doing so, we will concentrate on how corporate governance and internal organizations that are mutually complimentary by rights have evolved into a hybrid structure. Third, we will examine whether or not the hybrid-type company that emerged through the evolution process as described above has actually had a significant impact on corporate activities or performance. In this connection, we will present the possibility of the hybrid-type company playing a key role in enhancing the performance of Japanese companies. Moreover, by using an example of a company choosing M&A, we will show that corporate governance and organizational structures significantly impact on the company's strategic decisions in areas such as M&A. Finally, we will summarize the challenges associated with reforms to corporate governance in the future, by focusing on the three different types of Japanese companies that currently exist.