Corporate Governance in Japan <RIETI Featured Fellow> Gregory JACKSON

In Japan, the debate on corporate governance began several years ago. Coinciding with the surge of U.S. stock prices and the success of Silicon Valley and venture capital in the United States, the debate initially focused on the U.S. style of corporate governance as a desirable model. Today, however, things are somewhat different. The American-style corporate management system - a model corporate governance that prioritizes shareholders' rights -is now being put into question. WorldCom Inc., a U.S. telecom giant, has collapsed amid the widening corporate accounting scandal, following the fate of major energy trader Enron Corp. that went under in December. RIETI Fellow Gregory Jackson says the turning of the events is a "healthy development" from the viewpoint of rethinking corporate governance for Japan. Rather than single-mindedly emulating the U.S. model, he says, Japan should search for its own corporate governance model, learning from the lessons of European countries, in particular Germany with which Japan has some important features in common. Indeed, in both Japan and Germany, employees have relatively greater say in corporate management and it is generally perceived that maximizing shareholders' interests should not be the sole purpose of corporate activities. This comes in contrast with the United States, where employees have no say in corporate management. Referring to his research on corporate governance in Germany, Jackson says that in Germany, the rights and obligations between employees and management are determined through the "institution of codetermination," a mechanism similar to "joint consultation" in Japan, with the only difference being that such rights and obligations are fixed by law in Germany. "Employees have a large stake in the success of their company," he says. "They can be a good watchdog and make a good contribution to new styles of corporate governance."
A symposium on Asian economic integration, which RIETI hosted in April, also took up corporate governance as one of its major topics. In a half-day session entitled "Institutional Harmonization and Diversity: Corporate Governance," discussants debated the issue from the viewpoint of enhancing the competitiveness of the Asian region.
In September, RIETI will launch on its website a new virtual forum to discuss changing corporate governance studies in Japan, for which Jackson will play a leading role, joined by many scholars, lawyers and those on the business front. The new forum aims to provide the latest information on Japan's corporate governance and facilitate frank discussions on the issue.

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Gregory JACKSON
Dr. Jackson has been a fellow at RIETI since April 2002. After receiving a B.A. in Sociology from University of Wisconsin, he served as a research scientist at Centre for Economic Performance of London School of Economics. After receiving a M.A. degree in Sociology from Columbia University, he started working as a research scientist at Max-Planck-Institute for the Study of Societies in Germany. In 2002, he received his Ph.D. degree from Columbia University. His expertise is corporate governance, economic sociology, comparative and historical methods, sociology of organizations, and industrial relations.

His publications and papers include:
"Organizing the Firm: Corporate Governance in Germany and Japan, 1870-2000 (Ph.D. Dissertation, Department of Sociology, Columbia University, November 2001)"
For abstract and table of contents (PDF), click here

"Financial Markets and the Corporation: A Comment," New Political Economy, Vol. 7, No. 1, March 2002.

"An Emerging Market for Corporate Control? The Mannesmann Takeover and German Corporate Governance," Max-Planck-Institut for the Study of Societies, MPIfG Discussion Paper, 01/4, 2001. (With Martin Hopner)
To download the file (PDF), click here

'Corporate Governance in Germany and Japan: Liberalization Pressures and Responses,'in Wolfgang Streeck and Kozo Yamamura (eds.), "The End of Diversity? Prospects of German and Japanese Capitalism, Ithaca" (NY Cornell University Press, forthcoming)

'The Origins of Nonliberal Corporate Governance in Germany and Japan,' pp.121-170 in Wolfgang Streeck and Kozo Yamamura (eds.), "The Origins of Nonliberal Capitalism: Germany and Japan Compared." (Ithaca, NY: Cornell University Press, 2001)

He says he is interested in how corporate governance in Japan is changing. He says he wants to look into what companies do with the new possibilities brought by changes in the Japanese commercial code. There were some small amendments every year on holding companies' structure, for example. We do not know very much about how they are using the new practices or what impacts it really has on Japanese style management or the employment system or relationships to banks and so on. He says he is planning to study largest 200 Japanese companies. He also plans to construct corporate governance database to measure the changes.