Essays on Japanese Business System - Financial, Human and Social Capital Case Study

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Generally speaking, the paper "Japanese Business System - Financial, Human and Social Capital" is a great example of a business case study.   The Japanese business system has endeavoured to remain greatly coordinated and employee-centric regardless of the minor changes in the institutions in the recent past. The Japanese business system can be best understood by looking at culture, the institutional background of organizations as well as the rules of management within and among firms. The main aim of Institutions in Japan is to serve society as well as their employees.

The Confucian values that were introduced in Japan during the Tokugawa period serve to justify business activities in society. Universal male employment in Japan is seen as the recipe for achieving economic growth and development. This paper will discuss in details the institutional context of organizations in Japan by describing the guidelines governing the capacity of players to draw on financial, human and social capital. For the Financial capital, this paper will look into how Japanese firms obtain their finance and on what terms. For human capital, it will concentrate on the handiness of skills and labour unions.

Lastly, this paper will examine the social capital of the Japanese business system by discussing interpersonal and institutional trust. Financial Capital To analyse the institutional system of Japanese financial capital, the critical features that need to be considered include sources of finance, terms of lending and lending decisions. The main feature of Japanese financial structure was its reliance on indirect funding whereby organizations acquired much of their finance from banks instead of depending on capital markets. The banks played a crucial role as intermediaries for the implementation of industrial policy.

Although the bad loans crisis of the 1990s led to the weakening of banks, about two-thirds of the companies in Japan still depend on banks loans. Literature shows that the claim of the end of indirect funding in Japan is hyperbolic. The loan crisis only led to a temporary decline in indirect finance as it caused banks to have inadequate capital to lend to new firms, resulting in a credit crunch. Hence, the recession can only be said to have reduced the ability and need to obtain loans for new investments.

The reliance on bank loans regained lost grounds immediately the banks in Japan disposed of their troubled loans. The financial system in Japan is still bank-led regardless of the weakening of the indirect funding in the 1990s. Lending decisions entails a mixt of market criteria including creditworthiness, government instructions and strength of the prevailing business relationship. The exact combination has changed substantially with time. The government role in determining the lending decisions of the banks has considerably declined while that of market criteria has significantly improved.

In Japan, most of the loans acquired by companies are often long term. Contrary to Western banks, banks in Japan usually do not evoke loans from companies in trouble rather they give new loans to aid them to endure such difficult moments. This serves to prevent bankruptcies so as to maintain employment and hence Japanese banks can be said to have a sense of collective responsibility.

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