The Japanese Family: An Institutional Logic for Japanese Corporate Networks and Japanese

Management
Author(s): Anita D. Bhappu
Source: The Academy of Management Review, Vol. 25, No. 2 (Apr., 2000), pp. 409-415
Published by: Academy of Management
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iqtAcademy of Management Review
2000, Vol. 25, No. 2, 409-415.

NOTE

THEJAPANESEFAMILY:AN INSTITUTIONAL
LOGIC FOR JAPANESECORPORATE
NETWORKSAND JAPANESEMANAGEMENT
ANITA D. BHAPPU
Southern Methodist University

Although the existence of Japanese corporate networks and Japanese management

practices has been substantiated in the management literature, explanations for their
origins are lacking. I illustrate that the Japanese family provides an institutional logic
for Japanese corporate networks and Japanese management practices. Furthermore,
the historical actions of individuals in Japanese corporations are indicative of a
strategy to sustain and nurture their social capital-a strategy that might explain the
historical persistence of this family logic.

Japanese corporate networks and Japanese networks and Japanese management practices,
management practices have received consider- because "a successful social analysis cannot
able attention in the management literature take social structures as given, but rather must
(e.g., Abo, 1994; Cohen, 1993; Fruin, 1992; be able to account for their origins and their
Gerlach, 1992a,b; Gerlach & Lincoln, 1992; Gra- persistence" (Aldrich, 1982: 282).
ham, 1993; Hazama, 1997; Keys, Denton, & Miller, Since the historical origins of Japanese firms
1994; Kilduff, Funk, & Mehra, 1997; Lincoln & are well documented in the anthropology liter-
Kalleberg, 1990; Lucier, Cangemi, & Kowalski, ature on Japan, my primary goal here is to draw
1992; Lundberg & Peterson, 1994; Marsh, 1992; attention to this body of knowledge in a way
McNamara & Hayashi, 1994; Rhody & Tang, 1995; that facilitates its integration into management
Turnbull, Oliver, & Wilkinson, 1992; Young, scholars' analyses of Japanese firms. I illustrate
1992). Several scholars (Fruin, 1992; Gerlach, that the Japanese family is an institutional logic
1992a,b; Gerlach & Lincoln, 1992) have examined for Japanese corporate networks and Japanese
the distinctive network patterns of Japanese in- management practices.
dustrial organizations. At the same time, others
(Kilduff et al., 1997; Lincoln & Kalleberg, 1990; Institutional logics have been defined as an ar-
ray of material practices and symbolic construc-
Lucier et al., 1992; Lundberg & Peterson, 1994) tions that constitute organizing principles guid-
have focused on understanding the underlying ing activity within a field. It is recognized that
psychological framework that links Japanese society is composed of multiple institutional log-
employees to their work organizations. Although ics that are available to individuals and organi-
this literature clearly substantiates the exis- zations as bases for action (Galvin, 1999:4).
tence of Japanese corporate networks and Japa- My approach is similar to one used by Eleanor
nese management practices, there are few ex- Westney (1987), who applied an institutional
planations for the origins of these structures and perspective to three Japanese organizations to
practices. It is essential that we account for the explain how they emulated Western organiza-
historical significance of Japanese corporate tional forms in the development of their own
organizations. Whereas Westney (1987) focused
on Japanese innovations that produced depar-
I thank Eric Abrahamson and four anonymous reviewers tures from the intended Western organizational
for helping me strengthen and clarify my argument and Ken
Koput, Gerardo Okhuysen, and John Slocum for their sug-
models, my focus is on the persistence of Japa-
gestions and comments. I am most appreciative of Alice nese organizational models in the face of wide-
Schlegel's endless patience, encouragement, and guidance spread efforts to emulate Western organization-
through this entire endeavor. al models in Japan. Thus, this note is closer to
409
410 Academy of Management Review April

and rests heavily on the work of Chie Nakane solute allegiance to serve and honor one's par-
(1970), one of the first scholars to assert that ents, whereas in Japan it is modified to include
Japanese firms have historical links to the Jap- on, which stresses reciprocity and obligation,
anese family. rather than obedience. In Japan emphasis is
also placed on the equivalence of ko and on.
During the Tokugawa feudal era, dominance
THEJAPANESEFAMILY
or ko of the shogun was exercised indirectly,
Nakane (1970) and others (e.g., Kitano, 1970; through the apportionment of land. In exchange
Kumagai, 1992) have asserted that the behav- for a grant, samurai warriors owed allegiance or
ioral and structural patterns observed in Japa- on to the shogun. The samurai, in turn, gave
nese industrial organizations are rooted in the peasants the land to farm and derived ko,
construct of ie. "The Chinese character for ie whereas the peasants showed on by paying rice
signifies people under one roof, showing the as tribute to the samurai. Merchants operated on
roof at the top and the people at the bottom of the periphery of this social hierarchy, being in-
the character" (Kumagai, 1992:181). Ie is both volved primarily with monetary transactions.
tangible and intangible: it represents the tangi- Within each class there were many individual ie
ble possessions of a group of people and the who partook in the interactions of ko and on.
intangible organization of a family to which Within each ie, family members owed alle-
these people belong. In other words, the ie is the giance to the ie only by virtue of the ie's bestow-
material assets of the family, as well as its pres- ing benevolence upon them. As such, there ex-
tige, class, and ranking in society. isted a relationship of tension or conflict
The ie system dates back to the feudal Edo era between the head of the ie and the family mem-
(1600-1868). This family system was embedded bers, in spite of the tendencies toward domi-
in the context of a larger feudal system (Kitano, nance-submission relations between them.
1970; Kumagai, 1992). Japanese feudalism was The ie system was strictly observed by the
different from the Western feudalism practiced samurai class, with strong emphasis on abso-
in many parts of Europe or that practiced in lute and unconditional ko. However, in the ie of
China (Nagai & Bennett, 1953; Nakane, 1970). the lower classes, the "common people," more
Whereas feudalism in Europe was based on the emphasis was placed on on. These ie functioned
"rights and duties" defined by the relations of more as economic units. They were given family
the lord and vassal, feudalism in China was names that corresponded to their occupations.
based on the Confucian dominance-submission Every family member, including women, chil-
relations between the family patriarch and his dren, and the elderly, participated in the produc-
family members. The feudal family system in tive labor of the ie, in accordance with their
Japan possessed some elements of the domi- ability. Only the physically incompetent were
nance-submission pattern found in China but totally dependent on the head of the ie. The
also had features of the European rights and strict Confucian notions of ko did not exist here;
duties conception. Rights and duties in the Jap- emphasis, rather, was on cooperation and on.
anese family were learned and practiced as the Status within the ie was allocated by the task
concepts of ko and on-ko referring to duty to performed. There was clear differentiation
parents and on referring to the reciprocal obli- about the balance of ko and on between the
gations between family members. head of the ie and each family member. In this
Compared to the abstract Western concepts of way the hierarchical Confucian relations of the
rights and duties, ko and on have much more samurai class were replaced by coordinate re-
concrete meanings. "In the Japanese system, lations of cooperation in the ie of the lower
both ko and on are defined specifically for given classes.
situations, and as such they become inviolable The family members of these ie included not
rules of family relationships" (Nagai & Bennett, only kin but also tenants and servants. The
1953: 242-243). The concepts of ko and on are headship of the ie was not always passed on to
even better understood when contrasted with the eldest son in the family. Instead, to guaran-
the Chinese patriarchal concept of ko, a distinc- tee the success of a family, each family selected
tive feature of the Chinese Confucian family a male member of superior ability as its head.
system. Ko, as practiced in China, signifies ab- This could be one of the male siblings, or even
2000 Bhappu 411

an "adopted son," such as a son-in-law or an bunke ie was ranked relative to its genealogical
apprentice. Succession to the headship of the ie distance from the honke ie. In other words, the
meant that one now had full control of and re- dozuku had a pyramidal structure, with rank
sponsibility for the family business. This type of and status being equal among bunke ie of ap-
succession invested both the new head and the proximately equal genealogical distance from
rest of the family with defined relationships, the honke ie. Bunke ie with direct blood rela-
each with a degree of social capital. tions to the honke ie were ranked higher than
Within these ie, age and seniority com- bunke ie of adopted relatives. Relationships
manded respect, regardless of rank within the within the dozuku were among head of the ie or
family. Sons honored their mother, even though among the ie entities themselves. The dozuku
she was of lower gender status than they. Sim- also embodied the concepts of ko and on be-
ilarly, a daughter-in-law was subservient to her tween the head of the honke ie and the heads of
mother-in-law, since she held the lowest status the bunke ie. As a result, relationships among
in the ie. In fact, all new members of these ie the ie were more meaningful than those among
were treated like apprentices: individual ie members.
Ideally, this was how the corporate family
Ideally, an apprentice will live with the master's evolved through time. However, the honke-
family and take all meals at the household table. bunke relationships
Learners are not seen to be natural dependents; among the various ie
there has to be deliberate training for depen- changed with shifts in the economic prosperity
dency and the arrangement of settings that rein- of households partaking in the family enter-
force this dependency. Thus, there is a new "fam- prise. By the third generation, bunke ie from the
ily" model of dependency for the apprentice, second generation were honke to newer house-
which is comparable to the role of a new bride holds. The honke ie of the third generation could
who moves in with her husband's family. Both
must be inducted into the family's unique pat- become more or less equal in status and prop-
terns of daily work and life (Singleton, 1989:22). erty, some even breaking away from the original
family enterprise. Some honke ie began their
Among the ie of the lower classes, the mer- own lineage by establishing new enterprises of
chant ie were the structural precursors of mod- their own. In other instances ie simply dis-
ern Japanese corporations. Merchant house- solved. Regardless, new honke-bunke relation-
holds frequently established bunke (branch) ie ships were established.
beside the honke (main) ie. This enabled them to In summary, the Japanese family, whether ie
expand their distribution channels geographi- or dozuku, was a corporation with social, eco-
cally. It also provided a way for the "corporate" nomic, and moral aspects. It was characterized
merchant ie to perpetuate itself as an entity by a network of hierarchical ties among people
from one generation to another. Since only one within an ie and among ie within a dozuku.
son could inherit the honke ie, noninheriting These ties were governed by the principles of ko
sons would have to leave the honke ie to estab- and on. Recruitment into the corporate family
lish bunke ie, which created a relationship of ko was most often, but not exclusively, by birth,
and on between the head of the honke ie and the with other common forms being by marriage or
heads of the bunke ie. Whenever possible, the adoption (possibly including lower-status indi-
outgoing head of the honke ie would set up the viduals, such as servants). These people took
bunke ie through the transfer of land and prop- the family name. Sons-in-law and adopted sons,
erty so as to avoid conflict between the surviv- who were not relatives, were among those
ing siblings, since he was responsible for ensur- brought into the corporate family. This contrasts
ing that the ie passed on intact to the next with many other societies, such as China, where
generation. The strong vertical link between the only kin were included within the corporate
honke ie and the bunke ie was the central organ- family.
izing principle of the merchant family. In fact, the historical importance of the tradi-
The structural entity of the Japanese merchant tional Japanese dozuku can be seen when one
family with its honke-bunke ie was referred to compares it to the kinship system in China (Nagai
as the dozuku. The dozuku was the hierarchi- & Bennett, 1953;Nakane, 1970),which did not have
cally organized set of bunke ie around the cen- an analogous arrangement for the inheritance of
tral axis of the honke ie within a family. Each family property and wealth. In the Chinese family
412 Academy of Management Review April

the family property could be divided among the not limited to individual ie. It was participation
surviving sons of the patriarch at the time of his in common rituals that marked the moral char-
death. In these cases each son would then set up acter of the dozuku and reinforced the structural
an independent household. In other cases the entity of the corporate family (Kondo, 1990).
brothers continued managing the property, but At the time of early Japanese industrializa-
their sons divided the estate. The lack of the net- tion, large-scale family firms that had strong
work honke-bunke arrangements resulted in Chi- connections with the state were converted into
nese family businesses that were less durable the dominant Japanese industrial organiza-
and more short lived. Since the authority of the tions-the zaibatsu. The Meiji government, amid
Chinese patriarch was only a lifetime phenome- Western influence, played a key role in facilitat-
non, Chinese family businesses typically spanned ing this process (Gerlach, 1992a; Westney, 1987).
only one or two generations. This was not the case The legal forms of partnership and the joint stock
in Japan, where family businesses have thrived company were ideally geared to many of these
through several generations (e.g., Fruin, 1983; family enterprises. They allowed the main and
Kondo, 1990). branch families to take varying shares in the
family enterprise, while also maintaining the
unity of the business. Many of the larger enter-
THE FAMILY FIRM prises, those operating in a number of industries,
established central organizing agencies to main-
The dozuku was the structural template for the tain tight family control.... Such bodies would
family firm in Japan. The economic enterprise of sometimes take the form of a holding company
the honke ie was the family business, with all which controlled the operating branches of the
the bunke ie participating in some functional business. Many of the large and successful fam-
ily enterprises which owned their own banks
fashion. In most cases the top managers of the were encouraged by the state to channel bank
business were members of the honke ie, funds into strategic industries. The holding com-
whereas middle managers were members of the panies coordinated their vast and sprawling in-
bunke ie. Bunke ie also served to expand the terests through a pyramidal structure of majority
family business by starting new production op- and minority shareholdings (Scott, 1991:195-196).
erations in other geographic areas or by becom- When Japan was defeated in World War II, the
ing distributors for the honke ie (Fruin, 1983). Allied Occupation Forces abolished the
Often, ie of neighbors who performed vital busi- zaibatsu structure in an attempt to undermine
ness functions were adopted into the family as the strong conglomerate networks that con-
bunke ie (Kondo, 1990). "In any event, the ten- trolled the Japanese industrial enterprise.
dency to form these inflated, super-'families'
The most important measures from the point of
was undoubtedly always present awaiting only view of the zaibatsu were the dissolution of the
the right circumstances to evoke it" (Cornell, holding companies, the elimination of family as-
1964: 461). sets held in the zaibatsu, the removal of many top
The dozuku was also the psychological tem- executives from first-line subsidiaries, and the
plate for the family firm. As the family business breakup of a number of leading zaibatsu compa-
nies (Gerlach, 1992a: 100).
grew, it became more common to allocate rank
and status within the dozuku on the basis of age What remained were essentially smaller net-
and tenure, rather than genealogical distance works of core companies and their subsidiaries
from the honke ie. This served to highlight the that were part of the original zaibatsu.
importance of loyalty over rank. Furthermore, Although no longer structurally connected by
the concept of ko was exemplified through com- formal organizational ties, these smaller net-
mitment to the family business, whereas on was works began to coordinate their activities by
bestowed in the form of lifetime employment. In building on social ties that still existed among
other words, loyalty characterized both sides in individuals in the core companies (Gerlach,
the relationship. Also, within the dozuku coop- 1992a). The heads of the core companies contin-
eration and consensus were stressed over com- ued to meet regularly as a group. As the anti-
petition. zaibatsu sentiment diminished, the meetings of
On another level, the dozuku also functioned heads of the core companies became formalized
as a ceremonial group. The sharing of both spir- and institutionalized (Gerlach, 1992a), once
itual beliefs and attitudes was widespread and again structurally connecting networks of core
2000 Bhappu 413

companies and their subsidiaries by formal or- behavior found in Japanese organizations,
ganizational ties. Today, these corporate net- whether one is referring to the dozuku, the
works are called keiretsu. zaibatsu, or the keiretsu. In particular, it is the
ko-on relationship between members of the ie
that is an institutional logic for Japanese man-
INSTITUTIONAL
LOGICS
agement practices, a logic that exerts both nor-
Japanese corporate networks, whether one is mative and cognitive influences on individuals
referring to the dozuku, the zaibatsu, or the keir- (Scott, 1995). Just as in the ie, Japanese organi-
etsu, are economic institutions (Granovetter, zations have an intricate network of supervisors
1992). And although the keiretsu of present-day and subordinates, with rank and status distrib-
Japan are no longer composed of consanguine uted by position. Relationships between individ-
family members, their structural embeddedness uals are characterized by reciprocity and obli-
is similar to that of the dozuku and the zaibatsu. gation rather than obedience, with emphasis
The honke-bunke arrangements of the dozuku placed on the equivalence of ko and on. The
were evident in the corporate networks of the system of pay and promotion rewards seniority
zaibatsu, as they now are in the keiretsu. The within the organizational hierarchy. Achieve-
firm in both the zaibatsu and keiretsu is analo- ment is secondary to trust, in keeping with the
gous to the ie in the dozuku, with honke-bunke tradition of the ie. Lifetime employment guaran-
relationships providing the vertical hierarchy. tees are extended to employees as on in ex-
Central or honke positions are occupied by firms change for the employees' subordination, ko, to
with capital. The honke ie in the dozuku pro- the needs of the organization. Once again, this
vided the bunke ie with capital. Similarly, as do demonstrates the value that the Japanese place
banks in the keiretsu, holding companies in the on loyalty over time, in keeping with the tradi-
zaibatsu provided capital to core industrial tion of the ie.
firms in their corporate networks. Relational ties In personal observations of a large, industri-
between the individual heads of firms or ie are alized Japanese organization, I have noted that
characterized by principles of ko and on, similar the section unit bears the closest resemblance to
to the ties that existed between ie in the dozuku. the Japanese ie. The section head is analogous
The shared rituals and ceremonies within and to the head of the ie-that is, a father figure.
between firms or ie are outward expressions of Every member of the section has a specific role,
their shared moral character. with rank and status based on the function per-
In this way the dozuku is an institutional logic formed. Members of the section owe allegiance
for Japanese corporate networks. Also, by recog- to the section head only by virtue of his bestow-
nizing that the structural template of the dozuku ing benevolence upon them-the equivalence of
is but one of many institutional logics' apparent ko and on. As such, there exists a relationship of
in the zaibatsu and keiretsu, one can expect that tension or conflict between the section head and
the structural embeddedness of Japanese organ- the individual section members, in spite of the
izations varies in resemblance to that of the tendencies toward dominance-submission rela-
dozuku. "At different periods of time, the pres- tions between them because of their managerial
ence of institutional logics can be dominating rank in the organizational hierarchy.
or in competition with others" (Galvin, 1999: 7). By recognizing that the ko-on relationship is
Since Japanese corporate networks have come but one of many institutional logics apparent in
to represent the way Japanese organizations Japanese organizations, one can also expect
should be structured (Gerlach, 1992b), they ap- that the relational embeddedness of Japanese
pear to be a dominating institutional logic with organizations varies in resemblance to that of
normative influence (Scott, 1995). the ie.
Japanese management practices embody the
relational embeddedness of Japanese organiza-
tions. They are regular patterns of individual
CONCLUDINGREMARKS
In this note I have provided a historical ac-
count for the origins of Japanese corporate net-
' Western organizational models are another (Westney, works and Japanese management practices
1987). based on the anthropology literature on Japan. I
414 Academy of Management Review April

have illustrated that the Japanese family is an tive influence on the structural and relational
institutional logic for Japanese corporate net- embeddedness of industrial organizations is sa-
works and Japanese management practices. In lient. This is especially important during the
doing so, I hope that I have drawn attention to cross-cultural transfer of organizational models,
this body of knowledge in a way that facilitates when "unintended departures [from the in-
its integration into future analyses of Japanese tended organizational model] because of power-
firms by management scholars. ful implicit models constitute one source of in-
The question still to be addressed is why the novation that is rooted in culture" (Westney,
family logic has persisted in Japan. This family 1987: 27). On a theoretical note, the idea that the
logic was never mandated by any institution. In strategic actions of individuals-rather than in-
fact, the Japanese government tried to abolish stitutional mandates-may explain the histori-
the ie system. Since persistence is an outcome of cal persistence of an institutional logic is pro-
individuals confirming the value and utility of vocative.
existing patterns of social action and social Given the current state of the Japanese econ-
structures, the persistence of the family logic is omy, Japanese economic organizations are once
an expression of choice by individuals in Japa- again under considerable pressure to reform
nese economic organizations. The rationale be- their industrial models and economic practices.
hind their choice is the preservation of their It will be interesting to see if individuals in
social capital (Coleman, 1990; Walker, Kogut, & these organizations are able to preserve their
Shan, 1997). "Social capital comes about through historical social capital through this next set of
changes in the relations among people that fa- impending reforms.
cilitate action.... It exists in the relations Finally, in order to further our understand-
among persons. Just as physical capital and hu- ing of culture as it relates to management,
man capital facilitate productive activity, social more work is needed to identify the culturally
capital does as well" (Coleman, 1990: S100- rooted institutional logics that shape organi-
S101). zations around the world. The structural em-
As a strategy, the preservation of social capi- beddedness and relational embeddedness of
tal embedded in the ko and on relationships of historical social organizations, such as the
individuals may explain the persistence and family, are a good place to start. In doing so,
collapse of different institutional logics in Japa- we may find that, across cultures, individuals
nese economic organizations in the face of have different implicit models for organizing
changing political and business environments. their social capital.
Indeed, the historical actions of individuals in
Japanese economic organizations are indicative
of a strategy to sustain and nurture their social
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tion Development Journal, 10(2): 49-56. 677-700.

Anita D. Bhappu is an assistant professor of organizational behavior at the Edwin L. Cox

School of Business, Southern Methodist University. She received her Ph.D. from the
University of Arizona. She also studies the effects of demographic diversity and computer-
mediated communication in teams, service delivery, and customer satisfaction.