Conflict and Change: Foreign Ownership and the Japanese Firm (review)

The title of George Olcott’s new book creates high expectations—conflict, change, and foreigners are great topics to study. As it turns out, the book pursues a much narrower goal: “to investigate and describe what changes took place in traditional HR [human resources] practices and organisational forms at Japanese companies that were taken over by foreign companies” (p. 68). This is a study of five instances of such acquisitions (the “case companies”), which are compared with four Japanese-controlled firms (“comparator companies”) and one “major regional utility company” (to broaden the view beyond the comparator companies). The author also sets up a straw-man image of “Japanese HR practices” based mostly on earlier work by James Abegglen and Ronald Dore—what might be described as “Old Japan.”¹

That goal is still interesting enough and makes for a worthwhile read and food for thought, as Olcott presents careful and rich analysis. At the end, however, the reader is left with both dubious head scratching and a yearning for more. The analysis remains mostly at 30,000 feet, with too little beefy detail. Clearly, the author has more to say than what is written here. Let me begin with an overview.

While he worked at a Swiss bank that acquired a Japanese bank and then merged with another Swiss bank, Olcott became interested in exploring the changes in the workforce such intercontinental marriages might effect. He designed this study of ten companies, most of which remain undisclosed. The case companies include Nissan, Chugai Pharmaceutical, Shinsei Bank, and two “F-Services” firms. Each is matched to a comparator company in the same industry, all anonymous. The anonymity makes for awkward language (for example, comparing “J-Services Co” with “F-Services Co 2”). It also interrupts the story line as even the most attentive reader will eventually abort attempts to form a composite image of each unnamed entity, and the cases therefore remain unconnected across chapters. The author held 157 interviews at three distinct levels of the corporate hierarchy (including top management) of the focal companies and 67 interviews at the comparative cases. He scored these interview answers on a scale of one (no change) through three (great change).

Readers are walked through five issue areas: recruitment/training, career patterns, reward systems, female employees, and top management structures. In each chapter, we are presented with the same step-by-step approach: (1) a basic setup of existing literature, such as “lifetime employment means . . .” (this is well done, though little is new); (2) a bullet-point summary of what Olcott calls the “communitarian template” (the strawman image of Old Japan HR patterns); (3) a bullet-point list of the differences one might expect to result from acquisition by a foreign interest (this reads rather post-hoc); (4) a few citations of what interviewees said; and (5) a table with average scores from the five case companies for specific questions (such as “To what extent has seniority become more/less important?” [p. 165] and “Has the attitude towards lifetime employment changed?” [p. 126]), or a comparative table indicating change in matters such as midcareer hires. No account is offered of the details of each merger, the status of the acquired company prior to the acquisition (was there a crisis and therefore a greater perceived need for change?), or the degree of amicability associated with the acquisition. After all is said and done, Olcott finds that acquired companies have moved toward greater workforce diversity and goal clarity yet weaker socialization processes; they appear to have emerged from crisis and—one is led to believe—somehow fared better overall for the experience.

I have several quibbles. For example, important existing literature such as Marie Anchordoguy’s excellent book on “communitarian capitalism”² is overlooked, even though Olcott explicitly invokes “communitarian” HR practices. The theory chapter does not quite do it for me, and about one-third of the works...