Reflecting on Japanese Management in the Changing Climate of the Time

Management practices and orientation need to change when the climate of the time in which firms operate changes. In the 1980s–early 1990s when the world enjoyed a broad economic growth on a global scale, Japanese management practices were admired in awe around the world. Despite such admiration, however, Japanese firms, on average, tended to have much lower financial performance (measured as ROEs) than U.S. and European firms. Since the Japanese economy began to slip into a decade-long recessionary environment in the late 1990s, many Japanese firms experienced profit losses and even lower ROEs, but their change in management practices to address the new climate of the time has since been slow. Consequently, the world’s admiration of Japanese management began to wane. This article explores how and why, and offers broader implications to management practices in general.