America Works — Critical Thoughts on the Exceptional U.S. Labor Market – By Richard B. Freeman

Published date01 March 2008
Date01 March 2008
DOIhttp://doi.org/10.1111/j.1467-8543.2007.00672_8.x
BOOK REVIEWS
21st Century Japanese Management — New Systems, Lasting Values by James C.
Abegglen. Palgrave Macmilan, Houndsmills, 2006, ix +194 pp., ISBN 1 4039
9876 0, £58.00.
Abegglen was an industrial sociologist and a strategy consultant, who died in May
2007 at the age of 81. His last book, reviewed here posthumously, is best read as a
culmination of his work over a full half-century in shaping and deepening the
Western world’s understanding of Japan. It is this long-term perspective — arising
out of having seen Japan ‘move from total defeat and utter poverty to great eco-
nomic wealth’ — that makes his views on Japan carry weight. In this book,
Abegglen firmly espoused the view that despite the dramatic economic and techno-
logical change over the last 50 years, the cultural values underpinning Japan’s man-
agement system, namely ‘the concept of community in which all fully and fairly
participate as one does in family, village, and neighbourhood’ (p. 89), have not
changed.
Every student of Japan would have read his first book published in 1958, The
Japanese Factory, which remains a classic text on industrial sociology. In the
Preface, Abbeglen not only mentions his research as a Ford Foundation Fellow
during 1955–1956 but also reveals that the five companies he studied, anonymized
in his 1958 book, are NEC, Sumitomo Electric Industries, Sumitomo Chemical Co.,
Toray and Fuji Seitetsu (now Nippon Steel after its re-merger with Yawata Steel).
In order to write 21st Century Japanese Management, Abegglen continued to talk to
executives and managers in these and other Japanese corporations, not as an aca-
demic researcher but as a strategy consultant for the Boston Consulting Group
(BCG), whose Tokyo office he helped to establish in the 1960s. In order to appre-
ciate this book fully, it is important to recognize that Abegglen combined academic
insights as a sociologist with business acumen as a strategy consultant. He cared
deeply that his key audience included the business community in Japan as well as
overseas. The style in which the book is written, therefore, is less scholarly than
his earlier books but does not, in any way, undermine the clear message it
delivers.
The book consists of nine chapters. After providing an overview in chapter 1,
chapter 2 launches straight into the heart of strategy, with the redesign of kaisha
(Japanese corporations) for a competitive future. Abegglen diagnoses two structural
problems that derive from Japan’s high-growth legacy, namely the existence of too
many companies in an industry and the over-diversification of major firms. The
chapter traces the refocusing of product lines by electronics firms such as NEC and
the reduction in the number of main producers in diverse industries such as cement,
pulp and paper, steel, and sugar. Chapter 3 briefly charts the greying of the Japanese
workforce.
British Journal of Industrial Relations doi: 10.1111/j.1467-8543.2007.00672.x
46:1 March 2008 0007–1080 pp. 200–217
© Blackwell Publishing Ltd/London School of Economics 2008. Published by Blackwell Publishing Ltd,
9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA.
Chapter 4 on Japanese management is central to the book and perhaps the most
interesting given that it was Abegglen’s 1958 book that led to the coining of the
well-known phrase ‘lifetime employment’. Abegglen recounts that the book termed
the social contract between firm and employee a ‘lifetime commitment’, which became
translated into Japanese and re-translated back into English as ‘lifetime employment’.
With evidence, he demonstrates that lifetime commitment is honoured now as it was
then despite the rise of non-core workers including dispatched workers and freeters.
The evidence here is what managers believe is good, conforms to Japanese culture and
underlies the core competence to survive global competition.
The rest of the book covers other changes in Japan’s economy. Chapter 5 titled ‘A
Perfect Financial Storm’ argues that despite the 1990s recession, the main banking
institutions continue in a modified form in Japan where relationships remain highly
valued. Chapter 6 on the research imperative projects an optimistic view that ‘Japan
will be in the forefront of world science and technology progress over the next
decades’ (p. 129). Abegglen argues in chapter 7 that corporate governance in Japan is
organized around the purpose of perpetuating the company as an ongoing commu-
nity, and as such Japanese companies ‘should focus on developing their own gover-
nance methods, shaped by Japan’s own customs and values in order to achieve real
and lasting effectiveness’ (p. 149). As a man who helped BCG set up its first foreign
subsidiary in Tokyo, chapter 8 on ‘The Mysterious Foreign Investors’ forcefully
argues against the view that Japanese markets are closed to foreign investors, dem-
onstrating that now as in the past, successful entries are based on new technology.
Lastly, chapter 9 argues that Japan’s future well-being depends on its role in East
Asia. Here, Abegglen is a realist when he states that a successful future ‘requires a
degree of vision, leadership, and competence on the part of Japan’s political leaders
that is sadly lacking now’ (p. 188).
In summary, the book is a highly accessible and readable account of
Japanese management, written essentially by an optimist who believed that lasting
values were resilient enough to support marginal changes to a robust system. The
jury is still out on how much more the Japanese business system might converge
towards the US model. However, it is worth reading this book, not least to rem-
ember that where people matter, adaptive change occurs within clear cultural
constraints.
Mari Sako
Said Business School
University of Oxford
Staircase or Treadmills? Labor Market Intermediaries and Economic Opportunity in a
Changing Economy by Chris Benner, Laura Leete and Manuel Pastor. Russell
Sage Foundation, New York, 2007, xvii +290 pp., ISBN 0 87154 169 6, £22.40;
US$32.50.
Until the 1990s, the impact of intermediaries on labour markets received little aca-
demic attention. However, as Benner, Leete and Pastor contend in their book Stair-
case or Treadmills?, recent years have witnessed an increasing interest in labour
market intermediaries (LMIs) from academics, policy makers, the media and the
general public. The authors argue that the rapid technological change and a more
competitive business environment have given birth to a more volatile job market.
Book Reviews 201
© Blackwell Publishing Ltd/London School of Economics 2008.

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