Course MGMT299:

Special Topic in Management:

Management in the Asia Context

Lecture Modernised Traditional Asian Management:

Japanese Management
Traditional Asian Management in
Transformation: Indian Management

Lecturer Prof. Dr. Li-Choy Chong

Date 02 October 2007

HSG-Asia Term 2007

Session Outline

A Modernised Traditional Asian Management: Japanese Management

B Traditional Asian Management in Transformation: Indian Management

Prof. Li-Choy Chong

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Singapore Management University
Overview

A Japanese Management (Modernised tradit. Asian Mgmt.)

► Evolution of Japanese Management

► Pertinent Characteristics of Japanese

Management

► Understanding Japanese Management

> The Company as the Family

> Education, Business and Social Prestige

> Participatory Management

Prof. Li-Choy Chong

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Singapore Management University
 A C T & L E A R N : A quire expertise

Evolution of Japanese Management

► Japan in Transition

> Tradition vs. modernity

> East vs. West

► Japanese Management

> Convergence with Western practices or

cultural adaptation

Prof. Li-Choy Chong

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Singapore Management University
 A C T & L E A R N : A quire expertise

Pertinent Characteristics of Japanese Management 1 / 2

► Company-wide union or house union

► General preference for inexperienced fresh

graduates from schools or colleges

► Preference for promotions from within

► Life-time employment

► Quality Control Circles (QCCs)

Prof. Li-Choy Chong

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Singapore Management University
 A C T & L E A R N : A quire expertise

Pertinent Characteristics of Japanese Management 2 / 2

► Training practices

> On-the-job training

> In-house and outside training

> Job rotation

► Decision making and consultation practices

> Bottom-up communication

> Regular management-labour consultation

► Settlement of conflict trough negotiations

Prof. Li-Choy Chong

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Singapore Management University
 A C T & L E A R N : A quire expertise

Understand Japanese Management – The Company as the Family 1 / 2

► Social belonging

► Life-time employment and loyalty

► Social status of employees linked to success of

company

► Social role of employment

> company song

> company pin

► Emphasis on harmony (suppression of conflict)

► Paternalism

► Seniority system
Prof. Li-Choy Chong
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Singapore Management University
 A C T & L E A R N : A quire expertise

Understand Japanese Management – The Company as the Family 2 / 2

► Zaibatsu Groups –

> the financial & industrial conglomerates

were outgrowths of family enterprises

► Scarcity of daily necessities during World War II

> Fostered company-based cooperative

activities in the procurement and distribution
of goods

> Companies were used by the government to

distribute rations

Prof. Li-Choy Chong

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Singapore Management University
 A C T & L E A R N : A quire expertise

Understand Japanese Management – Recruitment and Training

► Fresh graduates are recruited each spring

through company's entrance examinations and
interviews

> Well known corporations usually focus on a

few high ranking schools and universities

► Costs and benefits of training internalised within

one firm (paternalism / loyalty)

> Continuous training

► Seniority system facilitates on-the-job training

> Senior workers train junior workers without

fear of jeopardizing their own position

Prof. Li-Choy Chong

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Singapore Management University
 A C T & L E A R N : A quire expertise

Understand Japanese Management – Participatory Management 1 / 2

► Process of decision making not centralized at the

top

> Process of broad consultation and

consensus

► System cannot move capable individuals

upwards

> Moves authority downward through personal

contacts and relationships (of CEO and
junior)

Prof. Li-Choy Chong

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Singapore Management University
 A C T & L E A R N : A quire expertise

Understand Japanese Management – Participatory Management 2 / 2

► Anyone with a stake in the decision will be

consulted (hierarchical relationship blurred).

► Explains why talented, able and young

employees can be satisfied under the
seniority-based system

► The Father-leader

> Authoritarian

> Able to advance corporate goals through

unobtrusive persuasion and conciliation

> Synthesizes group with warmth, sincerity

and humaneness

Prof. Li-Choy Chong

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Singapore Management University
Overview

B Indian Management (tradit. Asian Mgmt. in Transformation)

► Traditional India

► Transformation of Indian Management

Prof. Li-Choy Chong

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Singapore Management University
 A C T & L E A R N : A quire expertise

Traditional India

3 Fundamental & mutually reinforcing concepts:

Caste System : Rigid social stratification system

Karma : Predestination related to past life

Dharma : Social duty

Prof. Li-Choy Chong

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Singapore Management University
 A C T & L E A R N : A quire expertise

Historical/ Social Factors Influencing Indian Society

The Caste System The caste system evolved from a composition of

interdependent occupational groups to a stratified,
hierarchical, socio-economic class system

Legacy of British The British colonisation left a legacy of administrative

Colonisation bureaucracy and cleavage between leading and non-
leading groups

Post-Independence The development goals behind the socialist ideology led

Socialism to the protectionist economic situation that dominated
until 1991 - beginning of challenge to values of Karma
and Caste system due to social change and education

Post-1991 rapid change, Competition & achievements further

Economy challenged traditional shared values (Karma & Caste)
and Society

Prof. Li-Choy Chong

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Singapore Management University
 A C T & L E A R N : A quire expertise

Philosophical/ personal, shared values: Factors Influencing Indian Society

Karma – ► Humans are unchangeable and shaped by past

predestination life activities
► Impassive and impersonal outlook of pain,
suffering and poverty
► Preordination of one's life events
► No mastery over nature and destiny
► What is unfinished in this life can be continued in
the next
► Emphasis on heritage and tradition
► Lack of urgency, preference for tried-and-true
► Current time cycle is not worthy, predominance of
evil

Dharma – ► Admiration of ascetic contemplators over doers

social duty ► Motivation through duty to one's life roles and family

Prof. Li-Choy Chong

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Singapore Management University
 A C T & L E A R N : A quire expertise

Traditional Influences at the Workplace

► Fatalism at work (nothing can be improved)

► Lower persistence and ambition

► Scepticism towards innovation, the future

► Lack of sense of urgency and planning time

► Ambivalent attitude towards material success

► Conformity, dependence, seeking approval over

initiative, creativity, independence

Prof. Li-Choy Chong

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Singapore Management University
 A C T & L E A R N : A quire expertise

Traditional Indian Management in Comparison

Management Practice Western Management Traditional Indian Management

Employee Task requirements and abilities Family relation and caste mem-
Requirements berships of employees have to
be considered

Leadership Style Participative management style Organizational leaders display a

where input is solicited / Rela-
tionships remain impersonal
high level of personal involve-
ment with their subordinates.
Leaders provide nurturance con-
tingent upon the subordinate's
task accomplishment

Motivational Aspects Work an end itself / Intrinsic Work is viewed as a means to an

and Rewards rewards end i.e. for the sake of satisfying
family needs. Little demand for
changing work tasks, only the
compensation is relevant

Human resource Objective selection criteria Nepotism and caste conside-

management practices Downsizing, performance pay rations affect selection and
compensation. Training less
emphasized

Prof. Li-Choy Chong

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Singapore Management University
 A C T & L E A R N : A quire expertise

Changing Environment – After 1991

► Opening up of the Indian Economy

> Before 1991 protected economy and import of certain
goods was restricted
> After 1991 competition increased tremendously after
the liberalisation. Competitors from all over the world
enter the Indian market

► Competition from Low Wage Countries

> Low range products are floating into the market
> Low price, low quality

► Environmentalism and the Growing Importance of

Stakeholders
> As the economic status of the people in India
increases, aspects such as environmental issues are
increasingly addressed
Prof. Li-Choy Chong
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Singapore Management University
 A C T & L E A R N : A quire expertise

Reaction from Local Firms to the Changing Environment 1 / 2

► Innovation and Customer Focus

> Trend: solve a customer problem holistically rather

than just selling a product

► Education of the Customer

> As a result of increasing competition and increasing

supplies customers are increasingly educated and
demanding

► Sourcing

> Insourcing

> Centralisation

Prof. Li-Choy Chong

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Singapore Management University
 A C T & L E A R N : A quire expertise

Reaction from Local Firms to the Changing Environment 2 / 2

► Healthy competition seems to be one of the main reasons

that pushed local competitions to increasing
professionalism

► The external factors strongly influence the speed the

relevant companies have been transforming

Prof. Li-Choy Chong

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Singapore Management University
 A C T & L E A R N : A quire expertise

Challenges for Local Indian Firms

► With growing competition from professionally managed

businesses, local firms and especially family businesses are left
with no other option but to turn to professionals

► In order to survive local firms have master the challenges

> Separate professional matters from family interests
> Focus on core businesses
> Become accountable for shareholders

► Each firm has its own transformation but the importance is the end
result
> Professional controlled company
> Integration into the global economy
> Compete successfully with other companies

► Indian firms would not be where they are today, if they had not
transformed into professional organisations
Prof. Li-Choy Chong
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Singapore Management University
 A C T & L E A R N : A quire expertise

Areas of Change

► Globalisation of Competition and Markets

► Mobility of Professionals and Internationalisation of Salaries

► Professionalisation of Human Resources Systems

► Urbanism and Centralisation

Prof. Li-Choy Chong

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Singapore Management University
 A C
Evolution of Indian Management
Management Practice Traditional Indian Management
Employee Family relation and caste mem-
Requirements berships of employees have to
be considered
Leadership Style Organizational leaders display a
high level of personal involve-
ment with their subordinates.
Leaders provide nurturance con-
tingent upon the subordinate's
task accomplishment
Motivational Aspects Work is viewed as a means to an
and Rewards end i.e. for the sake of satisfying
family needs. Little demand for
changing work tasks, only the
compensation is relevant
Human resource Nepotism and caste conside-
management practices rations affect selection and
compensation. Training less
emphasized
T & L E A R N : A quire expertise
Contemporary
Indian Management
Relevant educational background
and experience matching task
requirements
Increasingly participative mana-
gement style where subordinates'
opinions and input are solicited.
Personal relationship between
management and employees
reduced
Elements such as job rotation,
enrichment, autonomy, team
work and competitive salaries
are increasingly considered to
motivate employees
Objective selection criteria.
Training programs and per-
formance related compensation
applied
Prof. Li-Choy Chong
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Singapore Management University
Readings

► Bhappu, A.D. (2000): The Japanese Family: An institutional logic for Japanese
corporate networks and Japanese management. Academy of Management, Vol.
25, pp. 409-415.
► Chong, L.C. & Agrawal, N.M. (eds.): Globalisation and Indian Management:
Environmental Change and Management Transition in Modern India
(Forthcoming).
► Falkenberg, A.D., Glamheden, H.A., Chong, L.C. & Agrawal, N.M. (2003): The
Impact of Changing Professionalism on Multinational Companies in Emerging
Economies – The Case of ABB India Ltd. 9th Asia Pacific Management
Conference, pp. 283-292.
► Steffensen, S.K. (1998): Informational network industrialization and Japanese
business management. Journal of Organizational Change, Vol. 11, pp. 515-529.

Prof. Li-Choy Chong

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Singapore Management University