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Management,
Management, accounting and accounting and
philosophy philosophy
The development of management accounting
at Kyocera, 1959-2013 317
Hiroshi Takeda
Graduate School of Business Administration, The University of Kitakyushu,
Kitakyushu City, Japan, and
Trevor Boyns
Cardiff Business School, Cardiff University, Cardiff, UK

Abstract
Purpose The purpose of this paper is to provide an understanding of the Kyocera approach to
business, i.e. the relationship between the Kyocera philosophy, the amoeba management system
(AMS) and the associated management accounting system.
Design/methodology/approach Utilising a variety of secondary sources, including
semi-autobiographical works written by Inamori, the architect of AMS, the authors examine in
detail the links between the underlying Kyocera philosophy and the management and accounting
principles derived therefrom. These sources are used to examine the historical origins of these
principles, their influence on both the AMS and the management accounting system, and how these
have developed over time.
Findings Both the AMS and the associated management accounting system can be shown to
contain a mixture of influences, including traditional Asian/Japanese factors, but also
Inamori/Kyocera-specific factors linked to Inamoris underlying philosophical approach to life and
specific life experiences encountered by him. This suggests that while the Kyocera approach may be
applicable more widely in Japan or Asia, outside of this context, the conflicts between Western and
Asian cultures, although not necessarily insurmountable, may provide barriers leading to incomplete
applications of the Kyocera approach
Originality/value This study adds to the understanding of the interrelationship between
management philosophy and management accounting practices, and the ability of individuals to
determine culture within organisations. It illustrates the importance of historical research in obtaining
a detailed understanding of the philosophical, cultural and religious underpinnings of current
management and accounting practices.
Keywords Management philosophy, Management accounting, Amoeba management system,
Holistic approach, Inamori, Kyocera, Toku
Paper type Research paper

The authors would like to express their thanks to the following: to Elly Yoshikawa of the
Kyocera Corporation for permission to reproduce material from the Kyocera web site; to
Professors Ralph Adler and Toshiro Hiromoto for access to aspects of their ongoing research into
Kyoceras management system and permission to reproduce quotes therefrom; to Professor
Masafumi Fujino for indicating specific references; to Professor Masayoshi Noguchi for advice Accounting, Auditing
& Accountability Journal
and guidance regarding certain sections of this paper; to the three referees of AAAJ who have Vol. 27 No. 2, 2014
helped to clarify the authors views; and last, but not least, to Professor Lee Parker for his pp. 317-356
q Emerald Group Publishing Limited
encouragement with regard to this paper. The authors alone, however, remain responsible for the 0951-3574
views expressed. DOI 10.1108/AAAJ-10-2013-1495
AAAJ 1. Introduction
27,2 In early 2011 it was announced that, as from 1 April, Japan Airlines (JAL) would be
adopting the amoeba management system (AMS) in an attempt to turn round its ailing
fortunes. Perhaps such an announcement should not have come as too much of a
surprise since the founder of AMS, Kazuo Inamori, had been appointed chairman and
chief executive officer (CEO) of the ailing JAL in February 2010[1]. In a speech made to
318 reporters at the Foreign Correspondents Club of Japan in October 2010, Inamori
stressed that it was important to have a system to allow you to grasp details of
real-time figures and results so that all employees can pitch ideas to improve business
operations (The Japan Times online, 2010). In the view of Inamori, the government
bail-outs of the past had served to de-motivate employees and management, and what
was required was a system which increases a sense of management among employees
and rejuvenates their interest in profitability (Asahi Shimbun, 3 February 2011).
Reflecting on Inamoris three-year tenure at JAL he retired from the board on 31
March 2013 Yoree Koh, correspondent of The Wall Street Journal, noted that,
through the adoption of AMS, Inamori had been able to introduce a cost-conscious
culture at the once profligate national airline (The Wall Street Journal, 2013). The
introduction of AMS, initiated by Inamori at what is now the Kyocera Corporation,
enabled JAL to recover rapidly from bankruptcy in 2010, posting in May 2012 an
annual net profit of 186.6 billion yen for the previous financial year (The Japan Times
online, 2012a). As a result, on 19 September 2012, JAL re-listed its shares on the main
section of the Tokyo Stock Exchange, the first company ever to do so after going
through Japans version of Chapter 11 bankruptcy (The Wall Street Journal, 2013). The
market value of the shares, at nearly 700 billion yen, made it the worlds second biggest
initial public offering in 2012 after that of Facebook Inc. (The Japan Times online,
2012b,c).
In this paper we examine not so much the details of AMS itself (since this has been
examined elsewhere, see Cooper (1994), Sawabe and Ushio (2008), and Adler and
Hiromoto (n.d.)), but rather focus on the historical and philosophical underpinnings of
the system and, in particular, the management accounting system which forms part of
the AMS. In particular we are concerned with the interrelationship between the
management accounting approach adopted and the underlying management
philosophy. While the relationship between philosophy and accounting has been
raised by some authors from time to time, the issue is not a widely discussed one.
Nevertheless some have considered it to be important, and recently Mattessich (2008,
p. 83) has argued that academic accounting is bound to remain an intellectual
fragment unless there is a profound inquiry into the reality that our discipline tries to
represent. The lack of discussion of philosophical aspects of accounting, however,
contrasts with that within management research, where the link between philosophy
and management has been discussed for several decades.
Within the management literature the emphasis has been not so much on the
philosophy of management, although two journals have been developed since 2000 to
publish work in this area[2], but on management (or business) philosophy, that is, the
ideas and principles which lie behind the actions of the person in charge of managing a
business. But what relationship is there, if any, between the management philosophy
pursued and the nature of the management accounting system adopted? Do different
management philosophies result in the adoption of different management accounting
systems? Does the existence of different management philosophies in Western Management,
businesses compared to that in non-Western businesses, result in the use of different accounting and
management accounting systems or, indeed, different approaches to management
accounting? To what extent do religion and culture influence such relationships and philosophy
what problems are faced when a business developed in one geographical context goes
global, either through internal expansion or taking over existing businesses operating
in other countries? 319
Although not entirely ignored by accounting researchers, the issues of religion and
culture have tended to be examined in limited ways. Studies of accounting and religion
have largely focused either on specific religious institutions, such as Jacobs and Walker
(2004) and Quattrone (2004), although Carmona and Ezzamel (2006) have noted that
research in this field is still at an embryonic stage, or the implications of religion,
especially Islam, for the international harmonisation of financial reporting (Hamid et al.,
1993; Karim, 2001). Of a more fundamental nature, Abo (2005) has examined the moral
and religious foundations of double-entry bookkeeping. In the sphere of managerial
control, however, Hofstede (1987, p. 8) remarked that accounting control systems were
likely to vary along cultural lines, a suggestion that in the past couple of decades has
given rise to cross-cultural comparative analyses of management control practices.
However, as Bhimani (2007, pp. 348-49) points out, much of this research has been of
the nomothetic variety, and while cultural differences have been identified as
explaining different practices (MacArthur, 2006), or a lessened impact of specific
practices on management performance in some countries compared to others (Eternadi
et al., 2009), such studies largely ignore the impact of cultural roots and historical
influences and, it may be added, the impact of specific individuals on particular
companies.
Historical and religious factors can undoubtedly influence both national and
corporate cultures and individual management or business philosophies. In this study
we utilise a historical lens to examine the links between the management philosophy
and the managerial and management accounting practices (as influenced by Kazuo
Inamori) adopted by the Kyocera Corporation, a Japanese multi-national business
which expanded initially within Japan and then through overseas expansion. That
individuals can potentially have a profound impact on accounting and society is
suggested by the work of Hoskin and Macve (1986, 1988, 1993), who examined the
significance of the new disciplinary culture of writing, examining and grading
introduced at the West Point Military Academy in the USA by Sylvanus Thayer, who
was appointed superintendent of the institution in 1817. For Hoskin and Macve, this
new form of power-knowledge relationship (human accounting) subsequently
permeated business and society more generally through the actions of West Point
graduates such as Daniel Tyler, George Whistler and Herman Haupt. The impact of
most individuals, however, is more limited, though it can nevertheless be significant
for the accounting practices of their firm or organisation (see, for example, Antonelli
et al., 2008). Such historical studies, however, invariably ignore the importance of
culture and religion.
While it is not our intention to suggest that the impact of Inamori has been (or
indeed will be) of a similar nature to that ascribed to Thayer by Hoskin and Macve, it is
our view that a historical study of the Kyocera Corporation can throw light on the
importance of an individuals management/business philosophy in shaping not only
AAAJ the nature of the accounting approach adopted but also the general corporate culture.
The paper therefore relates, as one of the referees succinctly put it:
27,2
[. . .] how the world view of a particular individual [Kazuo Inamori] shaped the growth of an
industrial empire, its organisational structure, management and accounting practices, how he
came to possess such a world view, how the employees in Japan were willing to buy into it,
and what happened when that world view came into contact with other organisational norms
320 as the empire expanded.
The aim of this paper is therefore to stimulate discussion of the relationship between
management and accounting practice on the one hand, and the extent to which these
are influenced by philosophical aspects. In the context of scholarly debates, we
examine the interrelationship between philosophy, management and accounting
inherent within the managerial approach adopted at Kyocera (the Kyocera approach).
This is done through a careful study of the writings of scholars and Kazuo Inamori and
an analysis of the link between these writings and the management and management
accounting practices at Kyocera. In order to better understand the motivation and
philosophical underpinnings of the Kyocera approach (that is, the AMS, the
management accounting system and the underlying Kyocera philosophy), we examine
historical aspects of the life of Inamori and that of Kyocera. This use of historical
analysis enables us to obtain a fuller understanding of the philosophical underpinnings
of the Kyocera approach and the rationale behind it. In turn, this helps us to throw
some light on the factors which have contributed to the success of AMS at Kyocera,
thereby potentially enabling us to consider whether it can be exported successfully to
other companies, such as JAL.
The study is structured as follows. In section 2 we set out our definitions of
management accounting and management philosophy and explore the nature of the
relationship between them in general terms. This is followed in section 3 by a brief
history of the development of Kyocera. Section 4 focuses on the Kyocera approach,
examining the Kyocera Philosophy and the management and accounting principles,
especially the latter, that derive therefrom. Section 5 of the paper briefly sets out the
main elements of AMS and the associated management accounting system. Section 6
examines the success or otherwise of attempts to implement the Kyocera approach
more widely, while in the concluding section we summarise the fundamental
differences in Kyoceras management accounting system and briefly comment on the
potential for the Kyocera approach to be effectively utilised by JAL and Western firms.

2. Management accounting and management philosophy

There is no generally accepted definition of management accounting. Nevertheless,
most definitions emphasise the importance of the provision of information, whether
they focus on management accounting as a process[3] or as a profession[4]. Some
definitions emphasise management accounting as a body of knowledge (Armstrong,
1995) or a set of techniques or practices loosely coupled to one another and varying
across both time and space (Chapman et al., 2007, p. ix), with some academic
researchers suggesting that the focus of management accounting research today
should be on understanding practices within organisations (see, for example, Scapens,
2006; Otley, 2008). This paper reflects this viewpoint and adopts a broad definition of
management accounting, namely, the use of accounting information for managerial
purposes. Furthermore, it is our belief that management philosophy has an important
influence on the choice of approach to management accounting, and hence the Management,
particular system adopted. accounting and
The importance of management philosophies has long been recognised in
management, but the link to management accounting has rarely been discussed. philosophy
De Bono and Heller (www.thinkingmanagers.com/business-management/
management-philosophy), while recognising that most managers think of themselves
as doers rather than as thinkers have suggested, based on their own experiences 321
and those of others, that managers have to develop their own personal management
philosophy. Moreover, management philosophies must reflect practical
requirements, while using the thinking process to learn from results, such
learning being fed back into a deeper understanding of the management practices
being adopted (de Bono and Heller, www.thinkingmanagers.com/business-
management/management-philosophy). Management accounting, as a practice which
provides information for management purposes, forms an integral part of management
and, as such, with any underlying management philosophy.
As with management accounting, however, there is no generally accepted
definition of the term management philosophy (Wang, 2009). In their review of the
literature between the 1920s and 1960s, Litzinger and Schaefer (1966, p. 337) noted that
the term management philosophy had been used variously to refer to a theory, a
goal, a technique, a way of life with certain implied values, or a public relations
gambit. Furthermore, Litzinger and Schaefer (1966, p. 342) could point to a confusion
among writers on management philosophy stemming from a basic confusion about
the term philosophy itself. Over the last half a century the focus has largely shifted
away from the meaning of the term management philosophy to how management
philosophies are reflected in management practice. For example, management
techniques/approaches developed in the twentieth century, such as just-in-time ( JIT)
and the theory of constraints, have been considered as different management
philosophies (Sale and Inman, 2003), while Adams et al. (2007) have suggested that
traditional management (TM), total quality management (TQM), and the theory of
constraints are management philosophies which exhibit strong perceptual differences
from each other.
Taka (2009) has suggested that the issue of management philosophy can be
approached in seven different ways (see Appendix 1). First, from the perspective of a
concern with fundamental issues of management (approach 1); second, through a focus
on defining the field of study (approaches 2, 3 and 4); and third, with an emphasis on
management thought and practice (approaches 5, 6 and 7). The approach adopted in
this paper follows the third of these approaches encompassing:
[. . .] management philosophy as the thoughts of a manager (as influenced by his/her personal
experiences), his/her beliefs, the systematization of those thoughts and beliefs through the
establishment of a corporate culture, as exemplified by the establishment of a corporate
motto, management rationale, and expressed through the official documents of the
corporation (e.g. corporate social responsibility report), and the implementation of such
thoughts and beliefs in practice.
This approach embraces the idea that the term management philosophy describes a
theory or attitude that acts as a guiding principle for behaviour (one definition of
philosophy provided by OED online), and opens up a number of fields for potential
research, such as the origins of such philosophies, how they differ from one another,
AAAJ and their implications for management accounting. Hence, one focus of research could
27,2 be an examination of the difference between the management philosophies of
individual businessmen, but of possibly greater interest given recent business and
economic history would be to consider a broader focus, such as the difference between
Western and non-Western management philosophies and their impact on management
accounting. The latter, however, can be approached through studies of the former type
322 since one way of better understanding such differences, consistent with the growing
emphasis in modern research in both management and management accounting with
practices and how they have developed and changed, is through historical case studies
of individual businesses, such as Kyocera. Since the company grew up in a Japanese
context, but later expanded into the West, a study of Kyocera can throw important
light on the relationship between management philosophy and management
accounting. Before examining the details of the Kyocera case and, in particular, the
Kyocera Philosophy, and to help place it in a broader perspective, we briefly turn our
attention to the different philosophical contexts that exist in Japan and the West.

2.1 Japanese and Western philosophical approaches

It has often been argued that the Japanese approach to business is guided only by
broadly defined objectives, reflecting a holistic philosophical approach, whereas that of
Western business is based on a more analytical approach which focuses on targets and
measurable objectives (Kustin, 1993, p. 4). Work by Yoshida (1989, 1991) has
emphasised that the different approaches of Japanese and Western businesses are
strongly linked to their different business cultures. In the West, and especially in the
USA, business developed in a context where there was a vast quantity of available
land, large markets, an educated labour force and, in the nineteenth century, a
laissez-faire government (Kustin, 1993, p. 4). This contrasted with Japanese business,
which developed in an environment comprising limited available land, a strong feudal
system, and a religious following of Buddhism and Confucianism which supports the
unit (i.e. family unit) rather than the individual (Kustin, 1993, p. 4).
The essence of holistic philosophy is that the whole is greater than the sum of the
parts (Yoshida, 1989)[5]. In contrast to Western analytic thinking, which seeks to
understand the whole by dividing it into its component parts, Japanese holistic
thinking focuses on the whole rather than on the individual parts. Furthermore, it
rejects the idea that the whole will necessarily be perfect just because each individual
part is perfect (Yoshida, 1989). Yoshidas discussion of Japanese and Western
differences was carried out in the context of an analysis of Demings management
philosophy, i.e. his concept of quality management, which has been seen as a crucial
factor in Japanese business success after second world war. For Yoshida (1989), the
Japanese holistic approach is based around the establishment of a fundamental
company philosophy from which everything else follows, including corporate
objectives, goals and job specifications. On the other hand, in Yoshidas view, the
American analytic mind requires at the outset the establishment of clear-cut
objectives and detailed job specifications.

2.2 The underpinnings of the Kyocera philosophy

The Kyocera Philosophy, i.e. the management philosophy adopted within Kyocera, is a
specific form of Japanese management philosophy. Although attempts have been made
to explain it in terms of Western philosophical approaches such as Aristotelian Management,
phronesis[6] (Sawabe, 2010) or Adam Smiths moral theory (Hiromoto and Hiki, accounting and
2010), these approaches fail to consider the Kyocera Philosophy as a holistic concept. It
is our contention that the Kyocera Philosophy can only be fully understood in the philosophy
context of the Japanese holistic approach. Attempts such as those of Sawabe (2010) and
Hiromoto and Hiki (2010) to explain amoeba management through the use of Western
moral theories fail to acknowledge the importance of classical Chinese texts and 323
Japanese thought in determining Inamoris philosophical approach to running Kyocera
(Inamori et al., 2005; Kawakami, 2010). As we shall see below (section 4), amoeba
management is based on Japanese cultural norms, in particular that of toku ( ),
emphasising the importance of seeing the Kyocera philosophy as a holistic entity,
moreover one that encompasses not only management per se but also management
accounting as an important element of management.
Indeed, seeing management accounting as a key element of management reflects the
holistic approach. The Western view which sees management accounting as a distinct
entity in its own right emphasises the difference in approach between Japan and the
West. In the latter, management and management accounting are separate entities and
can be analysed individually; in the former, although they may be different things, they
are nevertheless inter-locked since they form part of a single system of management.
Kazusa (2010) and Kazusa and Sawabe (2006) have argued that the management
accounting system played an important role in the successful development of Kyocera.
Furthermore, Hiromoto and Hiki (2010) have insisted that within Kyocera the
micro-macro loops of production, money and workers are connected more effectively
than within Toyota. To better understand the role of management accounting in the
development of Kyocera, and its significance as a part of the holistic Kyocera
Philosophy, we focus in the remainder of this paper on the links between the Kyocera
Philosophy and the companys system of management accounting. We start this
exploration by providing in the next section a brief historical outline of the growth and
development of Kyocera.

3. A brief history of Kyocera

The Kyocera Corporation is a Japanese multinational[7] which, at 31 March 2013, had a
capital of 115.7 billion yen and consolidated net sales of 1.28 trillion yen. Today it
operates in a number of fields, including fine ceramics, electronic devices,
photocopying equipment, etc., and comprises 229 companies employing 71,645
workers (http://global.kyocera.com/company/summary/company_profile.html).
However, before 2000, the company was little known outside of Japan, despite the
fact that it had begun to create something of a stir back in its native country more than
20 years earlier[8]. In 1980, for example, Kyoto Ceramics, as the company was
originally known, was noted as being first for its distinctive management method and
creativeness (The Japanese Economic Journal, 1980, p. 4). The distinctive management
method was something known as amoeba management, a system which had been
developed by the companys founder, Kazuo Inamori, from the middle of the 1960s.
In 1958, having been working for Shofu Industries for four years, and following a
disagreement over the companys technological development policy, Inamori left to set
up his own business, assisted by his former manager, Masaji Aoyama, and two of
Aoyamas friends. With borrowed funds, Inamori founded the Kyoto Ceramics Co. Ltd.
AAAJ on 1 April 1959 with an initial capital of 3 million yen. The company produced fine
27,2 ceramics and came to specialise in the production of ceramic packages for electronic
chips. Employing 28 members, the company initially faced a number of difficulties but,
according to Crampton (2001), the fact that it was profitable from its first year meant
that Inamori was able to expand the business by both internal growth and buying up
other businesses in Kyoto facing financial difficulties. Thus, the company expanded
324 during the 1960s, opening an office in Tokyo in April 1960 and adding additional
production plants at Shiga in 1963 and Kagoshima in 1969. By 1968 company
employment exceeded 500 (see Table I).
Expansion was increasingly based on overseas sales, Inamori making his first visit
to the USA in 1962. In 1966 a large order for alumina substrates for integrated circuits
was secured from IBM and, two years later, in August 1968, a sales office was opened
in California. In July 1969 this became the companys American sales company,
Kyocera International Inc., and production facilities were opened in the USA in March
1971. Back in Japan, the company moved its headquarters to Yamashina, Kyoto, in July
1972, opening the Kagoshima Kokubo plant in October of the same year. The
companys expansion led to an increase in capital and its shares becoming quoted on
the Tokyo, Kyoto and Osaka stock exchanges, while American Depository Receipts
were issued in the USA in February 1976 and again in May 1980, the latter issue
coinciding with the companys stock being listed on the New York Stock Exchange
(NYSE).
Further developments at the end of the 1970s and the beginning of the 1980s
resulted, in October 1982, in the formation of the Kyocera Corporation, a merger of
Kyoto Ceramics and four affiliates, including Cybernet Electronics Corporation (a
telecommunications equipment manufacturer in which Kyoto Ceramics had invested
capital in 1979). In the early 1980s Kyocera controlled about 70 per cent of the world
market in ceramic packages for electronic chips, but this market was beginning to
stagnate as plastics began to replace ceramics (The Economist, 9 April 1983, p. 65).
Looking for sources of potential future growth, the company engaged in mergers with
Japanese companies such as the camera manufacturer, Yashica Co. Ltd., in October

Sales Revenue Hourly efficiency Number of Number of

Yeara (m) (m) (yen) employees amoebas

1960b 26 3 36
1961 49 7 56
1962 80 11 87
1963 119 23 105
1964 161 18 160
1965 247 28 185
1966c 298 30 446 223 2
1967d 643 189 499 341 8
1968 1,043 229 690 462 14
1969 1,921 717 1,073 535 17
Table I.
The development of Notes: a Year ending 31 March; b The company was founded on 1 April 1959; c Amoeba system was
Kyoto Ceramics, introduced in manufacturing; d Inamori became CEO of the company as of 23 May 1966
1959/60-1968/69 Sources: Based on Kyocera Corporation (2000a, pp. 63, 401 and 434)
1983, while in June 1984, together with 24 other companies (including Sony and Management,
Mitsubishi), Kyocera established Daini-Denden Kikaku Co. Ltd. (DDI later KDDI) as accounting and
a competitor for Nippon Telegraph and Telephone (NTT) following the deregulation of
the Japanese telecommunications industry[9]. A few months earlier, in April 1984, philosophy
Kyocera had supported the establishment of the Inamori Foundation and the Tokyo
Central Research Laboratory (later Tokyo Yoga office), while a few months later, in
August 1984, it established the Solar Energy Centre (now the Chiba Sakura office) in 325
Sakura, Chiba.
Despite critics warning of disaster, Kyoceras diversification into electronic
equipment, optics and bioceramics, proved successful (The Economist, 21 July 1984,
p. 67) and the second half of the 1980s saw the establishment of various subsidiaries
across the world, namely, Germany (May 1986), America ( January 1987) and Mexico
(September 1987), while two American corporations, Elco and AVX joined the Kyocera
group in August 1989 and January 1990 respectively. By 1990 employment at Kyocera
had reached 12,762 and sales 300.4 billion yen or US$2.4 billion (St James, 1990,
pp. 50-52). The early 1990s saw further developments in North America, while
subsidiaries were established in China (Dongguan Shilong Kyocera Optics Co. Ltd. in
July 1995 and Shanghai Kyocera Electronics Co. Ltd. in December 1995). In 1997,
though sales had more than doubled compared with the beginning of the decade,
reaching 714.77 billion yen (US$5.76 billion), employment had only grown slightly to
13,270 (St James, 1998, pp. 329-32). It was in 1997, aged 65, that Inamori formally
resigned as chairman of both Kyocera and DDI, becoming instead founder and
chairman emeritus of both companies[10].
During the late 1990s and early 2000s the companys progress stalled somewhat
but, by 2005 revenue was almost twice what it had been in the mid-1990s (see Table II).
Kyoceras group sales exceeded 1 trillion yen for the first time in the financial year
ending 31 March 2001 but this did not prevent it having to lay off some of its workforce
in 2001/2002 as a result of the problems of the Japanese economy. Since 2004, although
Kyocera has continued to focus its activities on electronic components and products, it

Year ending Revenue Net income Net profit margin Group

31 March (US$m) (US$m) (%) employees

1995 5,760 500 8.7 29,925

1996 6,048 771 12.8 31,362
1997 5,764 368 6.4 35,511
1998 5,454 354 6.5 37,122
1999 6,007 239 4.0 38,019
2000 7,779 489 6.3 42,309
2001 10,199 1,742 17.1 51,113
2002 7,779 240 3.1 44,235
2003 9,066 349 3.8 49,420
2004 10,969 655 6.0 57,870
2005 11,034 429 3.9 58,559
2006 10,098 596 5.9 61,468 Table II.
The development of
Sources: Hoovers Handbook of World Business (2005 and 2007 editions) and Kyocera Corporation Kyocera,
(2000a, p. 404; 2000b, p. 1) 1994/1995-2005/2006
AAAJ has diversified into the hotel business, medical supplies (Japan Medical Materials
27,2 Corporation) and in April 2006 the company not only established a subsidiary in Korea
but also set up a consultancy arm, KCCS Management Consulting Inc. A Chinese
subsidiary of the consulting arm was established in Shanghai in December 2006.
According to Hiromoto and Hiki (2010), Kazusa (2010), Kazusa and Sawabe (2006)
and Inamori (2006), the success of the company has been built on the Kyocera
326 approach. In the next section we analyse this approach, focusing on the Kyocera
Philosophy and the management and accounting principles which it has spawned.

4. Kyocera philosophy and the management and accounting principles

4.1 Background
When Inamori founded Kyoto Ceramics in 1959 there was no well thought-out
philosophy guiding his approach to management. Furthermore, as a university-trained
chemist, he lacked any formal, or indeed informal, training in either management or
accounting. It was as a result of various events (life experiences), and developments
within both the business and his own views on philosophy that a well-established
approach to management and accounting matters subsequently emerged. Thus it was
that AMS and its associated management accounting system began to take shape
during the 1960s and early 1970s.
Fundamental to this developmental process was a strike which occurred at Kyoto
Ceramics in April 1961. Having set up the business in 1959, Inamoris initial concerns
were focused on three areas: research; satisfying customers needs; and avoiding
bankruptcy. These ends were pursued to the detriment of matters such as personnel
management. The desire to avoid bankruptcy led to pressure on sales people,
production staff, and development personnel to work around the clock to fulfil product
orders before their deadlines (St James, 1998, p. 330). However, this neglect of workers
welfare, as Inamori focused his own energies largely on research, resulted in a
three-day strike by some recently engaged high school graduates. The process of
resolving this dispute made Inamori re-think his approach to managerial issues. In
particular, he recognised that he needed to be more concerned with the well-being of his
workforce and it was this that resulted in the development of a new managerial
rationale, reflecting his developing philosophical approach to management. The
Kyocera web site today presents this rationale as follows:
To provide opportunities for the material and intellectual growth of all our employees, and
through our joint efforts, contribute to the advancement of society and humankind (http://
global.kyocera.com/company/philosophy/index.html).
This rationale is based on Inamoris own philosophical standpoint, which was itself the
result of a three-stage developmental process (Inamori et al., 2005). The first stage was
his early life (pre-working age) where he learnt, from his family and school teachers, to
do the right thing as a human being. The second stage comprised the understanding
which he gained from studying the management/business philosophies of leading
businessmen such as Konosuke Matsushita, founder of Panasonic, and Soichiro Honda,
founder of the Honda Motor Company. Finally, the third stage is represented by the
deeper understandings Inamori gained from reading philosophical texts and Chinese
classics, including texts written by influential writers such as Confucius and Mencius.
Inamori (2007b, p. 110), has written that if merchants have high moral standards and
personal integrity [jin-toku; ], they can do more than gain trust: They can earn the Management,
respect of their customers. I believe that the secret of success is to earn our customers accounting and
respect. Inamori (2007b, p. 110) also explains that being virtuous [toku-sei ;]
means more than offering superior performance on price, quality, and delivery . . . .its philosophy
the ability to make others spontaneously respect us. We cannot manage a great
business unless we learn to acquire this quality. These attitudes are a reflection of one
of the central tenets of Confucius, namely kunshi ( ; a man of toku [ ]). These 327
philosophies and thoughts can be summarised in the word toku, a commonly used
word in Japan and one which is considered to represent one of the highest of all
possible moral and ethical values.
The meaning of toku is to develop ones character by doing good deeds that result in
profit, wealth and fortune. The concept of toku originates in ancient China and its
values have been accepted in Japan, China, Korea, Taiwan, Hong Kong, and Singapore
for several thousand years (Hasegawa, 2009). Toku therefore provides a basis for
Eastern philosophy and management thought. As a Chinese character, (toku)
consists of (go), (open) and (mind) so that the literal meaning of toku is to go
with an open mind. In other words, toku means that if an individual exhibits a fine
character (one with an open mind), and realizes good deeds which generate happiness
and social advancement, that individual will be rewarded with profit, wealth and
fortune. However, it is important to realise that toku is a set of values that considers
happiness and social advancement as priorities, profits being of secondary importance
and an outcome of achieving other goals, not an end in itself. For example, Mr
Nishieda, one of the friends of Aoyama who had lent funds to Inamori to help him
establish the company, asked just one thing from Inamori: Never be a slave to money
(Inamori, 2007a, p. 10). By 1971, when the company was ready to go public and Inamori
was eager to repay him for his investment, Mr Nishieda insisted that it was not
necessary and explained: I did not invest in you to become rich. I did it because of your
philosophy (Inamori, 2007a, p. 10 italics in original). Similarly, when the companys
stock was first listed, Inamori chose a public offering of new stock rather than that held
by existing stockholders, including himself. In other words, Inamori decided against
personally benefiting financially from the stock-listing, all capital raised being used to
develop the company (Inamori, 2007b, p. 58).
Inamori was clearly influenced strongly by the concept of toku, as indicated by the
notes and written memoranda he kept, reflecting on his own early managerial
experiences. These notes and memoranda were subsequently fused together in what
has since become known as the Kyocera Philosophy. This philosophy, developed
during the first half of the 1960s, was initially put together and published, albeit in a
form solely for internal consumption by firm members, in 1967 (Kyocera Corporation,
2000a, pp. 72-73). Numerous versions of this philosophy have been published over the
years for use within the company (there had been 37 by 2000), but while these have
indicated modifications, the fundamental underpinnings of the philosophy have
remained unchanged. Indeed, according to Inamori:
When I built my company, I explained my management philosophy to my employees, and I
did say to the employees that with the change [in] time and culture, there may be changes
needed to modify this philosophy. However, what has happened in fact is that it has remained
the same throughout time (quoted in Taninecz, 1995).
AAAJ In 1989, Inamori was persuaded that this philosophy should be made more widely
27,2 available and it was published for external consumption as Kokoro wo Takameru,
Keiei wo Nobasu. The English translation of the title of this work is Elevate Your Mind
and Expand Your Business but when the work was eventually published in English, in
1995, it was entitled A Passion for Success. The English version was not simply a direct
translation of the Japanese text, but a more structured work which used a different
328 method of presentation of the material and also contained some different keywords
(see section 4.3 below) to those found in the Japanese version. These differences reflect
the influence of Kyoceras merger with the US-based AVX Corporation in 1990.
Following the merger, Inamori presented lectures on the Kyocera Philosophy at AVX,
and it was in the light of discussions between Inamori and the AVX directors that A
Passion for Success emerged. The book represented a fusing together of the material
contained in Kokoro wo Takameru, Keiei wo Nobasu with ideas that emerged from the
discussions with the AVX directors, presenting Inamoris philosophy in a manner that
would suit an American audience. In 1996, A Passion for Success was translated into
Japanese as Seiko eno Jyonetsu.

4.2 The structure of the Kyocera philosophy

There are four key elements to the Kyocera Philosophy, as depicted in Figure 1. At the
core is the corporate motto of Kyocera, Kei-Ten Ai-Jin ( : Respect the divine
and love people)[11]. The phrase Kei-Ten Ai-Jin is attributable not to Inamori but to
Takamori Saigo (1827-1877), the founder of the new Japan under the Meiji Restoration
in 1868. Being born and brought up in Kagoshima, the same town as Saigo, Inamori

Figure 1.
The structure of the
Kyocera philosophy
was taught by his parents and teachers about Saigo, the towns proudest son, and he Management,
learnt this phrase as a child. Just after the founding of Kyoto Ceramics, the first accounting and
president of the company, Otoya Miyaki, presented Inamori with a scroll on which was
depicted the phrase Kei-Ten Ai-Jin, which Inamori had mounted and displayed in the philosophy
companys reception (Inamori, 2007c).
As Figure 1 shows, immediately surrounding the corporate motto is the
management rationale, representing a broader manifestation of the same message. 329
Surrounding the rationale, and giving effect to it and the motto, are principles, which
are further elucidated through the philosophy keywords and reflect the concept of
management based on the bonding of human minds. The Kyocera Philosophy, as it
applies to accounting, is expressed in Figure 2. Here, the key principle, as indicated by
Inamori (2000) is that of seeking essence, which is expressed initially in the 12
management principles and then through the seven accounting principles. There are
two aspects to the principle of seeking essence:
1. the pursuit of the essence of matters should be based on principles and general
rules; and
2. decisions should be made on the basis of what is right as a human being.

As indicated in Figure 2, the accounting principles are to be found nested inside the
management principles, reflecting Inamoris holistic view that accounting is but one
part of management. Furthermore, he goes on to note that accounting represents the
core of management:
I realized that being aware of the true condition of the company was essential for the
long-term development of the corporation ([http://global.kyocera.com/inamori/management/
accounting.html]).
All 12 of the management principles (see Appendix 2 for a full list) can be found to be
linked with one or more of the accounting principles. In section 4.3 below we examine

Figure 2.
The link among principles
AAAJ in more detail certain aspects of the Kyocera Philosophy and principles depicted in
27,2 Figures 1 and 2.

4.3 Philosophy keywords and principles

Fundamental to the education of Kyocera workers as to the companys philosophy, and
its more general popularising in the external works published by Inamori, has been the
330 development of keywords, i.e. a series of short phrases or dictums which attempt to
reflect the essence of the Kyocera philosophy and enable it to be easily understood.
While the use of such phrases or dictums is not something particularly new or
Japanese, western writers on management, such as Casson (1915), Peters and
Waterman (1982) and Deming (1986), having likewise produced similar phrases or
dictums[12], what is distinctive about the Kyocera philosophy is the existence of a
more detailed, c.700 word, explanation of each keyword. Such explanations help
facilitate the determination of the link between the philosophy keywords and principles
and have informed our discussion below.
At the heart of the Kyocera philosophy is the idea that decisions should be taken on
the basis of doing the right thing as a human being. This is put into practice through
the philosophy keywords which link to both the 12 management and seven accounting
principles utilised within the company. While the main links are reasonably clear, the
inter-relationships between them all are extremely complex, do not lend themselves
readily to simple diagrammatic representation, and their explanation would take up far
more space than is available in a single journal article. Hence, our analysis below is
more limited, focusing on the key links, especially those between the philosophy
keywords, the accounting principles and the key management principles to which they
are related. To better understand the background context to these relationships, we
first examine the link between the philosophy keywords and management principles.
To consider such links, we need, first, to establish the philosophy keywords to be
studied. This is no simple task since the precise number of philosophy keywords used
has varied both over time and between Japanese and English language versions of,
ostensibly, the same text. Thus, while Kokoro wo Takameru, Keiei wo Nobasu
contained 106 keywords, A Passion for Success contained only 105, while the current
Kyocera web site records just 78 (see Appendix 3 for full list). The reason for the
smaller number of keywords shown on the web site is not altogether clear: it may
reflect simply those used in Kyocera today, or it may reflect the fact that some
keywords are closely associated with actual business practice and, since they represent
certain elements of Kyoceras core competency, they have been deliberately left off the
web site[13]. To keep our analysis manageable, we focus on those philosophy
keywords presented on the current Kyocera web site, but it needs to be recognised that
several of the current web site keywords do not appear in Inamoris various works, nor
do they seem to have any direct precursors or equivalents.
Turning to the issue of the links between keywords and management principles, the
first of the various works published by Inamori which dealt specifically with this issue
was A Passion for Success (first published in 1995). This work is divided into two main
sections, the first dealing with how to succeed in life and the second with how to
succeed in business. The key elements in relation to the latter are summarised in the
word Passion. Each letter of this word stands for something different: P stands for
profit; A for ambition; one S for sincerity and the other for strength; I is
for innovation; O for optimism; and N for never give up. For the purposes of Management,
this research, we have utilised a modern reprint of the Japanese version of this work accounting and
(Inamori, 2007d) and a modern reprint (Inamori, 2004a) of his earlier Japanese work
Kokoro wo Takameru, Keiei wo Nobasu (originally published in 1989). Utilising the philosophy
explanations provided in these two works, it is possible to illustrate the links between
the majority of the 78 keywords currently displayed on Kyoceras web site and the 12
management principles (see Table III and Figure 3). 331
In order to establish the links between the accounting principles and the philosophy
keywords, a different publication has to be used, Inamori Kazuo no Jitsu-Gaku (Kazuo
Inamoris Pragmatic Studies: Management and Accounting). This work was first
published in 1998, after Inamori had become founder and chairman emeritus of
Kyocera, and while we utilise Inamori (2000), a reprint of this 1998 work, it should be
noted that a number of the modern keywords with no predecessors (nos. 69-73 and
76-77 in Appendix 3) are more directly related to accounting principles than to
management principles and, more specifically, deal with cost issues. The differences
between the current keywords and those given in the earlier published works by
Inamori may reflect the time that has elapsed since Inamori became divorced from
active involvement in the affairs of Kyocera. Furthermore, the addition of the new
accounting-related keywords may reflect a concern within the company to explain
more simply to the workforce and managers the practical meaning of the accounting
principles. Nevertheless, it can be determined that, like each management principle,
each accounting principle can be linked to at least one philosophy keyword, as
indicated in Table IV, and also to one or more of the 12 management principles.
Since both the management principles, accounting principles and the principle of
seeking essence are linked to the keywords, and also interlinked with one another, the
Kyocera philosophy is very complex. While in theory it is possible to build up a single
diagram depicting this complexity, such a diagram would be impossible to read when
reduced to a size that could be accommodated within the confines of the page of an
academic journal. Thus Figure 4 depicts only the links between the philosophy
keywords, the seven accounting principles and the two management principles, 5
(maximise revenues and minimise expenses) and 6 (pricing is management), which,

Management principle Philosophy keywords

1 15, 18, 37, 38, 39, 40, 41, 52, 55, 57, 67, 69, 70, 71, 72,
73, 76, 77
2 5, 7, 8, 11, 20, 21, 32, 68
3 12, 25, 26, 27, 28, 42, 58, 59
4 6, 22, 24, 33, 43, 47, 51, 54
5, 6 2, 3, 4, 31, 63, 64, 65, 66
7, 8 46, 50, 56, 61, 62
9 29, 30, 44, 45, 49
10 10, 23, 35, 36, 53, 74, 75, 78
11 1, 9, 13, 14, 17, 34, 60 Table III.
12 16, 19, 48 Matching the 12
management principles
Sources: Based on the information presented in Appendices 2 and 3 and in Inamori (2004a, 2007d) and philosophy keywords
AAAJ
27,2

332

Figure 3.
Links between philosophy
keywords and 12
management principles

Accounting principle
1. Cash-basis management
2. One-to-one correspondence
3. Muscular management
4. Perfectionism
5. Double-check
6. Profitability improvement
7. Transparent management
Note: The numbers in brackets after each keyword indicates their position in the list given in
Appendix 3
Source: The principles are taken from Inamori (2000); see also http://global.kyocera.com/inamori/
management/accounting.html
Management,
Associated philosophy keywords
accounting and
Wrestle in the centre of the ring (always act on philosophy
challenges immediately, not when close to deadline)
(31)
Adhere to the principle of One-to-one
correspondence (76) 333
Only hold sound assets (66)
Be frugal (70)
Buy only what we need, when we need it (71)
Adhere to perfection (99 per cent is not good enough
in scientific experiments; nor is it in business) (22)
Management based on the bonds of human mind (1)
Always double check (77)
Produce a profit & loss report daily (65)
Elevate our cost consciousness (69)
Transparent management (11)
Insist on playing fair (40)
Separate personal matters from business (41)
Adhere to principle of One-to-one correspondence
(76)
Table IV.
Linking philosophy
keywords and accounting
principles

according to Inamori (2000, pp. 34-38), are those most closely connected with the
accounting principles and the principle of seeking essence. Despite its limitations, since
certain keywords are seen to be linked to both an accounting principle and either the
principle of seeking essence or management principles 5 and 6, Figure 4 emphasises
the holistic nature of the Kyocera Philosophy, as previously indicated in general terms
in Figures 1 and 2.
Having established the links between the accounting principles and other aspects of
the Kyocera philosophy, we now consider the former in more detail, including the
rationale behind them and the historical factors that have influenced them, and draw
comparisons with western approaches to accounting.

4.4 The accounting principles

At the time Kyoto Ceramics was founded, Inamori has claimed that he had no
knowledge of management or accounting. It was in the process of learning to manage
Kyocera during the 1960s that Inamori came to understand that accounting represents
the core of management. To overcome his lack of knowledge of accounting matters,
Inamori was forced to read books on the subject [http://global.kyocera.com/inamori/
management/accounting.html]. Further evidence indicates that it was in 1968, the year
after Akio Saito had been appointed as head of the companys accounting section, that
Inamori visited the library of Stanford University in order to study accounting
(Inamori, 2000, p. 69). Fifty years old at the time of his appointment, Saito had gained
accounting experience with other companies and was very much wedded to traditional
accounting ideas when he joined the firm (Inamori, 2000). Initially, Saito and Inamori
AAAJ
27,2

334

Figure 4.
Links between philosophy
keywords and principles
often disagreed over the accounting approach to be adopted, and it seems to have been Management,
this disagreement which stimulated Inamori to visit Stanford. Over time, Saito began accounting and
to be swayed by Inamoris vision of the essence of accounting and he established a
study group to develop Kyoto Ceramics terms of accounting which were issued philosophy
around 1970 (Hiki, 2007). These terms of accounting, the result of a combination of
Inamoris philosophy and Saitos accounting expertise[14], subsequently became
enshrined in the seven accounting principles depicted in Figure 4. 335
Of the seven principles listed (see also Table IV), at least three of them would appear
largely uncontroversial to Western eyes, emphasising the importance of cash to a
business (principle 1), the need for careful records to be kept (principle 2) and for the
accounting system to be able to provide the necessary checks and balances (principle
5). While all of these may seem obvious to the trained eye, they were not immediately
obvious to Inamori when he started Kyocera. The need to have a system of one-to-one
correspondence flowed from the problem of securing payment from customers for
goods delivered, a result of poor record keeping inside the company (Inamori, 2000). In
the early days of the companys existence, its main customer was a research institute
where researchers often pressurised the company into making deliveries in advance of
the originally stipulated supply date (Inamori, 2000, pp. 76-77). In the attempt to keep
its customer satisfied, deliveries were often made directly from the production section
of the company to the customer well into the night, long after the administrative office
had closed (Inamori, 2000, p. 77). As a result such deliveries often failed to be recorded,
either at the time or subsequently, making it impossible to recover sums owed to the
company (Inamori, 2000, p. 77). To avoid future problems of this nature, in addition to
the one-to-one correspondence principle, Inamori introduced the double-check principle
as part of the accounting system, effected organisationally through the establishment
of a separate materials department, to which all goods manufactured had to be sent
and recorded, before being dispatched to the customer, thus providing a double-check,
by enabling a match to be made between production and sales (Inamori, 2000).
The principle of double-check, however, plays a much more fundamental role than
this within the Kyocera Philosophy. Indeed, it forms a general, over-arching principle
which is linked to the fundamental concept that management must be based on the
bonding of human minds (Inamori, 2000, p. 103). Inamori, however, notes that while
human minds can bond together in a manner which leads to wonderful
achievements, they can also bond in ways which lead to the destruction and
unhappiness of large numbers of people (Inamori, 2000, p. 104). It is the desire to avoid
the latter, and encourage the former, which lies behind the principle of double-check.
Recognising that people have weak minds and can make mistakes, double-check helps
to ensure that individuals do not take the wrong path (Inamori, 2000, p. 104). Thus,
within Kyocera, all processes and expenditure, even those for which Inamori was
ultimately responsible, are subject to double-check as a means of trying to ensure that
only correct decisions are taken. In particular, it is considered that double-check can
help to prevent fraudulent or criminal activity on the part of particular individuals
(Inamori, 2000).
Making sure that funds were not lost from the business was vital in ensuring that
the company remained solvent. Inamoris concern with avoiding bankruptcy in the
early years reflected one of the basic business tenets of his father, namely, that debt
should always be avoided (Inamori, 2004b). In starting up Kyoto Ceramics, however,
AAAJ Inamori had been forced to borrow money, and during the early years he was
27,2 concerned not only that the company should not get further into debt, but that the
loans should be paid off as soon as possible. Thus, Inamori racked his brains day after
day over how to run operations so the company would not go bankrupt (quoted in
Hyde, 2008). This concern found its manifestation in the principle of cash-basis
management; Kyoceras accounting system, in conformity with keyword 71 (Buy only
336 what we need when we need it), is therefore cash-based rather than founded on the
accruals principle. Thus, all purchases by an amoeba within an accounting period are
charged to that period, irrespective of whether or not the material purchased is utilised
within that period[15]. In this way it was considered that the company could avoid
debt[16].
In discussing the cash-basis management principle, Inamori draws a parallel with
the Sumo wrestler. For Inamori, the Sumo wrestler should fight hardest when he is in
the centre of the ring, rather than wait to do so until he is at the edge, about to be
thrown out (Inamori, 2000, pp. 58-59). From a business point-of-view, challenges must
be faced immediately they arise, rather than waiting until a deadline is looming
(Inamori, 2000). From the accounting perspective, Inamori argues that a company
should maintain large reserves of cash, since this gives the directors the freedom to
make and act on investment decisions as the opportunities arise without having to
make recourse to outside sources of finance, which may slow down the
decision-making process and possibly lead to lost opportunities (Inamori, 2000)[17].
The third principle which does not necessarily seem odd to Western eyes is that of
one-to-one correspondence. For Inamori, this principle needs to be followed strictly, not
just as an accounting discipline, but also as a way by which to regulate the enterprise
and the people who work within it (Inamori, 2000, p. 65). Without this principle the
information generated from the accounting system may be incorrect and transparent
management would, as a consequence, be impossible and/or misleading (Inamori, 2000,
p. 65). One-to-one correspondence concerns the morality of management and goes to
the heart of achieving fairness in business since it helps ensure that individuals do the
right thing as a human being[18].
The remaining four principles do not so much seem to be principles of accounting
per se, but rather to be concerned either with the end to which the accounting system is
put or how it is supposed to help achieve those ends. For Inamori, management must
be transparent (principle 7), and it is one of the functions of the accounting system to
provide the information which ensures that this is the case (Inamori, 2000).
Transparent management is management free from any unfairness, either internal or
external, and this principle arose from Inamoris growing awareness that, in
discussions with employees, as CEO, he had more information at his disposal than they
did (Inamori, 2000). Aware that, for a small business to survive, it had to be built on
trust between management and employees, Inamori determined that information
relating to the companys financial position should be shared with them in order to
build up such trust (Inamori, 2000).
The sharing of information means that employees are able to monitor the
performance of top managers, since the accounting information reveals if they have
made the correct decisions or not. Furthermore, knowing that every employee would
know if they did something wrong, every manager would have an incentive to ensure
that they made the correct decision on all occasions. As well as achieving transparent
management, the accounting system, by recording everything that happens and Management,
making it available to all, can help to ensure the attainment of perfectionism (principle accounting and
4). The existence of this principle probably owes as much to lessons learnt by Inamori
prior to forming Kyoto Ceramics than during the companys early years. While philosophy
conducting research work at Shofu Industries, Inamori learnt that unless absolute care
was taken during the conduct of scientific experiments they could result in failure,
although the reason for the failure would not be clear, and hence the experiments 337
would have proved nothing (Inamori, 2000). Similarly, in production, care must be
taken at all times, otherwise product quality could be affected. Hence, for Inamori
(2000, p. 100), anything less than 100 per cent perfection is not acceptable!
Principle 3, that of muscular management, is really concerned with the way in
which accounting can help to improve profitability through ensuring that the business
has a lean and athletic body with excellent blood circulation[19]. It is the function of
management, with the assistance of the accounting system, to ensure that the company
remains lean and fit, thereby generating profit. However, as Principle 6 makes clear,
the goal is not profit per se, but rather profitability improvement. Profits, and the
improvement of profitability are, of course, important to all businesses, but it is
important to realise that Inamoris concept of profit is not the conventional one to be
found in Western texts since, for him, profit includes wage costs (see section 5.2 below).
In this way, all members of the business have an incentive to help improve
profitability, since ultimately their welfare will be raised, while the companys
corporate activities help contribute to the advancement of society. The mechanism
(practice) within Kyocera which helps to achieve profitability improvement is amoeba
management and the associated management accounting system. These are examined
in the next section of the paper.

5. Putting the principles into practice: AMS and management accounting

As we have already noted, the accounting principles examined in the previous section
are closely linked to two of the key management principles. Moreover, accounting
principle 6 is closely related to the concept of amoeba management. In this section we
first examine the nature of the AMS and then, in the second sub-section, we turn our
attention to the management accounting system used in conjunction with AMS.

5.1 The amoeba management system (AMS)

Amoeba management[20] was introduced at Kyoto Ceramics subsequent to the strike
in April 1961, the first two amoebas becoming operative in 1965 (Kyocera Corporation,
2000a, p. 63). Wishing to develop greater trust within the business, and to emphasise
transparent management, Inamori introduced a new type of egalitarian or flat
management structure within the company. Central to this new structure were
amoebas, individual units which at any time could change shape, size, content or
even break into smaller units, and the whole system is described as amoeba
management. Inamori has stated that the reason why he established amoebas was so
that he could share the joys and sorrows of work, as well as the heavy responsibilities
of management (taken from his book, Amoeba Management (http://global.kyocera.
com/inamori/management/amoeba)). He has also indicated that he considers amoeba
leaders to be business partners; since everybody within an amoeba takes an active
AAAJ role, both in the workplace and in relation to management, amoeba management
27,2 represents management by all.
Amoeba management took several years to put into effect and has been constantly
evolving. A report on Business Wire at 0932GMT on 26 April 2007, for example,
reported that a reinforcement of Kyoceras unique AMS had enabled the company to
raise its profits during the year ending 31 March 2007 (Business Wire, 2007). Since its
338 introduction in the 1960s, AMS has become integral to Kyoceras way of working. The
lack of hierarchy represented by AMS is particularly pronounced when compared to
the strict bureaucratic pyramids that govern most traditional Japanese companies,
differentiating Kyocera from other Japanese firms. AMS, however, provides Kyocera
with great flexibility since, being small, amoebas represent fast-responding,
customer-focused, entrepreneurially-oriented business units.
Although separate, and operating as independent companies, the amoebas share a
united purpose, i.e. the parent organizations goals and objectives (Adler and
Hiromoto, n.d., p. 1). Each amoeba is required to act in coordinated independence with
every other amoeba. The goal is to empower each amoeba to the point that each
resembles an independent company, having its own internal and external customers,
suppliers, and markets, and with each seeking to manage its own profitability. As
Adler and Hiromoto (2012, p. 84) have put it:
The use of the word amoeba is meant to capture the concept of an entity at its smallest,
most elemental level, as well as to describe its ability to multiply and change shape in
response to the environment[1]. [Inamori, 1999: 57]. In other words, amoeba management is
intended to offer a spontaneous, homeostatic response to a business world characterized by
rapid, dynamic change.
Inamori (2006) cites an amoebas ability to adapt quickly to change, particularly as
demanded by communications and electronics markets, as one of its advantages.
Adler and Hiromoto (2010, pp. 3-4) point out that:
Amoebas typically consist of 5-50 employees. Each amoeba is accountable for a meaningful
organizational activity, an activity that is meant to mirror what currently exists (or could
exist) in the outside, competitive environment. The amoeba manager and his/her employees
are encouraged to act like the owner of a small, independent company. Accordingly, the
manager is accountable for a wide range of activities, including the regular ongoing daily
activities of purchasing raw materials and hiring and scheduling labor, as well as the more
strategic activities of new product and new market development. Ultimately, the amoeba
manager is meant to be accountable for managing his/her units profitability, and in the
process becomes not just a valued and respected managerial decision maker but part of a set
of de facto business partners.
For Inamori, the amoeba philosophy, despite its entrepreneurial directive, does not lead
to over-individualism. I do not believe that any such danger exists in properly
managed amoebas. The reason is that an amoebas performance is not directly linked
to salaries paid to the employees (quoted in Taninecz, 1995). Nevertheless:
Reliance on a myriad of small, loosely coupled amoebas creates a critical management
challenge: how to ensure organization-wide harmony and coordination. For without this
harmony and coordination, amoebas could undermine other amoebas or, ultimately, the
entire organizations performance (Inamori, 2007: 79). Accordingly, as Hiromoto (2005) points
out, amoeba management features interactively cycling micro-macro loops (MMLs) of
 information flows between the organization as a whole and its individual amoebas. In Management,
particular, as Hiromoto (2007: 98-102) notes, the information flows focus on disseminating
and receiving information related to two main factors: 1. organizational values and accounting and
management philosophy; and 2. organization-wide and amoeba-level performance (Adler and philosophy
Hiromoto, n.d., p. 2).
While the former is given effect to via the issuing of a copy of the Kyocera Philosophy
to all employees, the latter is effected through the management accounting system. 339
5.2 Kyoceras management accounting system
According to Inamori (2006, p. 4):
From the time that Kyocera was founded, I felt that the long-term development of the
company required an infallible management philosophy shared by all employees, as well as a
management accounting system that allowed for accurate and timely awareness of the
realities of operations in every area of the organisation (see also http://global.kyocera.com/
inamori/management/amoeba).
According to Sawabe and Ushio (2008), the basis of Kyoceras management accounting
system is an emphasis on the importance of amoeba units as micro-profit centres
(MPCs see Cooper, 1995). For Cooper, these MPCs are smaller than the profit centres
found in more traditional business corporations, and this provides Kyocera with
certain benefits, not least greater flexibility to respond to its environment while
simultaneously reducing the growth of organisational bureaucracy (Sawabe and
Ushio, 2008, p. 16). By emphasising amoebas as profit centres rather than cost centres,
although the aim is to reduce costs, the focus is placed on positive rather than negative
strategies. The leader of each amoeba is responsible for the performance of the unit,
which is measured through the concept of Workers profit (WP), or total value added,
and Hourly workers profit (HWP) or hourly efficiency (see Appendix 4). In
calculating WP and HWP, however, labour expenditure is included not as a cost but as
part of profit: WP profit workers wages 2 capital interest[21]. The inclusion of
workers wages in WP reflects a key element of Inamoris philosophy, namely, that
everything is done in the interests of society as a whole. Thus higher expenditure on
labour is not seen, per se, as being something bad and which has to be reduced, but as
something good and to be maximised since it represents a return to all of those in the
amoeba. However, higher wage costs must be offset by higher efficiency and this is
monitored through HWP, which is determined simply by dividing WP by the total
number of labour hours worked by the members of the amoeba.
HWP represents the value added per hour and is computed and summarised daily,
these daily summaries being announced to all employees (Inamori, 2006; Sawabe and
Ushio, 2008, p. 36). Each amoeba has a target established within a yearly plan which is
then broken down into monthly plans. Progress towards the targets stated in the
monthly plan is monitored daily, while those in the yearly plan are monitored monthly.
Amoebas are divided as between manufacturing and sales, but since the former are
seen as being the source of all profits, the sales amoebas are designed to serve the
manufacturing ones, receiving commission from the manufacturing units in
recognition of their support (Sawabe and Ushio, 2008, p. 36). For a manufacturing
amoeba, the monthly plan evaluation mainly look (sic.) at total production, production
per labour hour and value added per labour hour (Sawabe and Ushio, 2008, p. 13
citing Cooper, 1994, pp. 7-8). Responsibility for achieving targets is placed squarely on
AAAJ the shoulders of the leader of each amoeba. According to Miya (2003), MPCs are
27,2 considered to enhance the motivation of the leaders, who are under pressure to reduce
costs. Each leader, however, is treated as a feudal lord and expected to manage his or
her unit in his or her own way (Sawabe and Ushio, 2008, p. 18). Amoebas are meant to
be autonomous and are kept small, typically between 3 and 50 members (Hamada and
Monden, 1989, p. 199), so that the leader can supervise to an incredible level of detail.
340 Each leader of a unit [i.e. amoeba] is expected to improve his or her level of
management abilities. As a manager, each leader has discretion over pricing their
units products for both internal and external transactions (Sawabe and Ushio, 2008,
p. 34). Amoebas have the choice of whether they deal with other amoebas within
Kyocera, as either suppliers or customers, or with external firms. Internal transfer
prices appear to be determined through a process of bargaining which reflects market
prices. Hamada and Monden (1989, p. 201) have described the competition between
amoebas as being keen.
The overall aim of the management accounting system, in addition to generating
profits, is to satisfy quality needs and to instil in each employee the idea of cost
consciousness. The latter aim is achieved by all members of an amoeba being involved
in decision-making within the amoeba, whereas the former is achieved through each
amoeba being able to compete with other amoebas, and the freedom afforded to an
amoeba in determining its customers and suppliers. This helps to ensure that the
quality of the product produced by an amoeba is maintained at a high level, otherwise
other amoebas will stop purchasing from it and its performance, as measured through
the management accounting system, will be adversely affected.

6. Applicability of AMS to other companies

6.1 AMS and its use within Kyocera
Hiki (2007) has claimed that, since the Kyocera Group came into being in the early
1980s, all Japanese subsidiaries of the company have adopted AMS or some variant
thereof. Given that the system is based on the concept of toku, which has a long
tradition in Japan and the Far East, the ability to make use of it within such
environments is not particularly surprising. However, it is clear that the different
cultures existing within some companies taken over by Kyocera have led to variations
on the standard Kyocera AMS. Thus, Hamada and Monden (1989, p. 209) noted that, at
Kyoceras Okaya factory, formerly owned by Yashica, the management system was a
hybrid of amoeba management and Toyotas JIT system, making it remarkably
different from Kyoceras original amoeba management system. It is not clear whether
this was simply a transitional arrangement or a compromise outcome, but local
circumstances within Japan do appear to have led to modifications and/or variations on
the Kyocera approach.
When Kyocera merged with Cybernet, a Japanese manufacturer of citizens-band
radios and audio equipment, aspects of the existing corporate culture resulted in
conflict with the labour unions, hampering the smooth transition Inamori sought (St
James, 1998, p. 330). In discussing such negative reactions, Inamori has argued that:
The amoeba system is somewhat unorthodox, or runs counter to the orthodox concept of
accounting, so in order to introduce it we had to make changes to accounting. People who are
used to traditional [accounting methods] did not like the changes. So there was opposition
from that aspect. But as far as the basic concept, which is to provide small units within a
 business to have the authority, or autonomy, for maintaining financial management, that Management,
concept itself has not been opposed by people. It was more because of opposition to changes
than opposition to concept (quoted in Taninecz, 1995). accounting and
Despite the adoption of AMS or a variant thereof throughout its Japanese subsidiaries,
philosophy
Hiki (2007, p. 298) has suggested four reasons for the lack of effective operation of AMS
within certain parts of the Kyocera group:
(1) The person in control of the accounting within a subsidiary does not agree with
341
the Kyocera method of cost accounting (this is the case in some US subsidiaries
where the preference is for standard cost accounting).
(2) Lack of support from top management for AMS.
(3) Disagreements over the nature and mechanism of negotiations between
manufacturing and sales amoebas.
(4) The nature of employment contracts militates against the use of AMS.

Outside of Japan, such issues can be exacerbated not only by existing company
cultures but also national cultures, though such negative influences can potentially be
overcome. Takeovers of US corporations in the late 1980s and early 1990s met with
differing responses from local management and employees. At the Elco Corporation,
acquired by Kyocera for $250 million in 1989, most of its senior management left
following disagreements which developed between them and Inamori (St James, 1998,
p. 331). When AVX was acquired in 1990, however, things went much more smoothly,
AVXs existing executive directors buying into the Kyocera approach much more
readily, though no doubt assisted by the lectures they received on the Kyocera
philosophy from Inamori (Inamori, 2007d). On switching to the Kyocera approach
AVXs performance improved, sales growing three-fold and profits six-fold over the
first six years following the merger, enabling the company to be re-listed on the NYSE
(PHP Institute, 2007).
Elsewhere, existing employment contracts and worker incentive systems have
created difficulties for the wholesale introduction of the Kyocera approach. In general
terms, Inamori is against the use of direct payment schemes for incentivising the
workforce, believing that while incentives can work well in good times, they can badly
affect motivation in less good times (Inamori, 2006, pp. 89-91). Thus, Kyocera generally
favours indirect over direct incentive schemes, based around a system of meritocracy.
Since the emphasis of the Kyocera philosophy is on the overall contribution of the
individual, and this is something that can only be measured over the medium to long
term, workers achieve promotion, and hence higher individual rewards, on the basis of
their medium to long term contribution, not simply their most recent performance. In
Brazil, however, the different work culture there necessitated the use of a more direct
incentive system to motivate workers to improve performance (Hiki, 2007, p. 262).
Thus while AMS and the management accounting system are employed in Kyoceras
Brazilian subsidiary, pay there is directly related to amoeba performance.
It is not difficult to understand why, potentially, there should be more problems for
Kyocera in getting its approach adopted by overseas subsidiaries. While the tradition
of toku is a familiar one throughout the Far East, it is not familiar in the West. Thus,
one might expect that modifications to the Kyocera approach would be necessary,
although the groups US arm has utilised AMS for 20-30 years. However, at Kyocera
AAAJ Solar and Kyocera Mexico, Hiki (2007) has noted that operationalising AMS proved
27,2 problematic and the system has been less than fully effective.

6.2 Use of AMS outside of Kyocera

Given that AMS and the associated management accounting system have not been
342 fully implemented throughout the whole of the Kyocera group in a fully effective
manner, a question arises as to whether or not the Kyocera approach can be transferred
to other companies outside of the Kyocera group and, in particular, ones that do not
share the Kyocera Philosophy.
Miya (2003) provides evidence that the introduction of AMS outside Kyocera has
been successful in improving performance (such as at the Systec Corporation from July
1994). However, AMS has not always been implemented in a wholesale fashion nor has
its introduction always involved the wholesale adoption of the Kyocera approach.
Thus, the Disco Corporation adopted Kyoceras management accounting system but
did not adopt other aspects of the Kyocera approach though, in the view of Miya (2003),
quality control circles, as used by the company, represent an approach similar to that
of AMS. Such examples indicate that the process of adopting the Kyocera approach can
be, and often has been, carried out in a piecemeal fashion. The introduction of AMS or
Kyoceras management accounting system, therefore, need not form part of a wholesale
adoption of the Kyocera approach, but rather simply the adoption of those parts of the
system which it was considered could be beneficial. This mirrors the introduction of
approaches such as that of scientific management, where history shows that piecemeal
adaptations, i.e. the implementation of specific tools and techniques, rather than
wholesale adoptions, seem to have been the order of the day (see, for example, Nelson,
1992).
Nevertheless, there has clearly been a demand from other firms to be able to use
AMS and in 2005 Kyocera Communication Systems Co. was set up to develop
enterprise resource planning software for use by companies planning to adopt AMS
(Asia Pulse, 10 March 2005). The new software made it possible for employees in offices
and plants to see the profitability of their own work and how the results for each
amoeba contributed to division performance. The new software was installed in such a
way that company members, including ordinary employees, management and
directors at sales offices, branches or plants, could access it on a personal computer via
the internet. At the time of its initial development, and in its minimum configuration,
introducing the software cost 50 million yen (US$480,000) for a company with about 50
employees, a cost which included software, consulting services and server and other
equipment. Kyocera Communication Systems anticipated having 15 companies
introduce the software during the financial year 2005 and sales of 1 billion yen (US$9.6
million). In April 2006 a subsidiary, KCCS Management Consulting, was established to
act as consultants in relation to the software (www.kccs.co.jp/e/company/index.html),
Kyoceras current web site claiming that there are now more than 300 outside
companies [which] have adopted the Amoeba Management System on the advice of
this subsidiary (http://global.kyocera.com/inamori/management/amoeba/index.html).
However, whether they have all embraced the Kyocera approach in its entirety,
including the Kyocera Philosophy, is another matter.
7. Putting Kyoceras management accounting system into context: some Management,
concluding thoughts accounting and
Like all firms, Kyoceras focus has been on fundamental business issues such as
survival, product quality, satisfying customers and making profits, all of which are philosophy
undoubtedly inter-linked. While Kyocera is no different in these respects, in several
ways, as we have seen, it is fundamentally different from other firms, even within the
Japanese context. One major difference is the Kyocera approach, in which the Kyocera 343
philosophy is given effect through AMS and the management accounting system. The
latter presents a different approach to that adopted in other Japanese companies, most
notably through the inclusion of workers wages within the concept of company profit.
This encourages a positive view of increasing labour costs (since it represents a higher
return to labour as a whole) rather than negatively as a drain on (conventional Western
measures of) profit, reflecting a concern within the Kyocera philosophy that the
emphasis should be society as a whole rather than the individual.
A second difference is the openness and transparency that exists within Kyocera
concerning performance data. After the Second World War, Japan was characterised
by increased levels of socialism and unionist activity, and the basic response of most
CEOs to this phenomenon was, like that of their counterparts in the West, to keep
secret, from competitors and workers, as much information about their company as
possible (Inamori, 2006, p. 30). The Kyocera approach, however, runs counter to this
mentality: Inamori feels that everybody should have the same information as the CEO,
making them therefore de facto CEOs. Sharing information, through making generally
available to all employees key accounting data, most particularly the monthly
accounting reports which reveal each amoebas net production, value added, and
hourly efficiency, enables management by all and facilitates transparent management.
In this way, it is similar to open-book management (OBM) developed in the USA by
Jack Stack of Springfield ReManufacturing in 1983[22]. As Davis (1997, p. 7) notes:
OBM literally opens the books to employees and discloses a companys financial records,
expenses, and sources of profit. By sharing detailed operating information and educating
employees about how to use it, management provides its workers with the opportunity to
contribute to the success of the enterprise. In return, companies practicing OBM give
employees a stake in the business, through profit sharing plans or some form of stock
ownership.
In one important respect, however, OBM differs from the Kyocera approach, namely
that there is no explicit mention of the need, nor is there any attempt made, to educate
workers as to the nature and importance of the management philosophy underlying the
approach (see Kyocera Corporation, 2011).
A third difference identified by Hamada and Monden (1989, pp. 202-03) is that
whereas other Japanese firms focused on performance as measured by profit, output,
cost or ROI, at Kyocera performance was monitored through the concept of value
added. Furthermore, as Hamada and Monden pointed out, Kyoceras system helps to
stimulate competition between amoebas, indicates when existing ones should be
divided or disbanded and new ones created, and also helps to determine if the amoeba
system is functioning effectively. Two further differences are the emphasis within the
costing system on accounting on a cash rather than an accruals basis, and the practice
of conducting, subject to strict rules, all cost accounting within the amoebas
themselves, reflecting Inamoris view that amoebas should be self-governing.
AAAJ It is clear, therefore, that the Kyocera approach generates certain fundamental
27,2 differences in the firms management accounting system from those found in other
Japanese firms, despite the fact that the underpinning Kyocera Philosophy is based on
the concept of toku, and hence clearly located within widely accepted Far Eastern
thought. While this might suggest that the Kyocera approach is likely to achieve most
success in the Far East, not only in Japan but especially in Taiwan and China, where
344 there is a shared, common philosophical approach, it nevertheless needs to be
recognised that when the Far East was subjected to Western pressures from the middle
of the nineteenth century, including in the area of accounting, the different
socio-cultural frameworks in China and Japan led to different outcomes (Auyeung,
2002). Hence it cannot be assumed that attempts to introduce the Kyocera approach in
other Far Eastern, including Japanese, businesses will be automatically successful,
though success might, prima facie, appear more likely among such businesses than in
the different cultural environment of Western businesses. In our view, success is less
likely if such attempts are done in a piecemeal rather than a holistic manner,
i.e. adopting some parts of the Kyocera approach, e.g. AMS, but not others. At Actec, a
company outside of the Kyocera group, for example, Miya (2010) notes that, initially,
the use of AMS without adopting the Kyocera Philosophy had led, by the fourth year of
implementation, to sectionalism among amoebas. In the ninth year of utilising AMS,
however, Actec adopted the Kyocera Philosophy with an emphasis on encouraging
lively communications among amoebas and employers. This resulted in a change of
focus away from each amoeba to the company as a whole, and a move from
sub-optimal to optimal outcomes for the business.
While Adler and Hiromoto (n.d., p. 8) may be correct in suggesting that AMS may
be relevant to many organizations operating across many different settings, AMS is
only one component part of the Kyocera approach. However, because the latter is a
holistic concept, the benefits that result from it are greater than those which derive
from each part individually. While it may be difficult, if not impossible, to quantify the
contribution of the Kyocera approach to the growth and development of the Kyocera
Corporation over the last 50 years, it is impossible to deny the important role it has
played in this process. The role of Inamori, his management philosophy and the culture
that it has spawned within the business has been fundamental to the companys
development. By the criteria of Schein (1999), Kyoceras success reflects a good or
right corporate culture, moreover one that was established by Inamori, the key
management figure, and has remained embedded within the business through the
philosophy keywords and the management and accounting principles, despite his
retirement from day-to-day involvement in the companys affairs 15 years ago.
Since, at Kyocera, AMS and the management accounting system are part of a single,
holistic approach to the management of the business, any attempt to introduce
elements of this approach in a piecemeal fashion will result in lower levels of success.
Thus, companies which adopt AMS but do not adopt the whole Kyocera approach may
realise gains, but not to the extent that would be possible if they embraced the whole
Kyocera approach. This explains why, in addition to adopting AMS at JAL, the
company has also established a JAL philosophy, which is a variation of the Kyocera
philosophy. Contained within a 125-page booklet, the JAL philosophy is credited with
having changed the mindset of the companys 32,000 employees, especially with regard
to better serving the companys customers (The Wall Street Journal, 2013). While the
initial adoption of each plane as an amoeba helped restore profitability during the first Management,
two years, in late 2012 JAL announced that amoeba management was to be extended to accounting and
eight JAL group companies, including ground service and the servicing of aircraft (The
Nikkei, 2012). This development reflected the fact that to obtain long-lived gains, philosophy
especially in the face of increased competition from newly-formed low-cost carriers in
Japan (The Japan Times online, 2012a), JAL needed to implement the new management
philosophy and AMS throughout the business as a whole, as at Kyocera. 345
Kyoceras growth and development have been grounded in a holistic approach to
management, one in which the management accounting system is embedded within a
holistic management philosophy and the corporate culture which emanates therefrom.
It is clear that Inamori was able to do what he did, both at Kyocera and JAL, because he
was able to harness latent cultural beliefs in his managerial approach. This suggests
that management accounting systems which are seen as separate from or, in a
reductionist manner, as merely a divisible part of management, may perform less well
than those which are fully embedded within the management philosophy and culture,
but this is a subject which clearly needs much further research, not least through case
studies of other companies, in both the West and the Far East.

Notes
1. Inamori was a director and chairman of JAL between February 2010 and March 2013,
becoming chairman emeritus in April 2013 (http://global.kyocera.com/inamori/profile/index.
html).
2. Philosophy of Management, an international refereed journal, was founded in 2001, while
Philosophy of Business, an e-journal, was launched in November 2003.
3. CIMA defines management accounting as the combination of accounting, finance and
management with the leading edge techniques needed to drive successful businesses
(www.cimaglobal.com/About-us/What-is-management-accounting/).
4. The Institute of Management Accountants defines management accounting as a profession
that involves partnering in management decision-making, devising planning and
performance management systems, and providing expertise in financial reporting and
control to assist management in the formulation and implementation of an organizations
strategy (http://www.imanet.org/mgi/Management_Accounting.aspx).
5. Holism is the idea that natural systems should be viewed as a whole rather than as a
collection of their parts since the parts only have a function in the context of the system as a
whole (e.g. blood only has a function within a living body). Hence the functioning of the
system cannot be seen, in reductionist terms, merely through an understanding of the
component parts. In the realm of science this approach has led to the development of systems
thinking and complexity theory.
6. Phronesis originally referred to wisdom or intelligence but is generally today taken to mean
practical wisdom or prudence.
7. In large part, this section is based on the English-language pages of the companys own web
site http://global.kyocera.com/company/summary/history/until1979.html - supplemented
with material from other sources.
8. In the early 1990s, English language display adverts for Kyocera described it as Japans
hottest high tech company, a multinational giant making anything from cameras to
electronic chips, but recognised that the Kyocera name has remained virtually unknown
outside Japan (see, for example, The Economist, 22 June 1991, p. 38). Despite continued
AAAJ rapid growth in the 1990s, towards the end of the decade Kyocera could still be described as
largely an unknown entity (St James, 1998, p. 331).
27,2
9. When DDI went public in 1993 it was the number two telephone company in Japan and had
sales of approximately US $3m. At that time Kyocera owned 25 per cent of the company.
10. On his retirement Inamori entered the Buddhist priesthood.
11. Kei-Ten means to respect the divine, i.e. doing the right thing as a human being, while Ai-Jin
346 means to love people, i.e. living with an altruistic mind (Inamori, 2007c).
12. We are grateful to one of the referees for pointing this fact out to us.
13. It is also worth noting that, of these 78, the web site only provides links to more detailed
explanations for some 14 keywords.
14. The involvement of two individuals in effecting major changes in the accounting system of a
company is not unusual. It seems to be the case that it is necessary for there to be both a key
enabler (or facilitator), often the owner or CEO, and an implementer, someone with the
requisite accounting knowledge to introduce the change and help make it stick.
15. Although the cash basis approach is utilised for most items purchased, following the merger
with Yashica in 1983 and the move into product markets other than those based around
ceramics, some slippage of this rule was allowed to occur, with some items capable of being
charged on the accruals basis, but only if specifically sanctioned by top management (Hiki,
2007).
16. Kyocera has always maintained a low debt ratio. At the end of 2006, for example, it was a
mere 2.6 per cent (Hoovers Handbook, 2007, p. 192).
17. In the early 1980s, Kyocera had a cash reserve of 150 billion yen. Because of this, it was able
to decide to invest 100 billion yen in the formation of DDI without the need to secure loans or
finance from outside the company (Inamori, 2004b).
18. Inamori (2000) attributes accounting scandals in the 1990s to the fact that the principle of
one-to-one correspondence was not adhered to in the respective concerns.
19. In 1933, Deuwez published a work in French which attempted to provide an explanation of
basic accounting concepts by analogy with the circulation of blood through the human body
(see Catalo and Azema-Girlando, 2009).
20. The last three paragraphs of this section draw very heavily on Adler and Hiromoto (n.d.,
2010, 2012).
21. Amoebas are charged interest on the value of the capital assets assigned to them at the rate
of 6 per cent (Sawabe and Ushio, 2008, p. 36).
22. We are grateful to one of the anonymous referees for pointing this out to us.

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Appendix 1
The seven approaches to management philosophy:
(1) As an attitude towards research on management, through asking fundamental questions
about management and throwing some light on a new phase of management.
(2) As a study of desirable values and codes of management conduct.
(3) As a study of how to put desirable values and codes of management conduct into
practice.
(4) As a study of the design of social evaluation systems for ethical corporations.
(5) A managers beliefs about management and thoughts and ideas gained through personal
experience.
(6) The systematization of a managers thoughts and ideas and their influence on corporate
culture, through, for example, the establishment of a corporate motto, management
rationale, and the official documents produced by the corporation, e.g. corporate social
responsibility report.
(7) The practical implementation of management thoughts and ideas, e.g. the principles of
Total Quality Control, kanban (just-in-time parts delivery) system, cross functional team,
amoeba management, etc.

Source: based on Taka (2009) - modified and translated into English by the authors.

Appendix 2
The 12 management principles
(1) Clearly state the purpose and mission of your business set high objectives that are
noble, just and fair.
(2) Set specific goals once targets are set, share them with all employees.
(3) Keep a passionate desire in your heart your desire must be strong and persistent to
penetrate into your subconscious mind.
(4) Strive harder than anyone else work steadily and diligently, one step at a time, never
relenting in tedious tasks.
AAAJ (5) Maximize revenues and minimize expenses measure your inflow and control your
outflow; do not chase profit, but let it follow your effort.
27,2 (6) Pricing is management pricing is top managements responsibility: to find that one
point where customers are happy and the company is most profitable.
(7) Success is determined by willpower business management requires a persistent,
rock-piercing will.
352 (8) Possess a fighting spirit management requires a more combative mentality than any
martial art.
(9) Face every challenge with courage be fair and never deceive others.
(10) Always be creative in your work innovate and improve continuously. Today should be
better than yesterday; tomorrow, better than today.
(11) Be kind and sincere business is based on partnerships and must bring happiness to all
parties.
(12) Always be cheerful and positive; hold great dreams and hopes in the pureness of your
heart.

Source: http://global.kyocera.com/inamori/management/twelve.html

Appendix 3
Philosophy keywords
The heart of management.
(1) Management based on the bonds of human minds.
(2) Pursue profit fairly.
(3) Follow truths and principles.
(4) Practice the customer-first principle.
(5) The extended family principle for management.
(6) Follow the merit system.
(7) Emphasize partnership.
(8) Management by all.
(9) Align mental vectors.
(10) Value creativity.
(11) Transparent management.
(12) Aim high.

Lead a wonderful life

Elevate our minds:
(13) Hearts in harmony with the will of the universe.
(14) Choose a loving, sincere and harmonious heart as our basis.
 (15) Draw a vision with a pure mind. Management,
(16) Have an open mind. accounting and
(17) Always be humble. philosophy
(18) Be thankful.
(19) Always remain cheerful. 353
Strive for improvement:
(20) Do our best for our colleagues.
(21) Establish mutual trust.
(22) Adhere to perfection.
(23) Work earnestly.
(24) Accumulate tedious efforts.
(25) Fire yourself up.
(26) Love your work.
(27) Seek the essence of matters.
(28) Be the center of the vortex.
(29) Lead by example.
(30) Corner yourself.
(31) Wrestle in the center of the ring.
(32) Discuss frankly.
(33) Make unselfish decisions.
(34) Have a well-balanced nature.
(35) Experience rather than knowledge.
(36) Always be creative in your work.
Make correct decisions:
(37) Make decisions with an altruistic mind.
(38) Be bold and meticulous.
(39) Paying voluntary attention sharpens judgment.
(40) Insist on playing fair.
(41) Separate personal matters from business.
Accomplishing a new feat:
(42) Maintain an ardent desire that penetrates into your subconscious mind.
AAAJ (43) Pursue unlimited human potential.
27,2 (44) Possess a challenging spirit.
(45) Be a pioneer.
(46) When you think it is time to give up, the real work begins.
354 (47) Hold on to our convictions.
(48) Conceive optimistically, plan pessimistically, and execute optimistically.
Conquer obstacles:
(49) Possess true courage.
(50) Raise our fighting spirit.
(51) Carve our own way.
(52) Boast and make it come true.
(53) Think through to visualize the results.
(54) Never give up until we succeed.
Reflections on life:
(55) The result of life or work Attitude Effort Ability.
(56) Live each day earnestly.
(57) Your life is an expression of your mind.
(58) Have ambitious dreams.
(59) Is my motive virtuous or selfish?
(60) A small good is like a great evil.
(61) Reflect on our behavior in everyday life.
(62) Lead our lives with a pure mind.
Everyone is a manager:
(63) Pricing is management.
(64) Maximize revenues and minimize expenses (measure your inflow and control your
outflow).
(65) Produce a P&L report daily.
(66) Only hold sound assets.
(67) Project our abilities into the future.
(68) Make targets well-known and understand.
Performing our daily work: Management,
(69) Elevate our cost-consciousness. accounting and
(70) Be frugal. philosophy
(71) Buy only what we need, when we need it.
(72) Focus on work floor management. 355
(73) Cherish experiences.
(74) Make sharp products.
(75) Listen to what the product says.
(76) Adhere to the principle of one-to-one correspondence.
(77) Always double-check.
(78) Grasp matters simply.
Source: http://global.kyocera.com/inamori/management/philosophy/index.html

Appendix 4
The hourly efficiency management system
Table AI is an example of a simplified hourly efficiency report for a production amoeba unit in a
component operation.

Item

Gross production 6,500,000 ($)

Production outside 4,000,000 ($)
Total internal sales 2,500,000 ($)
Total internal purchases 2,200,000 ($)
Net production 4,300,000 ($)
Deductions 2,400,000 ($)
Added value 1,900,000 ($)
Total working hours 35,000 (hours)
Hourly efficiency this month 54.28 ($)
Production per hour 122.85 ($)
Notes: Gross Production ($6.5 million) is obtained by adding Production outside ($4 million) and Total
internal sales ($2.5 million); Total internal purchases ($2.2 million), representing the cost of
components and other purchases from amoebas within the company, is subtracted from Gross
production to yield Net production ($4.3 million); Net production is the total revenue for this
manufacturing amoeba; Added value is the profit created by the amoeba. This figure is the balance
remaining after subtracting Deductions (total expenses other than amoeba labor costs, shown as [$2.4
million]) from Net production ($4.3 million); Recorded as Added value, the difference between revenue
and expenditure equals $1.9 million and represents the added value created by the amoeba; Dividing
Added value by Total working hours (35,000 hours) results in Hourly efficiency this month ($54.28);
Calculating hourly efficiency makes it possible for each amoeba to be aware of exactly how much
added value it is creating per hour; An amoebas business activities reflect efforts to raise this profit
indicator
Source: http://global.kyocera.com/inamori/management/amoeba/system.html Table AI.
AAAJ About the authors
Hiroshi Takeda is an Associate Professor at the Graduate School of Business Administration at
27,2 the University of Kitakyushu. He has been an active researcher in economics, finance and
management over the past 20 years. He has worked with co-authors across the world such as in
Japan, America, New Zealand, Australia and Britain. A major focus of his research has been on
the holistic understanding of management and economic issues by analysing management and
economic thoughts, theories, and practices. His current research centres on interrelationships
356 among management, accounting and finance; corporate financial policy and practice; and the
establishment of a new framework for understanding modern, traditional, and cultural values in
finance, management and economics. Before entering academia, he was a Chief Strategist at the
Long-Term Credit Bank of Japan (now Shinsei Bank).
Trevor Boyns is Professor of Accounting and Business History at Cardiff University. He has
been an active researcher in economic, business and accounting history over the past 30 years
and from its founding in 1990 until 2010 he was assistant/joint editor of the international journal
Accounting, Business & Financial History. He has published widely in business and management
history journals, as well as in a wide range of accounting journals (both history and mainstream),
including Accounting, Auditing & Accountability Journal, Abacus, Journal of Business Finance
and Accounting, Management Accounting Research, European Accounting Review, Accounting,
Business & Financial History, The Accounting Historians Journal, and Accounting History.
Trevor Boyns has worked with many co-authors across the world, including colleagues in
Britain, America, France, Italy and Japan. A major focus of his research has been on the
development of cost and management accounting in a range of countries as part of a desire to
better understand the process by which ideas and practices are transmitted internationally.
Trevor Boyns is the corresponding author and can be contacted at: boyns@cf.ac.uk

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