¹ Chandler, Alfred D. Jr, The Visible Hand: The Managerial Revolution in American Business (Cambridge, Mass., 1977), 1–12.Google Scholar For a useful discussion of the managerial firm, see Kobayashi, Kesaji and Morikawa, Hidemasa, eds., Development of Managerial Enterprise (Tokyo, 1986).Google Scholar

² Alfred D. Chandler, Jr., “The United States: Seedbed of Managerial Capitalism,” in idem and Daems, Herman, eds., Managerial Hierarchies: Comparative Perspective on the Rise of the Modern Industrial Enterprise (Cambridge, Mass., 1980), 9—40Google Scholar; Oliver E. Williamson, “Emergence of the Visible Hand: Implications for Industrial Organization,” in ibid., 186–87.

³ Chandler, Alfred D. Jr, “The Emergence of Managerial Capitalism,” Business History Review 58 (1984): 503.CrossRefGoogle Scholar

⁴ Gerschenkron, Alexander, Economic Backwardness in Historical Perspective (Cambridge, 1962), chap. 1.Google Scholar

⁵ Some scholars hold that Gerschenkron's model indicates that convergence will take place if we look at development over a very long time-span. While that may be true, it is obvious that Gerschenkron stresses the differences between the early starters and the latecomers. They do not follow the same paths.

⁶ For a comprehensive study of the zaibatsu, see Morikawa, Hidemasa, Zaihatsu: The Rise and Fall of Family Enterprise Groups in Japan (Tokyo, 1992).Google Scholar

⁷ For a brief history of the Iwasaki Family, see Abe, Etuso, “Iwasaki, Yataro,” in International Encyclopedia of Business and Management, ed. Warner, Malcolm (London, 1996), 2407–409.Google Scholar

⁸ For the Korean chaebol, see Amsden, Alice H., Asia's Next Giant: South Korea and Late Industrialization (New York, 1989), 243–86.Google Scholar

⁹ See Chandler, Alfred D. Jr, Scale and Scope: The Dynamics of Industrial Capitalism (Cambridge, Mass., 1990), 145, 495–6.Google Scholar

¹⁰ Morikawa, Zaibatsu, chaps. 1 and 2.

¹¹ See Hirschmeier, Johannes and Yui, Tsunehiko, The Development of Japanese Business (London, 1981).Google Scholar See also Abe, Etsuo, “Japanese Business History,” in International Encyclopedia of Business and Management, ed. Warner, Malcolm (London, 1996).Google Scholar

¹² The word keiretsu has a peculiar history. Originally, it was used for the kigyo gurupu (group) like Toyota, Matsushita, and Hitachi; afterwards, for the most part, it was used by American government officers, businessmen and scholars, most of whom misused it (or, to be charitable, they used it in a different way than it was used in Japan). They implied that it referred to kigyo groups such as Mitsui, Mitsubishi, and Sumitomo. Nowadays, under the influence of such misuse, Japanese have become familiar with the inexact way to use the word. Now Japanese have come to use the word keiretsu to mean both types of organization. Accordingly, keiretsu is almost equivalent to kigyo shudan. See for example, Mason, Mark, American Multinationals and Japan: The Political Economy of Japanese Capital Controls, 1899–1980 (Cambridge, Mass., 1992), 205–206.CrossRefGoogle Scholar For more on this subject see Shimotani, Masahiro, Nihon no Keiretsu to Kigyo Gurupu (Keiretsu of Japan and Enterprise Group) (Tokyo, 1993), 228–32.Google Scholar

¹³ For information on the Japanese keiretsu, there are several good works. On inter-market keiretsu, see Gerlach, Michael L., Alliance Capitalism: The Social Organization of Japanese Business (Berkeley, Calif, 1992).Google Scholar For keiretsu in the automobile industry, see Smitka, Michael J., Competitive Ties: Subcontacting in the Japanese Automotive Industry (New York, 1991).Google Scholar For the electrical industry, Fruin, Mark W., The Japanese Enterprise System (Oxford, 1992).Google Scholar For the contemporary keiretsu, Kenichi Imai, “Enterprise Groups,” in idem and Komiya, Ryutaro, eds., Business Enterprise in Japan (Cambridge, Mass., 1994), 117–140.Google Scholar For a balanced comparison of Japan and the United States, see McCraw, Thomas K., ed., America versus Japan (Boston, Mass., 1986).Google Scholar For secular trend in strategy and structure, see Suzuki, Yoshitaka, Japanese Management Structure (London, 1991).Google Scholar

¹⁴ In most cases, major Japanese firms form hierarchical keiretsu and frequently are also members of inter-market keiretsu. Toyota is a member of the Mitsui group as an observer; Hitachi is a member of three kigyo groups, i.e., Fuyo, DKB, and Sanwa. As this suggests, the affiliation of the two firms is not very strong. Canon is a member of Fuyo but is mainly an independent firm like Honda and Sony. But Honda and Sony have main banks (Mitsubishi Bank and Mitsui Bank, now Sakura, respectively) which belong to inter-market keiretsu. Matsushita too is independent but has a close connection with Sumitomo.

¹⁵ Weinstein and Yafeh offer an interesting hypothesis that the reason for lower imports in sectors where there is a formidable presence of inter-market keiretsu is not collusion; they suggest that it is, instead, intense competition. This suggests that the inter-market keiretsu have substantial power. David E. Weinstein and Yafeh, Yishay, “Japans Corporate Groups: Collusive or Competitive? An Empirical Investigations of Keiretsu Behavior,” Journal of Industrial Economics 43 (Dec. 1995): 374.Google Scholar

¹⁶ On Toyota's keiretsu and production management, see Udagawa, Masaru, “The Development of Production Management at the Toyota Motor Corporation,” Business History 37 (April 1995): 107–119.Google Scholar See also Abe, Etsuo and Fitzgerald, Robert, eds., The Origins of Japanese Industrial Power (London, 1995)Google Scholar and Yui, Tsunehiko and Nakagawa, Keiichiro, eds., Japanese Management in Historical Perspective (Tokyo, 1989).Google Scholar

¹⁷ See, for example, the experience of Toyota. Some of Toyota's core firms were created by spin-offs. Toyota Automobile itself was separated in this manner from Toyota Jido Shokki (a producer of automatic looms). But a number of large affiliated companies became members as a result of acquisitions.

¹⁸ Chandler, Scale and Scope, chap. 2.

¹⁹ The case of Furukawa, Fuji Denki, Fujitsu, and Fanuc provides a typical spin-off case in Japan. Furukawa (a holding company) formed Fuji Denki (electrical products) with Siemens; then Fuji Denki spun off Fujitsu (computers); furthermore, Fujitsu spun off Fanuc (robot producers). For more detail, see Yonekura, Seiichiro and Clabsen, Hans-Jurgen, “Innovation by Externalization: A New Organizational Strategy for the High-Tech Industries—Fuji Denki, Fujitsu and Fanuc,” in Japanese Business Success: The Evolution of a Strategy, ed. Yuzawa, T. (London, 1994), 39–64.Google Scholar

²⁰ Oliver, Nick and Wilkinson, Barry, The Japanization of British Industry: New Developments in the 1990s (Oxford, 1992), chaps. 8 and 9.Google Scholar

²¹ For Toshiba's case, see Fruin, Japanese Enterprise System.

²² Chandler, Alfred D. Jr, “The Enduring Logic of Industrial Success,” Harvard Business Review 90 (March-April 1990).Google Scholar

²³ Chandler, Alfred D. Jr, “The Competitive Performance of U.S. Industrial Enterprises since the Second World War,” Business History Review 68 (Spring 1994): 22–23.CrossRefGoogle Scholar Chandler denounced “transaction-oriented mergers and acquisitions” because they did not look to the long-term health of the enterprises.

²⁴ Ibid., 23–57.

²⁵ For more detail, see Ohno, T. and Monden, Y., eds., Toyota Seisan Hoshiki no Shin Tenkai (New Development of Toyota Production System) (Tokyo, 1983).Google Scholar

²⁶ Hidemasa Morikawa is critical with the interpretation that the deterioration of large industrial enterprises in the United States and elsewhere was due to the unprecedented competition since the 1960s. See Morikawa, , “The View from Japan,” Business History Review 64 (Winter 1990): 725.Google Scholar

²⁷ Japanese managerial firms were firmly built on mutual-shareholding, in which professional managers held virtually total power. Usually, they were able to devote themselves to long-term management, without intervention from shareholders, because they mutually sought to protect their positions at each company.

In the United States from the 1970s on, institutional investors such as pension funds and mutual funds have become extremely influential. Decision-making in large companies now tends to be shaped in part by institutional investors. This was an unexpected phenomenon from the perspective of classical managerial capitalism. Is the notion of managerial capitalism dated? And is the present time the age of institutional investor capitalism?

It can be argued that the fundamental characteristic of managerial capitalism is its long-termism, as Chandler emphasized in comparing it with British family capitalism. He criticized the British system due to its conservativeness. That system, he said, produced a myopic perspective, which derived from the belief that the family's prime objective was to keep its assets; as a result there was little appetite for aggressive investment in production, distribution and personnel. See Scale and Scope, 390.

Today, American business, which was thought to be in the vanguard of managerial capitalism, appears to be strongly influenced by institutional investors such as CALPERS; this influence is turning it towards short-termism. In Japan, institutional investors such as insurance companies are so far tightly locked into stable cross-shareholding. In that sense, Japan remains in the heyday of managerial capitalism.

Yet, with the advent of a mature economy, Japanese institutional investors are becoming more demanding on dividends and are as conscious of share prices as their American counterparts. In Japan too, the maturing of the economy may be directing the system toward institutional investor capitalism. If that is our common future, something Chandler certainly denies, all of the advanced economies may be entering a new stage of development. For Chandler's position see Chandler, “Competitive Performance,” 9, 21, 57. And see also idem, “Managerial Enterprise and Competitive Capabilities,” Business History 34 (1992): 29–39.