A Test of Theories Underlying the Japanese Lifetime Employment System
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JOURNAL OF INTERNATIONALBUSINESS STUDIES, FIRST QUARTER1991
economic,power-control,andmotivationtheoriesas possibleexplanations for its use.Webeginby brieflydiscussingthe backgroundliteratureon the permanentemploymentsystem. The next section looks at the specific theoriesthat may explainthe use of permanentemploymentin Japan. Sections three and four presentthe researchdesign used as well as the surveyresults. Finally,we discuss the implicationsof our findings for futureresearch. THE DEVELOPMENTOF THE LIFETIMEEMPLOYMENTSYSTEM
Thereis considerableevidencethat lifetimeemploymenthas operatedin largeJapanesefirmsformost of thepostwarperiod[Abegglen1958,1973; Dore 1973;Cole 1979;Clark1979].Thereis someconsensusthatthe Japanese permanentemploymentsystemas we knowit todayemergedshortly after WorldWarII, though some arguethat examplescould be found duringthe inter-waryears.A numberof expertstraceits originsback to the Tokugawaperiod(1615-1868).Abegglen[1958],for instance,believed that lifetimeemploymentcouldbe linkedwiththe pre-Meiji(before1868) feudalsystem.Dore[1973]mentionstheold "housetraditions"(referredto as the ie conceptlaterin this paper)of suchfirmsas MitsuiandSumitomo wherebythe young apprenticemight end up as a trusted manageror founder of a new "branch house" (p. 391). Clark [1979] traces the permanentemploymentsystem'sorigin to the merchanthouses in the Tokugawaperiod-at least indirectly.Odaka[1984]sees the roots of the presentlifetimeemploymentsystemin close-knitagriculturalcommunities, and later in the merchanthouses in the Osakavicinityin the eighteenth century.Finally,Levine[1958]and Karsh[1984]see its origins in traditional familybehaviorpatterns.The essentialelementsin pre-Meijitimes includedsubordinationto patriarchalauthority(basedon Confucianideology) and cooperationamong peasantfamilymembers[McMillan1984]. Japaneseeconomistsin the 1950sand 1960swereinclinedto say that the permanentemploymentsystem, imbeddedin the feudal frameworkof Japan,wouldultimatelymovetowardsa morerationalsystembasedon fluctuating supply-demandfor workers. However, with continuing rapid economicgrowthin the 1970sand 1980s,Japanesewritersbecame more positivein extollingthestrengthsof permanentemploymentandits compatibilitywith historicculturaltraditions.Specificstrengthscited include:a stable work force of experiencedemployees;loyal cadres due to job securityguarantees;andbettertrainedworkers,sincelong servicejustifies on companytrainingprogramsthanwhenturnmorecompanyexpenditures overis high [Odaka1984;Christopher1984;Cole 1979]. Nevertheless, there has been increasing criticism of the Japanese permanentemploymentsystemin the 1980s.The most seriouscriticisms revolvearoundthe fact that secureemploymentfor the permanentstaff comesat the expenseof temporaryworkerslikewomen,part-timers,midcareeremployees,andretirees.Moreover,permanentemploymentmay not
THE JAPANESELIFET
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