Top Executive Origins: Comparative Study between Japan and Thailand
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Top Executive Origins: Comparative Study between Japan and Thailand Natenapha Wailerdsaka and Akira Suehirob a Graduate School of Economics, University of Tokyo, 7-3-1 Hongo, Bunkyo-ku, Tokyo 113-0033, Japan. E-mail: [email protected] b Institute of Social Science, University of Tokyo, 7-3-1 Hongo, Bunkyo-ku, Tokyo 113-0033, Japan. E-mail: [email protected]
The origins of directors and executives have been the subject of much recent discussion in Asian countries, with concern being expressed about corporate governance and management effectiveness. As an investigation of the origins and determining factors for East Asian directors and executives, this article is based on a wide array of data taken from corporations listed on the stock exchanges in Japan and Thailand. The results of this investigation show that although there has been much argument over the appointment of outside directors to company boards, and the ongoing collapse of the lifetime employment system in Japan, the ratio of internally promoted directors and executives remains high, particularly in companies with widely held shares. Also, it has been widely assumed that most Thai directors and executives are family owners, that their associates have poor management skills, and that other managers are brought in from outside as needed. Our results, however, indicate a significant increase in well-educated professional managers. The data point to the creation of internal managerial labor markets in Thailand. Regardless of ownership pattern, the companies most likely to have a high level of internally promoted executives are large long-established ones or sometimes those in regulated industries. Asian Business & Management (2004) 3, 85–104. doi:10.1057/palgrave.abm.9200071 Keywords: top executives; internal labor market; ownership pattern; managerial enterprises; Japan; Thailand
Top Executives in Japan and Thailand With the bursting of Japan’s bubble economy in the early 1990s and the 1997 financial crisis followed by prolonged economic stagnation, corporate governance and management effectiveness have emerged as the key issues for corporate restructuring in Japan and Thailand. Financial impasse, fraud, Received 25 November 2002; revised 24 April 2003; accepted 30 October 2003
Natenapha Wailerdsak and Akira Suehiro Top Executive Origins
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management failures, high-profile bankruptcies of large companies, and the gradual decline of international competitiveness have raised questions about the quality and competency of top management in these two countries. A movement towards enhancing corporate governance and managerial effectiveness has begun. Many changes have already occurred in Japan. A number of well-known companies, including Sony, Orix, Fuji Xerox, Sumitomo Life, Komatsu and Dentsu, have reformed their governance structures by reducing the size of their boards, appointing outside directors, including foreigners, and forming executive committees (shikko iinkai).1 In addition, the commercial code has also been revised to require list
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