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Supported by the Friedrich-Naumann Foundation and the Monbukagakusho
ICT Business Associations in Japan:
Platforms of communication and socialization harmonizing between business and politics
Andreas Schaumayer (University of Konstanz and Waseda University) andreas.schaumayer@uni‐konstanz.de
July 11 , 2006 Paper prepared for 20th World Congress of the International Political Science Association (IPSA) in Fukuoka/Japan. Business and Politics Research Committee.
Abstract This paper identifies challenges for business associations and applies a dynamic view on organisational change of the Japanese associational system representing business interests in the ICT sector. Core business associations and their relations to governmental- and international actors are systematically identified and described with tools of network analysis. Emphasis is put on inter-personal exchange to explain the structural setting and the way business associations interact with other political actors and react on challenges in their environment. Keywords: Japan, Business associations, ICT, industrial relations, network analysis, shukko, amakudari, varieties of capitalism.
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Introduction
Japan is changing. Its new election system reduced the power of the factions within the LDP. A
severe administrative reform in 2001 established a strong cabinet office, increased staff for the
prime minister and reduced the power of the omnipotent Ministry of Finance (MoF). Now a long
serving and charismatic prime minister challenges its own party and succeed with triumphant
election results. The Japanese Army, which is called a “self-defence force - SDF”, also serves
outside of Japan. In foreign policy, Japan demonstrates a strong will to be a full member of the
international community. And last but not least, young workers ceased to have stable jobs in big
firms (furiita). Institutional, cultural and societal changes can be observed at all levels. This article
attempts to show if those changes also influence the subsystem of business associations in an
intra- and interorganisational perspective1.
The relationship between business and politics is one of the dominant research topics in Japanese
studies and the influence and power of the bureaucracy has always been stressed by social and
political researches even though Japanese bureaucracy is comparatively small in budget and staff
(Knoke et al. 1996). Latest research about associations and special interest groups has broaden the
perspective through the inclusion of NGOs and their focus on civil society (Schwartz and Pharr
2003; Ohtomo et al. 2005). Nevertheless, the results of these studies show that organized business
is regard as the most influential, and associations have established “relatively” institutionalized
relationships with the bureaucracy, the LDP and other relevant interest groups (Muramatsu and
Krauss 1990, Kume 2006). The most influential associations are subject to either legal regulation
(kyoninka) or administrative guidance (gyosei shido). This demonstrates that independence from
bureaucratic control does not necessarily lead to more political influence in Japan, even though
recent studies mention a transformation process and a decrease in interest-group politics (see
JIGS-Japan Interest Group Survey)2.
In this case study about associations in the ICT sector (Information and Communication
Technologies) a systemic approach will be used “in order to make sense of this change, (that)
seems to be necessary to analyze political dynamics at a deeper level than the strategic choice of
the political actors” (Kume 2006: 11). The study inquires into the linkages between the socio-
political system and it constituent social and political actors because business associations are
seen as intermediaries who respond to external developments like internationalization and adapt to
complex and changing environments. Schmitter and Streeck (1999) emphasize that association
1 This study was part of a research project supervised by Volker Schneider and Jürgen Grote. 2 JIGS results can be found in Muramatsu and Kraus 1990, Tsujinaka 2002 and Kume 2006
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steadily try to fit their organizations structure to constraints that emanate from the logics of
membership and influence. “Interest organization formation seems to respond to economic and
political threats and opportunities, particularly major ideological shifts in legislative, regulatory,
and judicial decisions affecting the interests of previous unorganised social groups” (Granados
and Knoke 2002: 9). It is therefore assumed that the subsystem is adapting to those changes in
associational environments. This can be observed with respect to organisational structures,
attitudes and strategies at the organisational, population and community level (Baum 1996). On
the other hand, the associational system is also reflecting the broader political framework and can
therefore be used as clue to understand a given polity.
The data that are presented in this study are based on semi-standardized interviews which have
been conducted by the author in Tokyo with representatives of the most important business
associations in the ICT sector. This so-called focal organization set comprises 13 associations
which had been identified by a panel of experts evaluating at total list of 64 associations which
was compiled on the basis of official handbooks and internet research. This research reveals that
the domestic political influence is overestimated in contemporary relations between business and
politics since not only national but also international factors produce dynamics that affect the
environment of business associations (Schneider and Grote 2006). Especially in East Asia where
political and economical integration is just at a starting point, the internationalization of markets
implies rather different tasks compared to European associations that are tightly embedded in a
multilevel governance system.
Framework and developments in the ICT sector
The ICT sector in Japan is technologically one of the most developed in the world. The
emergence of this market through liberalization, privatization and deregulation is well
documented in the current literature (Vogel 1996, Schneider 2001.). A new perspective on ICT
and its pressure for convergence has been outlined by Latzer (1997). The following overview of
recent developments is based on this literature, publications by the MIC (Ministry of Internal
Affairs and Communications 2004) and several associational publications.
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During the late 1980s and early 1990s Japan's ICT revolution propelled a rapid spread of PCs, the
Internet, and mobile communications. Since then, this sector expanded at an average annual rate
of 5.6% becoming the largest of Japan’s industries (JETRO 2005). The above mentioned report
issued by MIC (2004) estimates the size of core- and related markets at 59.3 trillion yen in 2007
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and 87.6 trillion yen in 2010. With respect to employment, it counts for 18% of the total.
Compared to 6% in Germany or 9% in Great Britain, ICT companies are the major employers in
Japan. The development seems most turbulent in the high-tech sector. For instance, the future
market of broadband internet connections has increased by 350% in 2004. Japan is a high-tech
nation par excellence with a strong comparative advantage in the international markets, especially
in East Asia. The juridical framework for ICT business is set by the Basic IT Law (Basic Law on
the Formation of an Advanced Information and Telecommunications Network Society No.
144/2000). However, formal law (horitsu) does not have equal importance as it does in western
societies. Guidelines (meirei and seirei) and ministerial ordinances (shorei and sorifurei) that
specify the abstract law are common instruments for the governance of industrial sectors which
give the "guiding" ministry extraordinary power3. Particularly the procedures of ministerial
ordinances generate inefficiencies since ICT is regulated by three competing ministries namely
MIC, METI (Ministry of Economy, Trade and Industry) and MEXT (Ministry of Education,
Culture, Sports, Science and Technology). Three different laws apply to mobile communication,
television and internet. For a converging sector like ICT this creates obstacles and also causes
strong inter-ministerial competition (Lehmbruch 1995). Prime Minister Junichiro Koizumi is
trying to overcome this traditional counterproductive competition by establishing high-level
councils and committees in the prime minister’s office. An example is the “IT Strategic
Headquarter for the Promotion of an Advanced Information and Telecommunications Network
Society” which was established in 2001. It started to work effectively since the members of these
councils are transferred for a longer period to the cabinet office and serve exclusively for this
body. The IT headquarter consists of all cabinet ministers, as well as eight non-government
experts such as Nobuyuki Idei (Sony), Jun Murai (Keio University), and lead by Prime Minister
Koizumi.
Current challenges for the Council are the increasing internationalization of the markets with a
focus on East Asia, consumer protection and access to communication infrastructure for service
providers (Agata 2006). Japan has not yet established an integrated independent regulatory agency
like the Bundesnetzagentur in Germany, where all networks such as gas, electricity and
telecommunications are regulated by one administrative body and where disputes can be resolved.
In contrast, Japan has developed various dispute councils affiliated with the responsible ministry.
The “Telecommunications Business Dispute Settlement Council” is a MIC council. It was
3 In the hierarchy of laws, the Constitution (kenpo) ranks highest, followed by the other Codes and statute laws (horitsu) enacted by the Diet (the parliament). These are followed by orders enacted by government agencies (meirei) (such as cabinet orders (seirei) and ministerial ordinances (shorei and sorifurei)) or administrative guidance (tsutatsu and gyosei shido).
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established in 2001 for disputes over issues such as interconnection between telecommunications
carriers (MIC 2005). At the international level, standardization negotiations especially with China,
and APEC countries are dominating the agenda in mobile communication technology. Japan tries
to enforce the transition to 4th generation mobile communications technology particularly in China
from IPv4 networks to IPv6. An overview of what Japan is trying to achieve in East Asia is
currently announced in the Asia Broadband initiative that tries to promote Asia into the leading
ICT region until 2010.
Business Associations linking the industry with government
Japan’s society comprises of a large number of business associations. It is hard to imagine that its
total number exceeds 15,000, where more than 3,000 can be regarded as operating at the national
level (Schaede 2000: 43). Compared to the US, Japan with half the US-GDP outnumbers the
American business associations by seven (Aldrich et al. 1994). Even though concentration
processes are going on, it is still the most densely organized in the world. Hence, Japanese
business associations are very stable, both in terms of existence and membership. Member
turnover or dissolutions are extremely rare. The underlying mechanism which is driving Japan’s
governance structure in a rather constant way is self-regulation by industry. What differs over
time is the involvement of bureaucrats in this process (Schaede 2000: 258).
Historically, Japan has a long tradition of associational life. Dating back to the 10th century were
the so called za stabilised and controlled markets. As trade and commerce were prospering while
neither civic institutions nor a feudal system had yet fully developed, groups like the za
supplemented the missing institutional environment for trade by carrying out activities such as
forging trade agreements, creating barriers to entry to local markets, or establishing rules of trade
(Toyoda 1963: 167). Governmental institutions always used the associations to implement new
policies and to establish a consensus via reciprocal exchange of influence and responsibility.
Those governmental funded and established associations (toseikai) were also crucial in preparing
and transforming Japan into a war economy during World War II. After the war there had been
strong incentives by the government to establish new associations reflecting and sharing the goals
of the developmental state channelling the scarce resources to state selected industries. This post-
war developmental state, best described in Chalmer Johnson’s “Miti and the Japanese Miracle”
(1982) emphasised state-interference and administrative guidance (gyosei shido).
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After the oil crises in 1973, emancipation processes of the Japanese electronics and entertainment
industry remodelled and rejected the administrative guidance. When the bubble economy busted
in the late 80s, the end of the already outdated myth of the supreme MITI found its end. The
competence of governmental institutions became highly questioned and the system - the so called
tan-system (governmental regulation) - shifted to more self-regulation. This transition is also
indicated by the “Japan Interest Group Survey–JIGS” which supports these observations and
stresses that the support to political parties has declined. However, business associations still have
an important mediating role between a government with scarce resources and a very powerful
business sector. In this role “Japan’s trade associations have crafted a system of institutionalised
information exchange through meetings at various executive levels and through mechanisms of
personnel exchange” (Schaede 2000: 43). Associations also depend heavily on the bureaucracy as
a source of ‘information crucial to the organization’s operation (JIGS). In this survey, the
bureaucracy is ranked as most important followed by “members of the associations”.
This information exchange from the bureaucracy to associations can also be observed in the
network structure that will be shown below. In addition, exchange of staff between government,
associations and member-firms will be identified as a particular element in the Japanese
governance system, described by shukko and amakudari. Many studies on Japan suggest that
these personal networks lead to a trust-based society. This paper, however, does not follow this
line or argument. Like Yamagishi (1998), I would like to point to a common misunderstanding
with respect to the assurance of security and trust. In my perspective, Japan is not a trust based-
society. It is rather built on strong institutionalized and well-trained social exchange which starts
early in life and is enforced by a rigid education system. For instance, Japanese university
graduates are well trained to participate in group activities, to accept rules and to keep relations
working. However, this is not friendship, but the necessity to belong to a social group and to
establish a social identity to which one can refer to. It is a tradition of personal contacts,
established over many years rather then friendship relations or trust. Though, it can be regarded as
an important mechanism that enables this specific Japanese network governance.
Empirical findings for change and persistence The adaptation pressures that influence business associations to respond to external factors, are
subdivided in four dimensions and are operationalized by the variables political challenge,
economic pressure, technological transformations and social changes. The following analysis of
these dimensions will show, whether and to what extent associations perceive adaptation pressure.
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In a second step, the empirically observed variations on the dependent variable, namely
organisational change will be presented.
An important result of our investigation was that Japanese associations perceive large pressures to
adapt. About 92 procent of the associations are sensitive for changes in external environment. The
examined associations name these external factors as decisive triggers for organisational change.
As tables 1 and 2 show, economic factors are perceived to produce the strongest adaptation
pressure at the national level. Technological changes are seen as international processes instead.
Our data thus point to important environmental changes, and that the various associations were
able to differentiate among those triggering factors. Globalization and regionalization processes
thus were regarded as important factors driving organisational adaptation processes at various
levels.
> Insert Table 1 and Table 2 about here <
Organizational adaptation processes also can be described through changes within the
organizations and their internal processes of redistributing the budget, or reassembling internal
committees with respect to technological needs or political demand. Table 3 depicts the
distribution of the resources among various activities. An interesting result is that about 80
percent is spent for investments concerning members whereas only 20 percent is allocated to
influence political actors. This means that the membership side clearly dominates over the
influence side in interest intermediation. Almost one quarter of the total budget is spend for
“provision of information for members” and for “organising conferences”.
> Insert Table 3 <
The dominance of the investment in membership is surprising. Such a clear focus was not
expected in the Japanese system of organized interests. The consultation process with ministerial
agencies during the policy process was expected to be a much large share of the budget. Even
though the total spending on political consultation is only 11 percent of the total budget it is still a
core business of Japanese associations. This small share may have its origin in an institutionalized
and also monopolized exchange between associations and the bureaucracy4. Competition between
associations is very low. There are no competitors in the respective associational interest domains
(Schaumayer 2003). Such a context makes political influence cheaper while the management of
compliance with respect to member-firms and to mobilize expertise seems to be more resource
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consuming. In the policy process public actors are also interested in an association’s willingness
and ability to make its members accept the respective political decision (Streeck and Schmitter
1999). The marginalization of the influence investments can be contradicted by the fact that due to
a strong interdependency between the governmental sector and the business associations there is
necessity of communication and exchange. In an international perspective Japanese bureaucracy is
not over-staffed or over-funded, resources are therefore scarce. However, Japanese government
regards ICT as a key sector, and also the World Bank shows in a recent analysis that the Japanese
government concentrates a lot of attention and resources on the ICT sector. For further sectoral
policy-research, it would be helpful to determine what importance the Japanese government
allocates, because this shapes the policy-arena and determines the actors. A pure dominance of the
membership logic would mean that the country would have had fragmented and small internally
not distinguished associations which compete fiercely among each other (Grote and Lang 2003).
However, this is not the case in ICT. Also, the division of labor is not short-term oriented.
Informal meetings are so habitual in daily work that some association representatives do not
subsume their actions under the term lobbying.
Populism, political uncertainty and internationalization as a threat
Even though Japanese economy is strongly represented in governmental committees and Japanese
business participates on all levels of negotiations, it keeps distance to party politics, especially
since the 1993 election when the LDP lost its dominant power for a short time. At that time, it had
been a shock for business and even the Keidanren revised its expenditures for political parties.
Contacts with parliamentarians are not an influence channel for sectoral business associations. As
political uncertainty has risen, societal lobbying and PR by general media has gained importance.
Japanese business associations shifted their resources to other actors than pure political ones.
Table 3 illustrates an ongoing process of strengthening civil society and media contacts. In
addition to their privileged access to the bureaucracy, the top associations in the ICT sector also
have a political consultancy function. Since Prime Minister Koizumi revitalized the committee
structure at the prime minister’s office (first introduced by Nakasone), a new channel of political
influence evolved. This shift was necessary because of political needs to challenge the
bureaucracy and allow the Prime minister more control and leadership5. This new leadership
brought new impulses to the Japanese political culture, but political uncertainty is rising since the
prime minister can set its own agenda without consulting, neither his own party nor any pressure
4 The term lobbying is not very popular and associations do not regard or do not want to regard themselves as lobbyists.
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group. Hence, associations find themselves in multi-option situations. They have to maintain their
strong linkages to the ministries, which are still the most important channels of influence. In
addition they have to deal with a politicized domestic policy making process and are faced with a
tough international environment in East Asia. Key elements that keep the channels of
communication and the way of thinking together are the inter-personal relationships that will be
described in the last part of the paper.
International representation of business interest and effective political influence is an urgent task
for associations in Japan. Globalization implies to a large extent also standardization. Societies
developed their peculiar rules of exchange and domestic organisations adapted to these rules.
International standardization then is a field of strategic interaction where different interest
collides. International organisations like the WTO or international associations then try to settle
disputes and harmonize interests. Markets, trading partner and competitors of Japan are changing.
Now China, Korea and Southeast Asia are becoming the most important markets especially for
MNC (Rugman 2005). Even though East Asia nowadays has high barriers to trade and
investment, those markets matter. Associations react on these challenges either in the traditional
way by negotiating with the bureaucracy, or on the other hand by building strong relations with
associations in other countries.
Especially in Sino-Japanese relations these contacts are important. For some time, official
political relations were cooling down because of political issues, disputes about fishing territories
and overall about authority in East Asia. The visits of Prime Minister Koizumi to Yasukuni
shrine, where 14 war criminals are enshrined, were not only perceived as a threat for economic
relations but also for the security in the whole region. The countries are sharpening their language
and on high-level talks those topics are always on the agenda. In June and October 2005 the
president of Keidanren addressed that problem in a press conference and criticized the visits to
Yasukuni shrine (Keidanren June 13th, October 24th 2005). Activities of Japanese businesses are
negatively influenced by these events, but also institutions like JETRO face obstacles to work in
China. For instance, business associations currently have problems getting their employees
accredited in China. For Japan, there is no supranational actor like the EU or any other significant
international institution. National governmental institutions thus remain as lobbying targets. Even
though one could observe a stronger “Asian-Integration” especially in South-East Asian with
ASEAN and the Free-Trade zone AFTA, China, Japan and South Korea are on the edge of this
integration process, albeit they are the most important economies. The need of business for a
5 leadership is one of the most important words in contemporary political talks in Japan. Due to a lack of it for
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stable political environment is at stake. Associations react to this threat by establishing more
contacts to civil society. This situation is also triggering direct lobbying of MNC whereas on a
national level, direct lobbying by large Japanese firms has been answered in-between support and
denial from the associations. What can be drawn from the data is that in the ICT sector the
shingikai round-tables are still the central bargaining point. Committee structure and shingikai
participation reveals the importance of an association. If the association has no expertise in a
specific issue, it will not be invited to a shingikai meeting. In such a situation, member firms step
in and articulate their interest directly. But this is restricted to specific and issue based cases.
> Insert Figure 1<
As pointed out above, in international negations such round-tables have lost their importance
since political influence is shrinking due to current Japanese foreign policy. This is a deadlock for
Japanese industrial actors which heavily relied on governmental contacts to realize their interests.
The dominance of governmental actors can be observed in the network diagram. It indicates the
vertical structure of the sector. The graph was produced with the aim of Visone, a computer
program facilitating network visualization (Brandes et al. 1999, Brandes/Wagner 2003)6. The
diagram also shows that the Ministry of Foreign Affairs is not recognized by the associations.
Only indirect relations exist towards MoFA. Relationships with international actors are therefore
established by METI, MIC and MoFA but only METI and MIC have close relationships to the
associations. An important task for associations in Japan will be establishment of non-
governmental relationships with foreign partners. Otherwise business associations will loose their
representation monopoly to independent direct-lobbying MNCs.
A relational approach takes into account the ties to other associations, governmental organisations
or international actors. In such a perspective, business associations are not only perceived within
the framework of their interests and resources, but also within the network relations in which they
are embedded. Network analysis allows us to take it for granted that actors are connected and
secondary connection matters for spreading of ideas over those hubs and knots. Complexity is
managed, where different actors and levels coordinate themselves through direct and indirect
information flows. Both intra-organisational and inter-associational are significant, because not all
resources are provided by one organisation itself. For instance, the distribution of information to a
wider public is EJF’s duty. On the population level, the associations form a network that can be
interpreted as an exchange network of strategic information to generate a common position to
almost 50 years.
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enter shingikai meetings. On a working level issues are freely discussed in official meetings with
the ministry. On more important questions, associations start preliminary consensus building.
JEITA can be identified through relational and survey data as the central actor.
In order to sketch the second network, I was asking in the interviews, which actor from
perspective of your association is the most important one. The measurement is rank prestige.
Large rank prestige indicates that an actor is chosen by a number other actors that also have
relatively high rank prestige or by others that have low or moderate rank prestige (Wassermann
and Faust 1994: 207). The visualization is helpful in the sense, that it demonstrates how the
associations perceive the sector in a hierarchical perspective. JEITA is dominating the sector, also
by its budget, employees and committees, followed by CIAJ and JISA7.
This correlates with the hard facts about organisational structure. Surprisingly, FMMC as a
comparatively small association which is completely government financed, has a high ranking.
Direct access to government, a good financial base, access to and distribution of information, and
the purpose together with EJF “to promote the advancement of Japan’s information and
communications infrastructure and its liability” (Interview with FMMC 2003) explains the high
ranking.
> Insert Figure 2 <
The graph in Figure 2 illustrates the hierarchical order in Japanese associational system. JEITA
serves as a sector peak association, which is also member in the umbrella association Keidanren.
Smaller associations are sending information to JEITA about the situation in their respective
domain. In return, they receive political support. This asymmetrical relationship can also be
observed by looking at the linkages. Only 4 relationships are symmetrical, where both
associations regard their exchange in the same intensity. Even though all associations are
important in their domain and are well accepted actors, it underlines the inherent hierarchical
structure.
Technological progress made it necessary to create new associations, but those were either
merged with already existing ones or they find themselves under the umbrella of a national
operating association. The life histories of the various organizations are depicted in a simplified
time lines in Figure 3.
6 Network analysis conducted with UCINET - Borgatti (2002)
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> Insert Figure 3 <
One reason for those mergers may be that firms operating in the ICT sector are mostly big players
and members in several associations. In such a position they are not interested in strong
competition. But even though there is a hierarchical structure, the density of information networks
is not very high. The division of labour is well developed. Information is circulating, but the
network is not overloaded with to much information. It is thus easier to find the right person via
the network than in a more dense system. This seems also in the interest of the bureaucracy,
which prefers long-lasting relationships to avoid conflicts and facilitate side-payments for
compromises.
It seems that hubs like JEITA and smaller associations such as JCTA create a balance between
centralization of information and stability on the one hand, and direct on-the-field information by
smaller associations on the other. This makes the whole network more searchable. To find short
paths to all actors is easier, even if they are not directly linked. Those shortest paths and
interactions are safeguarded by exchange of staff, which will be explained below in more detail.
Lobbying and access strategies of business associations are differentiated functions. Multiple
levels have been identified which vary in their strategies. Political information goes more from
top-down to independent self-regulating associations on the national level that also have
specialized member associations. This generates knowledge position to deliver the industry with
vital information on forthcoming regulation. A further function is consensus building for new
policies. The following section will indicate how all this knits together.
Inter-personal exchange - balancing conflict and knitting all together
Associations find themselves in a dilemma situation between demands of its members and the
state. Balancing those confronting interests is a major task for business associations. In this
respect the integration of the logics of membership and of influence in Japan seems to be based on
institutionalized personal interlocks. This form of vertical integration in Japan is characterised by
intense intertwinement and personal relations. Vertical integration points to the combination of
interweaving contacts between the three levels – state, associations, and member firms. The term
vertical integration emphasizes the interweaving of the system rather than its strict differentiation.
Page | 12 7 Budget, employees, committees: Jeita (33 Mio.$; 140; 120) CIAJ (1,9 Mio.$; 43; 70) JISA (7,4 Mio$; 25; 30)
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Therefore legitimization and representation is improved by direct involvement of representatives
from member-firms and ministerial agency. Business associations thus serve as inter-personal
platforms form interest harmonization.
> Insert Figure 4 <
Shukko
Shukko is a human resources management tool, to send employees temporarily to related
organisations. This fulfils several functions: early retirement, knowledge transfer, and training-on-
the-job. The significance of this instrument can be illustrated by the fact that out of 12
associations 10 had shukko staff. The average shukko employee in Japan is around 45 years old
and the lending period is around 3 years (Futagami et al. 1998). In case of the business
associations the picture looks a bit differently. The average shukko employee is younger and is
supposed to return to the member firm after the period of not longer then 5 years. Their prime
function is to provide up-to-date expertise and increasing the representation of member-firm
interest within the association. Shukko employees come predominantly from specific departments
within the member firm to serve on associational committees. Through this, much knowledge
flows into the association that afterwards can be used in shingikai negotiations or association
committees. Through this mechanism business interests are represented directly. Moreover, the
authority of the association increases, based on the direct representation of the industry. A further
advantage for business is the communication of the shukko colleagues amongst each other. In this
respect, an elitist circle may meet for three to five years, building up new relationships between
employees of competing firms. It also can be the nucleus of a future top management. Moreover,
tight relations with the ministries are constructed which are maintained by daily contacts during
their stay.
Whereas in other sectors even the managing directors are shukko employees, such arrangements
cannot be observed in the ICT sector. A reason for this may be that Japanese firms emphasize the
need of an independent top management which is able to mediate between the different shukko
that constitute the middle-management. The managing director is in almost all cases somebody
with long-term experience in the association or an ex-governmental employee (amakudari). This
is necessary because the compilation of shukko is biased for large firms coming from Tokyo and
therefore tension arises. First of all because of high moving costs and the expenses for employees
working outside of an organization for at least 3 years are only affordable for very large
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companies. The former employer either pays the full salary and the move, or the costs are divided
between the association and the business firms (JCTA interviews 2003). Associations also send
colleagues into the ministries (amaagari) (TCA interviews 2003). Such personal exchanges occur
in all types of associations - not only the peak associations like Keidanren or JEITA in the ICT
sector, but all business associations run such programs.
Amakudari
Associations and the political system are interconnected with another highly disputed medium of
interpersonal exchange, called amakudari. Amakudari means “descent from heaven” and
describes a situation when top bureaucrats get retired and start to work for corporations, state
agencies, or associations. Because of the seniority system, every year hundreds of bureaucrats
enter the labour market, mostly coming from METI, MIC, MOF and the Ministry of Construction.
The total figure of amakudari is estimated to amount between 70.000 and 80.000 (Moerke 2000).
Every second private firm benefits from an ex-bureaucrat on its “board of directors” (Moerke
1999: 227). Amakudari allows instant access to the bureaucracy, based on inter-personal relations.
This generates
“a group with similar policy orientations whose members sit on the boards of almost 30% of list private firms, 67% of the largest 100 private firms, occupied 40%-50% of board positions in powerful public corporations, and accounted for 20% of lower house LDP seats and 20% of cabinet positions provides an argument for locational influence.” Usui and Colignon (2001: 892)
Out of our twelve associations, five had amakudari as managing director8. Three were originally
from METI and two from MIC. After their retirement and a 2-year break, when they want to work
in the same sector, the ex-bureaucrats “descent from heaven” into corporate management, top
positions in governmental agencies and also in business associations. In this new position they are
compensated very well. During their duty at the ministry they were badly paid and worked at least
the first few years extremely hard and long. Due to these financial incentives and a privately
organised pension system, there are many that decide for this second career. Kim (1996)
combined the salary of a manager and a civil servant both in their thirties and found that the
difference is more then 10%. Amakudari then want to get compensated in their new positions.
8 The negative side of amakudari was stressed by Nakano (1998: 116): “First, on the side of the industry, the web of amakudari bureaucrats clearly hinders the emergence of real competition [...]. Second, on the government side, amakudari entails a severe loss in the autonomy and neutrality of the state. […] quite plainly, the picture of ‘public servants’, who self-servingly seek and distribute ‘spoils’ seriously damages public confidence in the administrative elite as well as the wider democratic polity.”
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Because of this the salary of such employees are much higher then of normal managing directors
(JCTA Interview 2003). At the system level, amakudari is a mechanism for direct access to
bureaucracy and very helpful in sectors which are under tight governmental regulation or are
engaged in international negotiations.
Jinmyaku – legitimacy and representation
Amakudari and shukko are institutionalised elements of the Japanese governance system. In
Figure 3 we observe the interconnections between firms, associations and the bureaucracy. The
connection ensures direct information and cooperation through personal contacts. Like the veins
in the human body the transport goes to the most diverse places. The whole system is supplied
with information based on this logic. Interdependence and personal exchange is moving the
discussion to a mutual understanding of each other. This does not imply that the participants do
not have different interests, but that their relevant preferences do not only reflect the own use, but
also that of the other participants (Scharpf 1997). Certainly, approaching a common goal is always
a process of harsh negotiations and an exchange of position papers, especially in Japan. Japanese
decision-making can not be described as a majority system, it is rather a system of endless
exchange of statements of facts, not opinions, that in the end not only a majority supports a given
decision, but almost everybody. In Japan, there will be no conflict on the day of the decision.
The natural conflict between effective influence and satisfying the members is harmonized due to
the fact that all actors participate with the highest legitimization and representation. Associations
are the centre of the negotiation processes, because they are also socialization platforms, serving
as meeting points for divergent interests. Even though the ministerial shingikai is the place of the
decision making and agenda-setting formally takes place by the shingikai secretary department,
pre-negotiation and collecting divergent interests and perspectives is carried out by associations
within their own structure. As Figure 4 shows, the employees in an association are assembled by
member-firm shukko, former ministerial officials’ amakudari and permanent and more
autonomous employed association staff. This leads to strong representation of all actors involved
and decisions gains high legitimacy. Such socialization processes enhance the chance of acting
towards a common goal, as Max Weber has phrased it: "dass das Handeln des Gehorchenden im
wesentlichen so abläuft, als ob er den Inhalt des Befehls um dessen selbst willen zur Maxime
seines Verhaltens gemacht habe" (Weber 1956: 123). Federations thus fulfil their function to
represent their member’s interests because member-firms have their shukko still on their payroll,
and amakudari enable them to get direct access to their ministries.
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Andreas Schaumayer – Waseda University
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Interestingly this tradition-based system contains an important element of innovation. Japanese
bureaucracy is on a steady move, because of the rotation system. Every two years the departments
are partly reassembled with new staff. Within the three classes of public employees, class one is
changing its workplace every two years. On the other side there are shukko employees, and even
the managing director who work on a temporary basis in the associations. An adjusting
mechanism exists within the logic of the system. Through exchange of staff, complexity is
reduced but not extinguished. It can be described as an institutional configuration to harmonize
conflict. Through independent managing directors, shukko middle-management and support-staff
permanent employed by the association they find ways of balancing interest-conflicts on different
levels through rules and procedures that can be shared by a vast majority. This creates a particular
Japanese way of interest representation in a long-term interest perspective, strategic thinking and
long-lasting consultation processes with short implementation phases. This also explains the low
density of the network structure.
Conclusion
Japanese business associations in ICT have crafted a system that harmonizes inherent conflicts
between government on the one hand and industry on the other. Complexity is structured by
exchange of staff and division of labour. Hence the components depend on each other and
function as long as everybody understands and agrees to the rules. The interconnection of actors
can be interpreted as a hindrance of organisational change, but also as an institution to ensure that
change is not merely a subsystem phenomenon. The interrelations enable a more systemic and
coherent process.
At the organizational level, associational interest domains are separated and monopolized.
Resources are mostly spent for membership investments whereas political consultation is shared
with other associations in the sector or with the peak association. Domestic regulation shifted to
high level councils and committees and associations try to influence them by relying on higher-
level associations to represent their interest. Most of the associations react on technological
changes by founding new member association or incorporating new competitors. The channels of
influence remain therefore the same, which is necessary because of strong inter-personal
exchange.
In the context of domestic political uncertainty however, new ways of business interest
representation have been developed. Small but significantly more important then in the 90s, the
influence of public opinion through media and information campaigning is regard as a new tool
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besides traditional governmental lobbying. However, lobbying is performed through bureaucracy.
Other paths into the legislation process e.g. incumbencies and prime minister can be neglected.
This happens either multilateral via committees or in bilateral consultation with departments of
the ministry.
When it comes to internationalization, Japanese business associations are trying to enforce their
interest through traditional governmental actors namely METI and MIC and negotiate with them
over umbrella associations, because they are tight together by personal relationships. Whereas in
Europe and the US a political centre facilitates international lobbying, the political centre of East
Asia is not defined and therefore more sensitive approaches and issue based initiatives are
necessary. And these sensitive approaches are missing. If the political situation does not chang, a
major shift to more non-governmental approaches can be forecasted. As the demands posed by the
two conflicting logics of influence and membership are not in balance. Moreover, individual firms
will start direct lobbying to governmental and non-governmental actors. Associations are reacting
on this threat by establishing non-governmental cooperation, but still they are relying mostly on
the traditional channels of influence supported by the inter-personal governance system. In
combining approaches and perspectives this paper showed that Japanese business associations are
embedded in a coherent system that functions in similar logics over system boundaries. It does not
prohibit change, but it has to be in the logic of the system9.
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9 In reference to the varieties of capitalism literature this is not an obstacle, it rather enforces growth then hinders it.
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Associations CIAJ Communications and Information network Association of Japan
ECOM Electronic Commerce Promotion Council of Japan
EJF E-Japan Forum
FMMC Foundation for Multi Media Communications
IAJ Internet Association Japan
JCTA Japan Cable Television Association
JAMTA Japan Mobile Telecommunication system Association
JBPA Japan Book Publisher Association
JEITA Japan Electronics and Information Technology Industries Association
JISA Japan Information Technology Services Industry Association
NAB National Association of Commercial Broadcasters
PressNet The Japan Newspaper Publishers&Editors Association
TCA Telecommunications Carriers Association
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