Managing

In this module, we examine Japanese-style corporate governance. In what ways does Japanese corporate governance operate according to a unique logic? Do you think that recent law reforms aimed at making Japanese companies more "growth-oriented" will lead to a convergence with the US and Europe?  

To prepare, please download and complete the assigned reading.  

Demonstrate class engagement by submitting evidence of (a) pre-reading and (b) post-class reflection in relation to any five modules of the course. 

The class is on 19 January 2025 (intensive class). 

The following videos discuss corporate scandals in Japan. What were the corporate governance failures that led to the poor business outcomes? In what way, if any, do these failures reflect distinctly "Japanese-style" corporate governance problems as distinguishable from those that might manifest in American, Australian, English or French companies? 

Is Japanese corporate governance practices different from those in the West? And, if so (or even if not), how do you account for the way Japanese managers conduct the affairs of the company? Once again, does culture, institutional design, or rationalism determine the way companies operate in Japan? Do you think Japanese corporate governance is a product of Japanese culture, leadership or institutional design?

In class, we will debate the proposition: for there to be effective corporate governance in Japan, Japanese culture means that there must be incremental consensus-building and buy-in by the business and investment community.

To prepare for this debate, consider the following competing views: 

When your client hosts a dinner for JSportAI  executives in Tokyo, three of the four directors -- Abe-san, Baba-san and Chiyoda-san -- attend (Dando-san declines due to other commitments). 

You learn that all four directors were tennis-loving IT engineering students who built JSportAI from a capstone university project. After ten years working at IT firms after graduation to build their respective skill-sets, they quit their jobs to found a start-up. They fund their start-up with equal equity contributions from their four sets of parents and a loan from Hanami Bank that was secured with a 20% stake in the company. 

Dando-san's sister, Ebata-san, a chartered accountant, recommends her husband (also Ebata-san) to serve as auditing consultant for the company; he is duly retained. Your client does not know the terms of the loan contract with Hanami Bank, but know that JSportAI's financials are good and it has never come close to defaulting on a repayment. 

Given the client's enduring interest in co-developing the line-calling technology and live scheduling software, the three directors suggest the client purchase a 25% stake in the company (all other shareholders will have their stake reduce from 20% to 15%) with a right to appoint two directors to the board.

What are the merits (or otherwise) of this proposal in terms of -- 

• the ability of the client to influence the future direction of JSportAI, especially in terms of how it develops its suite of technology?

• the corporate governance risks of such a structure, even if the client is satisfied that it has a "shared vision" and on the "same page" as the current directors with respect to the future of JSportAI?