A Cautionary Tale
for Emerging Market Giants
JAPAN
35.2%
1994
20.8% 2000
11.2%
2008
BRIC
0.9% 1995
10.4% 2008
Problem
Unable to transform the cultures and processes that propelled their
early export-led growth into those needed for global leadership.
Will those countries (BRIC)
lose their edge in the years ahead,
as Japan did ?
Devotion to The Way
Japan’s early success:
•Develop substantial asset bases
•Achieve economics of scale and drive down
cost
•Maintain the high quality
•Powerful export value proposition
Devotion to The Way
Japan’s early success:
•Created strong corporate policies, practices,
thinking and behaviors
•Purpose, unity and rules governing
relationships and expectations of behavior
Devotion to The Way
Japan’s decline:
•Replicating the way
•Narrow hiring criteria
eg: mobile telephony
Sony Ericsson
Devotion to The Way
Is It Risk?
•Developing ways will
hinder their international
expansion
eg: China (Guanxi)
Russia (Government)
An isolated domestic market
Japan:
• little competition
• FDI
• foreign firms
An isolated domestic market
•
Disadvantage: less competitive
e.g. Nomura
•
Is it a risk?
BRIC
A docile labour force
•
•
•
•
Japan:
homogeneous labour
few subethnic groups
no local dialects
few immigrants
A docile labour force
• Disadvantage: workplace norms
diverse, combative labour
e.g. sexual harassment, litigation
• Is it a risk? BRIC
A Homogeneous Team at the Top
Japanese companies ——cohesive and homogeneous
leadership
Matsushita Electric (now Panasonic)——all Japanese during the 1980s and 1990s
In the 68 Japanese firms on the 2009 Global 500, nearly 98% of the listed
corporate officers were Japanese.
Only exceptions: Nissan and Sony
On the contrary…
●European
and U.S. ——diversifying their leadership
Example: Carrefour’s success
“…if your company’s international revenues approach
50% of the total, but fewer than 25% of your top leaders
come from foreign markets, it’s time to get nervous
about your firm’s ability to make the leap from plucky
challenger to global leader…”
Stewart Black, J. & Morrison, A.J. (2010)
Is it a risk?
Many BRIC companies lack leadership diversity.
WHAT TO DO?
- Early expatriation
- Inpatriation
- Education