Overcoming the obstacles to entrepreneurship in Japan by shifting the reference point

Abstract

Since the 1990s, Japan has implemented a number of entrepreneurial support measures as part of its small and medium-sized enterprise policy. Inspired by the success of Silicon Valley in the United States, there was an expectation that small and medium-sized enterprises would play a role as a driving force for Japan’s economic growth. However, even after that, entrepreneurship has not become more popular in Japan, and both the overall entrepreneurial activity index and the start-up rate are sluggish compared to other countries. What is the reason? The purpose of this paper is to elucidate this based on prospect theory and effectuation. The results of the Japan Finance Corporation’s “2017 Survey on Entrepreneurship and Entrepreneurial Attitudes” reveal that there are two reasons why prospective entrepreneurs hesitate to start a business: first, they feel that they do not have enough of their own funds to meet the capital required for starting a new business, and second, even if they are able to establish a new business, if the business does not get on track, they are concerned that not only will they lose much of their invested capital, but they will also be burdened with debts and personal guarantees, which will cause trouble for their family and other close people. Regarding this point, this paper proposes that, as a result of Japan’s small and medium-sized enterprise policy being centered on providing lateral support to small and medium-sized enterprises with advanced knowledge and technology, the focus on entrepreneurship has tended to be on venture companies, with little attention paid to small-scale entrepreneurship, and that, as a result of the decline in the population of 18-year-olds and the chronic labor shortage, the commitment between high schools, universities, and companies has deepened, leading to the strengthening of employment practices in Japan that assume the hiring of new graduates en masse and long-term continuous employment, and that the orientation of future entrepreneurship in the career development process has receded. Based on the discussion so far, it proposes, as a way to change the current state of entrepreneurship in Japan, to change the reference point from (1) “the goal of starting a business” to “the means required to start a business” and (2) from “occupation as a goal” to “occupation as a means,” and to promote side jobs and dual jobs as a method of entrepreneurship suited to the actual situation in Japan.