Management Strategies and Employment Systems on Japanese Small Enterprises

Abstract

There are a lot of studies on industry with local tradition. These studies have not argued the employment system on local small enterprise. So, we cannot evolve the employment system model from them. They say that a feature of Japanese employment system is lifetime employment system. There are some opinions about features of Japanese employment system: affirmative opinion and adverse opinion. A model of the lifetime employment system has not discussed the interface between enterprise and external labor market and does not included family worker in it. So, we can not use lifetime employment system for investigating employment system on local small enterprise. Therefore, we must present a model for analyzing it. Our model composes of employment sub systems, criteria of organizing employment system and restrictions.

Employment system can be categorized four employment sub systems (Temporary worker model, manpower model, professional model and careerist model) by two dimension: labor market and knowledge and skill for doing task. If enterprise organizes its employment system, it is based on five criteria of organizing its employment system (Cost minimizing, the flexibility of labor cost, deployment, the escape from uncertainty and the resource of having the advantage). There are conflicts between the criteria cost minimizing and the flexibility intend to external of labor market and the other criteria intend to internal of labor market. The problem to organize employment system is to minimize the conflict. Between internalization and externalization of labor market. When enterprise organizes its employment system, it faces on restrictions (Technology, labor custom, the situation of external labor market and labor policy).

Local small enterprise has located countryside where the excess working population is. It has organized its employment system in dependent on cost minimizing and the flexibility. The environment to surround local enterprise has been changing, it can not keep the traditional employment system. Especially, its production system is changing from mass production to limited production of a wide variety of goods, the life cycle of goods is getting shorter. These changes are necessitating agile competition for local small enterprise. This trend makes local enterprise change management style from cost leadership to speed management. For example in netting industry, the enterprise that has never started oversea operation has been turning a big profit. The enterprises that have located plant oversea can not correspond to these changes and have poor profit. This change of management style makes small enterprise change criteria from cost minimizing to deployment, the escape from uncertainty and the resource of having the advantage. The meaning of cost leadership on industry with local tradition is changing from labor cost minimizing to minimizing total cost of production process. So, it is very reasonable that local enterprise chooses manpower model instead of temporary worker