The purpose of this paper is to investigate the determinants of the introduction of executive officer system in Japanese firms. Executive officer system is one of the top management reform plans in the late 1990s, and it intends to reinforce the functions of both board (decision making and monitoring role) and each divisional management. According to the previous studies on executive officer system, it is reported that firms adopted this system for the purpose of board revival by decreasing the number of directors. Yet, the relationship between firm performance and the introduction of executive officer system is not clear. So, the first concern of this paper is to clarify whether the poor performance really increases the pressure of board restructuring or not. This is important from the viewpoint of good corporate governance. Using a sample of large 357 firms in manufacturing sector, we analyzed the effect of firm performance on the introduction of executive officer system. The results of the logit model estimation showed that lower performance (industry-adjusted ordinary profit per total asset) increased the probability of introducing executive officer system. This means that lower performance increases the pressure of board reform, and indicates the possibility that some kind of an effective governance mechanism is working behind. Then, the second concern is to specify what kinds of governance characteristics have an influence on the adoption of executive officer system. As a result of estimation, which investigated some governance factors, the probability of adopting executive officer system was high for the firms that had relatively weak relationship with main bank and parent company. And it was also found that outside shareholders (foreign financial institutions and life insurance companies) and insiders' commitment (measured by the employees average tenure for their company) exaggerated the negative correlation between firm performance and the introduction of executive officer system. Therefore, when the firm performance was poor, both the external and the internal disciplines worked complementally to increase the probability of introducing executive officer system.

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In the time of rapid progress of WTO system and regional economic permeation in East Asia, the idea of international division of production and labor should be highlighted not only from the perspective of macro international economy, but also from the viewpoint of international allocation strategy of global firms. This paper will take the issue of international division of production and labor at firm level. We statistically examined the hypothesis that Japanese global firms have organized discriminative and/or complementary relations among their locations and that these relations have played important role in driving the restructuring process of domestic business and maintaining the level of domestic production. Moreover the relations have also made good effects on intra-firm trade and contributed to the creation of comparative advantage on domestic production side. Behind this mechanism, there seem to be strategic behavior of global firms, behavior not only just responding to the external change of comparative advantage, shifting their production oversea in the short-term economic calculation, but also creating internal comparative advantage and shifting the pattern of resource allocation toward competitive field in the long-term perspective. This structural shift is backed up with their rationale that the priority of internal advantage creation in mother country will ultimately be significant for survival in the long-run global competition. However without this rationale, keeping domestic production just in the name of employment will lead the firms to the danger of drastic layoff.

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This article deals with the dichotomy between markets and hierarchies in new institutional economics, especially transaction cost theory. In economics and management studies, there is an interesting illusion. This illusion derives from the complementary substitution of markets and hierarchies in concrete level, although the both concepts are incompatible and exclusive paradigm in abstract level. The purpose of our article is to consider which of economics or management theory does an above problem work out. We use the system approach, in which we apply 'Autopoiesis' theory to market theory and organization theory in order to solve this problem. First, we reconsider the main paradigm in social sciences, depending on Tomas Kuhn's paradigm concept. In so doing, we find out that there are two main paradigms in social sciences, the concept of 'market science' and 'organization science.' In this article, organizations are equal to formal organization which consists of scalar organization and lateral organization (Barnard, 1938; 1948). Second, we make clear the problem which lenses are useful to see through very complicated social phenomena. There are two differentiation between two concepts: (a) there have or have not character of subject, and (b) media to utilize to refer to own meaning. Third, by these differentiations and the features of lateral organization, we specify the correlation between two concepts and lead to a following view. Our view is that organizations which have character of subject internalize transactions in markets at the very point when their activities combine to customers, suppliers, stakeholders, and other organizations, rather than that markets which do not have character of subject internalize organizational activities at the very point when organizations engage to transactions. Our conclusion of this articles is that it seems to be able to see more through very complicated social phenomena in the view of organizations, and therefore that Management theory which study organizations-human cooperation-are discipline to study modern social phenomena most comprehensively.

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This paper analyzes the relationships among three concepts of ambiguity, equivocality and uncertainty. These concepts are used to describe organizational behavior, but have been applied in different models. Ambiguity is the key concept in the garbage can model and refers to disorder in organization. Equivocality is employed in the evolution model represented by Weick (1979) to describe the cycle of organizing. Organizing is consensually validated grammar of reducing equivocality by means of sensible interlocked behaviors. Uncertainty is used in contingency theory and resource dependence theory. For dealing with the problem of uncertainty, organizations either reduce the necessity of information processing or increase the ability of information processing. By applying these concepts, we can get rich explanation about organizational behavior. For a better understanding, it is important to take a look at the relationships among these concepts at the same time. There are several theories dealing with the relationships among them, though those theories use them in their distinctive way and there has been no work trying to evaluate and integrate those models. To resolve the theoretical problems above, we firstly survey three models which deal with the three concepts and extract their characteristics. Those three models are Weick model, Information-processing model, and Sequential model. The former two models can be categorized as synchronous model. Secondly, we compare the synchronous model and the sequential model in terms of multi-paradigm theory and point out the superiority of the sequential model over synchronous model. According to Schultz & Hatch (1996), it is important to show contrasts and connections between paradigms in multi-paradigm research. The sequential model we present in this paper deals with both contrasts and connections. Thirdly, by interpreting the synchronous model through the sequential model, we offer a comprehensive explanation of the relationships among ambiguity, equivocality, and uncertainty.

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Despite the importance of the service department in the organization, few studies have investigated the antecedents and consequences of innovation in service departments. The purpose of this study is to examine the relationship between organizational behavioral patterns, innovations, and performance in Japanese sales departments. Although the coexistence of cooperation and competition has been discussed mainly in the inter-organization context such as in strategic alliances, it has been rarely examined in the intra-organizational context. Particularly, the role of competition within the organization has received little attention. It is notable, however, that recent research has emphasized the role of creative pressure that seems to be related to competition and cooperation within an organization. Based on a cross-sectional sample of 203 Japanese sales departments and structural equation methodology, this study empirically examine how competitive and cooperative behavioral patterns affect the two core components of organizational innovation (technical and administrative) en route to affecting department performance. The results indicate that competition and cooperation within a sales department influence both technical and administrative innovations, and that technical and administrative innovation have an impact on performance. The findings suggest that competition stimulates salespeople's motivations to generate innovative ideas and encourages productive conflict, and cooperation promotes diffusion of these ideas and reduces destructive conflict within a department. This study has two managerial implications. First, sales managers need to recognize the importance of striking a balance between competition and cooperation within a department in promoting innovation. In particular, since intra-organizational competition is a double-edged sword, managers should avoid relationship conflict, which is detrimental to innovative activities, and try to develop creative competition.

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This paper is an attempt to explore the process of drug discovery and development. Although pharmaceuticals are crucial in modern society, there are few empirical studies that examine the process of drug innovation fully and closely. Using the approach of the social shaping of technology, which focuses on technical contents and social processes of technological change, this work demonstrates the complex interactions between human actors, non-human entities, and institutional and structural factors in the process of drug discovery and development. Two case studies are included: Cimetidine, an anti-ulcer drug discovered and developed in the UK, and tamsulosin, a drug for the treatment of urination disorder, discovered and developed in Japan. Both cases show that the process of drug innovation is not totally rational and linear but political and interactive. Four aspects of drug innovation are identified, namely the shaping of the compound, of the application, of organizational authorization and of the market. In each aspect, various human actors, non-human entities, and institutional and structural factors are differently involved and interacted with each other. These different aspects of drug shaping themselves also interact and interdependent with each other. This paper concludes that the linear model that regards an innovation process as a unilateral one from R & D through production to market is not appropriate to understand innovation in the pharmaceutical industry. Instead, it proposes a view that drugs are shaped through a highly interactive and political process. This implies that the idea that huge research investment or good technological seeds automatically lead to successful products is quite misleading. Social activities including networking, intra-organizational politics and marketing are also essential for the shaping of drugs. Technology management in the pharmaceutical industry should recognize these activities as opportunities for promoting innovation.

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The internal institutionalization of business ethics becomes more important when viewed from the perspective of what can be described as "Business Ethics", which is designed to prevent any corporate scandal from occurring in the first place and also to promote sound corporate behavior. It is connected with corporate sustainable development. "Sound corporate behavior" is promoted through discussion of the meaning and importance of ethical behavior, and enlightenment in an organization. Thinking about "the best practice" or "do the right thing" becomes an ethical edge and finally the guidepost to ethical corporation. However, the construction of a perfect organization with no possibility of scandals occurring is in many ways almost impossible. The organization and its members occasionally cause a scandal simultaneously acknowledging unethical behaviors as a matter of unpleasant necessity. Such examples of unethical behavior sometimes occur by an almost imperceptible process. Moreover, an individual who behaves with malice tries to cause illegal act by evading any laws. The scandal should be prevented well in advance, and steps be taken to do what is considered necessary in order to conduct business in a manner that is compatible with acceptable ethical standards. This should be approached in such a way, so as to ensure that the least damage is done to society even if such an incident happens by chance. This is a part of the social responsibility expected of a corporation as a public organ. In this report, I would like to propose the internal institutionalization of "The Ethics Help & Reporting System" within the corporation so that it may have an important "self-cleansing" function in business ethics. Consequently this avoids the risk of a scandal occurring, and also minimizes adverse effects should it happen by any chance.

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It is often argued that Japanese firms operate their businesses within the relations of corporate networks. Although many well-established firms in fact belong to some corporate groups, there are also independent firms that do not have close associations with such groups. These independent firms tend to be relatively new compared to the well-established group firms and are sometimes still managed by the founders who hold equity stakes. While previous research on Japanese firms often focuses on large group firms, this paper examines the independent firms as they have not been paid as much attention as group firms. This study investigated the effects of the liability of newness on behavior and performance of Japanese firms. Specifically, this paper examined the relationships between firm age, group affiliation, corporate finance, stock ownership by the founder and foreign sales, ROA, and TSR. The results of analysis support the view that firm age and group affiliation affect a firm's propensity to rely on foreign markets. Further, it was found that heavy reliance on bank loans, stock ownership by the founder, and firm age were associated with profitability. We also found negative relations between reliance on bank loans, group affiliation, and TSR. These results are consistent with the view based on the liability of newness and resource dependence theory. For Japanese firms that were relatively new, it was difficult to penetrate the domestic market because of various disadvantages that arise from the liability of newness. That led these firms to enter foreign markets from the early stage. Group affiliated firms, on the other hand, did not have a strong incentive to seek foreign sales because they could rely on stable domestic sales. The results of this study suggest that these early experiences have strong and long-lasting effects on a firm's current behavior.

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