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Command without control: a way ahead for the multinational business.

Command without control: a way ahead for the multinational business

For 40 years from the late 1960s, Japan was a powerhouse of the developed economies. From cars to computers and from television sets to telecommunications equipment, many of the world's most efficient producers and respected brands were Japanese. In the 1970s and 1980s, the Japanese motor industry had established such a lead over its western rivals that populist politicians in the USA and western Europe took to attacking consumers for buying Japanese cars.

Japan, whose economy had been down and out at the end of the Second World War, had established its leadership position first by copying many of the western techniques of mass production, then by adding innovative processes of its own. From total quality management to the poka-yoke system of mistake-proof manufacturing and from just-in-time production to quality-function deployment, Japan adopted systems that transformed the manufacturing process by building quality into even the most routine of factory operations. Ironically, these quality systems were then as eagerly copied in the west as western systems had been copied by Japan in the late 1940s and early 1950s.

Today, though, a further shift in economic power is taking place in the world, which is every bit as important as the rise of Japan in the latter half of the last century. China recently ousted Japan from the position of the world's second-largest economy after the USA. While the average age of the Japanese population is increasing and the number of people in the country is declining, China offers a vast population with rising incomes.

Nakamoto provides some interesting statistics in the August 2010 edition of the Financial Times. Three Japanese ports were among the world's top 20 in 1994 in terms of the number of containers handled. None of them remains in the league table, while the Chinese ports of Shanghai and Shenzhen are placed second and fourth. China has also ousted Japan as the favoured regional base for expatriate companies in Asia, and as the preferred location for research and development.

Despite these figures, Nakamoto points out that Japan appears not to feel threatened by the rise of its giant neighbour. This is partly because Japan now looks to China as its source of growth. But it is also because, for the moment, the two countries' industries are complementary. China's main exports are textiles, toys and plastic goods - industries which are no longer central to the Japanese economy. Even the high-technology goods that China exports often use components from Japan.

As Japanese companies expand into China, some are following a new model of the multinational firm. Rather than trying to exert rigid control from their home base, they are allowing their Chinese operations greater autonomy, to gain maximum benefit from the advantages that the Chinese business model can bring.

In Volume 50, Issue 4 of Management International Review, Tallman and Koza describe this ?command without control' system of operation as the way ahead for multinational firms. It offers, say the authors, a global multi-business perspective where headquarters are able to manage for the future, rather than becoming trapped in ?managing for the last struggle'.

China and Japan have a long history of animosity, but their increasing economic interdependence seems set to promote an era of co-operation. The prospects are exciting. If Japan and China really do manage banish old suspicions and deepen their mutual understanding, Japan could once again find itself leading the west - this time, in establishing a way to turn the potential of business with China into solid, bottom-line returns.

In other Emerald news, the inaugural issue of the journal of Sports Business & Management is due to be published at the end of November 2010. To find out more about the journal, or submit an article, please go to: www.emeraldinsight.com/sbm.htm