Strategic Human Resource Management in Japan

January 22, 2025 [No. 132 – 2024]

 

Prof. Kuriyama Naoki
Faculty of Business Administration,
Dean of the Graduate School of Economics, Soka University

 

 

 

In the 1980s, the competitive strength of the Japanese automobile industry and other sectors visibly increased. The attention of the world focused on Japan's successful economy, and the United States felt threatened by it. In the 1990s, economic globalization was accelerating. Debate about strategic management, which considers how to gain a competitive advantage and capture market share, reached a peak. Japanese companies were expanding internationally. Western businesses, especially in the United States, were strongly worried about this. It is no exaggeration to say that the academic and industrial sectors were fully committed to developing strategies.

To make it easier to understand the main streams in these strategies, we can summarize them based on two approaches. It can be explained them using SWOT analysis, which is a classic framework for organizational analysis. SWOT is an abbreviation that stands for Strengths, Weaknesses, Opportunities, and Threats. Strengths and weaknesses may be viewed as an organization's internal resources. Opportunities and threats may be seen as its external context. One stream of strategic management involves searching for internal resources (S and W) and the organization's internal fit. Another stream involves searching for an organization's external context (O and T) and external fit.

Starting in the 1990s, the world's attention focused on competitive advantage based on context. This theory was proposed by Michael Porter, who advocated the second of the two streams (external fit). He advised changing priorities (differentiation, focus, cost leadership strategy) based on the external context. To do this, agile adaptation to the external context is important. Later, in the 2000s, the resource-based view became influential. This approach was suggested mainly by Jay Barney. He argued that even if a company adapts agilely to the external context, other companies will soon imitate its strategy and catch up. Therefore, a strategy that features internal resource heterogeneity and immobility will lead to a more sustainable competitive advantage.

These two corporate management streams have a major impact on Strategic Human Resource Management. One approach derives from organization-building and human resources for the purpose of gaining a competitive advantage in response to the external context. One researcher has called this Hard HRM. This approach tries to identify patterns in HR systems adapted to various external contexts. It requires the entire organization to be able to respond agilely. On the other hand, strategic human resource management derived from the Resource-based View focuses on internal resources. It is accordingly called Soft HRM. Advocates of Soft HRM include Jeffrey Pfeffer and others. They have tried to identify best practices by considering Japanese companies. These include employment security, teamwork, extensive on-the-job training, and information-sharing.

Japanese human resources strategy stands at a crossroads. It must be directed whether to continue with Soft HRM, as in the past, or shift to Hard HRM. Perhaps it is necessary to aim for the best mix by gauging which values should be defended and which values should change.