From Industrial Relations to Investor Relations? Persistence and Change in Japanese Corporate Governance, Employment Practices and Industrial Relations

The international drift towards corporate governance reform changed into a higher gear in the latter half of the 1990s. As the process of corporate governance reform unfolded, it brought into sharp relief contrasts between three different models of corporate governance: the classical model, the enlightened shareholder value model and the pluralist model. The corporate governance reforms envisaged by the Keizai D o ¯ y u ¯ kai and Nikkeiren employers' associations can be classified under the pluralist model. However, the findings of an extensive questionnaire survey conducted on executive managers of large firms suggest that the enlightened shareholder value model seems to be supported by one out of every three executive managers in Japan. Spurred by reforms of the Commercial Code and other laws relating to corporate governance, major firms are increasingly looking to establish a system of consolidated management encompassing the entire corporate group, with emphasis on maximizing capital efficiency. Taking place in parallel with this development are changes in employment practices. Although long‐term stable employment practices are not likely to be changed drastically in the foreseeable future, it is highly likely that the seniority system will be further eroded, wage differentials will widen, terms of employment and working conditions will become individual‐specific, and remuneration systems will be diversified. However, labour unions are failing to find ways of coping with these prospects, and are continuing to lose influence.