Japanese-owned companies in the United States significantly outperform their American counterparts in key business areas ranging from capital investment to quality control, according to a newly released Columbia Business School survey.
While the survey does not compare the relative profitability of the U.S. and Japanese-owned firms, the findings lend statistical credence to assertions that Japanese management techniques -- stressing customer service, employment participation and production quality -- can lead to superior marketplace performance over American management techniques, which emphasize financial results, said Martin K. Starr, a professor who coauthored the report, "The Performance of Japanese-Owned Firms in America."
"The bottom line has become such a ubiquitous term," said Starr, "but these results indicate that you can't get there without these other points."
The report also implies that, with modifications, Japanese management techniques can be transplanted successfully to the United States.
The survey, which relied on 159 responses from a sampling of 675 Japanese-owned firms in industries ranging from high technology to textiles, points out major differences of Japanese-owned companies in comparison with American firms:
* Quality control standards in the Japanese firms were very stringent, with 95 percent of the companies reporting a defect rate of under 5 percent. Roughly half the companies reported a defect rate of less than one half of 1 percent. "This is much lower than it is in the comparable American firms," the report notes.
* Nearly half of the Japanese-owned firms reported less than a 1 percent absentee rate; 95 percent reported less than a 5 percent absentee rate.
* The Japanese-owned companies enjoyed a higher rate of employe growth and capital investment than comparable American firms.
Columbia's Starr cautioned that there may be a positive bias in the findings because successful firms are most likely to respond to surveys of this kind. But he insists that in the aggregate, the results are representative of Japanese-owned American companies -- a group he estimates represents close to $15 billion in direct investments.
However, the survey results also note that the Japanese have made several modifications in their management techniques to accommodate American life styles. "They adapt to the culture," Starr said.
For example, the Japanese practice of guaranteed lifetime employment is not, for the most part, explored by Japanese-owned companies in the United States. Similarly, the Japanese manufacturing approach known as "just in time," which relies on maintaining low inventory levels and a network of diligent suppliers, is rarely used in this country because reliable American suppliers are hard to find, the report says.
On the other hand, Japanese firms stress employe participation in company management through such techniques as quality circles and get-togethers of top manangement with low-level workers.
"Their overall premise is that everybody in the company is a tremendous resource," Starr said.
Japanese-owned American companies, like their Japanese counterparts, also place a very heavy emphasis on preventive maintainance and quality control, with employes being instructed that zero defects are paramount.
Cultural differences also have arisen as Japanese-owned firms cope with American priorities. One Japanese manager in this country, according to the survey, stated that "the local employes here put their life first, the company second."
American employes, on the other hand, maintained in the report that the Japanese managers often didn't understand the American marketplace; consequently, that "slows down decision-making," they said.
The average Japanese-owned firm surveyed by the Columbia business school had 185 employes and net fixed assets of about $16 million. Virtually all of the firms indicated that they planned major expansion over the next three years.