A GLOBAL STANDARD?

March 1, 2002. I had just arrived in Tokyo. Jet lagged, but thinking I should get oriented as soon as possible, I decided to attend a lecture entitled “Globalization and Corporate Governance” presented by an American professor, Christina Ahmadjian, then teaching at a major private university in Japan (Ahmadjian 2002). In her lecture – which was attended by a large number of top corporate executives and academics – Professor Ahmadjian exhorted the Japanese to adjust to the new realities of globalized capitalism and adopt what she called the “Global Standard.” The Global Standard, she proceeded to explain, was used by the most successful companies in the world and differed from the standard governance practices in effect in most Japanese firms. Whereas Japanese firms were typically run in a manner similar to large hierarchical families, the Global Standard demanded greater separation and competition between the constituent parts of the firm, larger independence between financial interests and manufacturing interests, more flexibility in the labor market, and most importantly, greater transparency in corporate governance decisions. Professor Ahmadjian's major point was that the traditional “Japanese Model” firms needed to become more like American firms if they were to survive in the modern globalized economy.

I had heard versions of this argument before. Many had criticized Japanese firms for their lack of transparency, rigid employment ladders, and cozy relationships between financial institutions and borrowers.