A Community of Employees

This chapter presents an analysis of the role of employees in the governance of their companies. There are two main perspectives on the relevance of employees for the system of corporate governance in Japan. The first is that the Japanese company is a corporate community rather than just a production mechanism. The second perspective is that Japanese companies have prioritized the interests of employees at the expense of shareholders, which is a sign of poor corporate governance. The arguments presented in this chapter strongly corroborate the former view. Lifetime employment and its associated practices continue to be highly valued in the Japanese companies studied. These practices are closely bound up with a strong commitment among employees to their colleagues and their company, which is in turn bound up with strong feelings of personal and collective responsibility among employees for the actions of the company as a whole. This is consistent with a participatory and inclusive form of corporate governance, where employees are committed to and closely involved in ensuring their companies are governed well.