Management Practices and Firm Performance inJapanese and Korean Firms-An Empirical Study Using Interview Surveys-

August 2009

Keun Lee(Seoul National University)
Tsutomu Miyagawa(Gakushuin University and RIETI)
Shigesaburo Kabe
(Japan Center for Economic Research)
Junhyup Lee(Seoul National University)
Hyoungjin Kim(Seoul National University)
YoungGak Kim(Hitotsubashi University)
Kazuma Edamura(Institute of Intellectual Property)* This paper is a revised version of JCER Discussion Paper No. 120. We thank Professors Mitsuhiro Fukao (Japan
Center for Economic Research and Keio University) and Haruo Horaguchi (Hosei University) for their insightfulcomments. Professors Kyoji Fukao (Hitotsubashi University), Keiko Itoh (Senshu University) and other members of
the project entitled ‘Productivity and Organizational Capital in East Asian Countries’ at the Japan Center for
Economic Research, also gave us helpful comments to improve our paper. We also thank Professor Takizawa of
Toyo University, and Mr. Kawakami for their excellent research assistance.

Abstract

To compare management practices between Japanese and Korean firms, we conducted interview surveys
on organizational and human resource management based on Bloom and Van Reenen (2007). The
average management scores resulting from the interview surveys in Japanese firms were higher than in
Korean firms. The gap in the scores between Japan and Korea can be explained by more conservative
human resource management practices in Korean small and medium sized firms. We regressed someindicators representing management practices on firm performance. Estimation results suggest that inJapan, organizational reform plays a role in improving firm performance, while management practices
shown in the interview scores do not affect firm performance directly. In Korea, the measure obtained byfactor analysis reflecting human resource management improves firm performance in the whole samples.
In addition, the average score as well as the measure obtained by factor analysis affects firm
performance in the Korean manufacturing sector.

Keywords: Intangible assets, Management practices, Organizational capital, Human resource
management, Factor analysis
JEL classification numbers: D21, L23, M11, M12, M15, M51

Contact:Tsutomu Miyagawa
Faculty of Economics, Gakushuin University
1-5-1 Mejiro, Toshima-ku, Tokyo, 171-8588, Japan
Tel: +81-3-5992-2257
Fax: +81-3-5992-1007
E-mail:19990230@gakushuin.ac.jp

11. Introduction
The US economy had

marked accelerated economic growth from the late 1990sto thefirst half of 2000s. At first, many economists and policymakers believed that the rapid growth in
the IT industry and IT investment contributed to the acceleration in US economic growth, andmany advanced countries encouraged the IT industry and IT investment in their own countries.
However, the gaps in rates of economic or productivity growth between the US and otheradvanced countries have remained intact even in the early 2000s. Since then, many economists
have paid attention to the complementary role of intangible assets in productivity growth.

Thatis, they started to believe that without intangible assets, IT assets do not contribute toproductivity growth at the firm and aggregated level.1
Corrado, Hulten and Sichel (hereafter referred to as CHS) (2005, 2006), and estimated theinvestment in intangible assets at the aggregate US economy level, classifying intangible assets
into three categories: computerized information, innovative property, and economic
competencies. Following CHS (2006), many researchers in other advanced countries tried toestimate intangible investment.2 Comparing the estimation results in Japan with those in the US
and the UK, Fukao et al (2009) found the following characteristics of Japanese intangible

1

Economic Report of the President 2007 wrote ‘Only when they (businesses) made intangible investments tocomplement their IT investments did productivity growth really take off.’ (p. 56)
2
See Marrano, Haskel and Wallis (2007) for the UK, Hao, Manole and van Ark (2008) for Germany and France, andFukao et al. (2009) for Japan.

2

investment.
(1)

Investment in computerized information measured as a share of GDP in

Japan is almost the same as that in the US and the UK.
(2)

Due to the large R&D investment levels in Japan, the ratio of investment ininnovative property to GDP in Japan is greater than that in the US and the UK.
(3)

As for investment in economic competencies, the investment/GDP ratio inJapan is much smaller than that in the US and the UK.
The third category includes investment in brand equity, firm-specific human capital, andorganizational capital. Among these, the investment in firm-specific human capital andorganizational capital in Japan is much smaller than that in the US and the UK. However, it isdifficult to estimate these investment amounts at the aggregate level and to compare theseamong advanced countries.3 In addition, these investments depend on management practices at
the firm level. Therefore, recent studies on intangible investment have focused on management
practices on human resource management and organizational reform at the firm level using
micro-data.
Black and Lynch (2005) categorized organizational capital into three components;
accumulation in human capital, how employees’ voices are reflected in the workplace, and3
For example, CHS (2006) does not account for the investment in firm specific human capital through on-the–job
training while this type of investment is very important in Japanese firms.

3organizational design. Bloom and Van Reenen (2007) examined the effects of management
practices on firm performance based on interview surveys of plant managers. Management
practices were assigned scores based on interview results, and these scores were included as
independent variables when they estimated the production function. According to their study,
U.S. firms got the highest score of the four countries studied (France, Germany, the UK, theU.S.). They believed that the low score in European firms was partly explained by weakcompetition and the prevalence of many family-owned firms.
In Japan, Kurokawa and Minetaki (2006), Kanamori and Motohashi (2006), andShinozaki (2007) examined the effects of organizational reform resulting from IT investment onfirm performance by using the Basic Survey on Business Enterprise Activities and IT Workplace
Survey. Their studies suggested that organizational reform resulting form IT investment waspartially responsible for improving firm performance.
While our paper also focuses on the effects of organizational reform and human resource
management on firm performance, there are three different features from the previous studies inJapan. First, we examined more comprehensive management practices on organizational andhuman resource management than earlier studies. Second, we studied the effects of management
practice on firm performance using not only official surveys but also interview surveys
following Bloom and Van Reenen (2007). Third, we compared the interview scores and firm

4

performances between Japanese and Korean firms.
In the next section, we describe our interview survey. Though our interview survey
basically follows Bloom and Van Reenen (2007), we incorporate some questions that were notincluded in Bloom and Van Reenen (2007) to capture some unique features of Japanese andKorean firms. In the third section, we construct a management score by quantifying theinterview results of Japanese and Korean firms, and compare the management practices in firmsof the two countries. In the fourth section, using management scores and financial statements inJapanese and Korean firms, we estimate a production function and examine the effects ofmanagement practices on firm performance. In the last section, we summarize our studies.
2. The Interview Surveys in Japan and Korea
Why did we conduct the interview survey?
Recently, it has been recognized that qualitative factors in management practices not
captured by official surveys are affecting firm performance. At first, many researchers
conducted their own mailed surveys to examine these qualitative factors within firms. However,
the response rates to the surveys were very low. For example, the response rate to the mailed
survey conducted by Ichikowski (1990) -- who tried to examine the effect of human resource
management on Tobin’s Q or labor productivity-- was only 10%. In the U.S., researchers andstatistical agencies have adopted interview surveys to improve the response rate. For example,

5the response rate of the interview survey in the National Employers Survey conducted by the
National Bureau of Census was 66% in the manufacturing sector and 61% in the
non-manufacturing sector. Much of the recent research on human resource management has also
incorporated interview surveys. Bloom and Van Reenen (2007) conducted interview surveys bytelephone to examine management practices in firm and attained a 54% response rate.
Following the above experiences, we also decided to conduct an interview survey.
How did we design our interview survey?
In our research, we followed the interview survey conducted by Bloom and Van Reenen.
However, we conducted the survey by meeting the managers of the planning departments offirms face-to-face, while Bloom and Van Reenen (2007) conducted their survey by telephone.
The reason why we conducted face-to-face interviews is that we were concerned about low
response rates. In Japan and Korea, when we want to ascertain qualitative features in firms,
face-to-face communication is a more useful tool than telephone interviews.
Bloom and Van Reenen (2007) classified their eighteen interview questions into four
categories; product management, monitoring, the firm’s target, and incentives for workers.
While their survey was extended to only manufacturing plants, our survey was also extended tofirms in the service sector. Thus, we excluded questions about product management, as theywould not apply to all firms. Instead, we asked questions about organizational change and6on-the-job training. As a result, we can classify our questions into two categories; organizational
capital and human resource management.
The first category covers the first four questions (Questions 1 to 4). In this category, we
wanted to examine the managerial vision of the firm, the organizational goals, communication
within the firm, and organizational reform. In the remaining questions (Questions 5 to 13) that
focused on human resource management, we added a question about on-the-job training (OJT)
to the questions in Bloom and Van Reenen (2007), because the effects of OJT in Japanese andKorean firms are considered significant to firm performance. The detailed interview questions
are shown in Appendix 1.
We quantify the responses to the above questions as follows: In each question, we havethree sub questions. If the firm manager responds negatively to the first sub-question, we givethe response a 1 and move to the next question. If he responds positively to the first
sub-question, we move to the second sub-question. If the manager responds negatively to thesecond sub-question, we mark a 2 and move to the next question. If he responds positively tothe second sub-question, we move to the last sub-question. In the last sub-question, the positive
response of the manager is given a 4, while a negative response is given a 3.
Our survey focused on four industries in the manufacturing sector (Electric machinery,
Information and communication equipment , Motor vehicle , and Precision machinery) and7three industries in the service sector (Internet-based services and information services, Media
activities, and Retail service). In Japan, we obtained our data from 573 firms. As the total
sample was 1086 firms, the response rate in Japan was 52.8%. In Korea, we obtained the data of
350 of the sample 591 firms, thus the response rate was 59.2%4.
3. Management Practices in Japan and Korea
In this section, we compare the management practices between Japanese and Korean
firms based on interview surveys.5 Table 1 shows the distribution of firms in Japan and Korea
by industry. While the share of manufacturing firms in the total number of firms in Japan is
33.9%, the share of manufacturers in Korea is 84.9%. In particular, the firms in the motor
vehicles industry in Korea account for 40% of the total number of firms. In Japan, the share offirms in the retail services is 40.0%.
(Place Table 1 here)

Table 2 shows the distribution of firms in Japan and Korea by size as measured by the
number of employees. In Japan, the number of firms with fewer than 10,000 employees in thesurvey is 563 of the total 573. Of these, 313 are small and medium-sized firms (with fewer than
300 employees). In Korea, the number of firms with fewer than 10,000 is 348 out of the 350, of
which 260 are small and medium-sized firms.

4

The Japanese survey was conducted from February, 2008 to September, 2008. The Korean Survey was conducted from May, 2008
to July, 2008.
The results in the Korean interview surveys are based on Lee et al. (2009).

5

8

(Place Table 2 here)

As explained in the previous section, we assigned scores to the management practices based on
the interview surveys. Figure 1-1 shows the distribution of scores in all firms in Japan and
Korea. In Japan, the average score for all firms is 2.73 and the variance is 0.23. Many firms fall
between 2.5 and 3.5. In Korea, the average score is 2.33 and the variance is 0.32. The averagescore and the median value in Korea are lower than those in Japan and the variance of scores in
Korea is higher. Most of the Korean firms range from 1.5 to 2.5.
(Place Figure 1-1 here)

However, the difference in the distribution of scores in Japan and Korea may reflect thedifference in the industry composition in the samples. Thus, we examined the distribution ofscores by industry. Figures 1-2, 1-3, and 1-4 show the distribution of scores in the
manufacturing sector, the information-related services sector, and the retail sector respectively.6
In Figure 1-2, we find that the average score in the Japanese manufacturing sector is almost thesame as the average score in all firms. We also find that the distribution of scores of all firms in
Korea is affected by the distribution of scores in the manufacturing sector. While the averagescores in the manufacturing and information-related services sectors in Korea are smaller thanthose of Japan, the average score in the retail sector in Korea is the same.

6
The information-related services sector consists of internet-based services and information services, and media
activities.

9

(Place Figure 1-2 to Figure 1-4 here)

We classify our interview questions into two categories: one category consists ofquestions about organizational capital and the other, questions about human resource
management. We show the distribution of scores in organizational capital from Figure 2-1 to
Figure 2-4. In both countries, the average score in organizational capital is higher than that of allquestions together. The scores in Japan are higher than in Korea. These results imply that theorganizational targets are clear to all employees in Japan in more cases than in Korea, orJapanese firms improve their organizational structures more aggressively than Korean firms,
because high scores in organizational capital indicate a greater degree of transparency oforganizational goals or aggressive organizational reform.
(Place Figure 2-1 to Figure 2-4 here)

We also show the distribution of scores in human resource management in Figures 3-1 to
3-4. The average scores in human resource management are lower than those in organizational
capital in both countries. The average scores in Japanese firms are higher than those in Korean
firms in all sectors. In Korea, the low score in the manufacturing sector pulls down the score in
all firms. As a high score in this category indicates more flexible human resource management,
the results imply that Japanese firms are more flexible in their human capital management than
Korean firms.

10

(Place Figure 3-1 to Figure 3-4 here)

As seen in Table 2, the Korean sample consists of more small and medium sized firms
than the Japanese sample. Thus, we examine the distribution of average score in both countries
by size in Figures 4-1 and 4-2. In Figure 4-1, where the distributions of average scores in firms
with more than 300 employees are shown, we find a gap in the average score between Japan(2.81) and Korea (2.57). The median value (2.87) in Japanese firms is also higher than that
(2.57) in Korean firms.
(Place Figure 4-1 & 4-2 here)

As for firms with fewer than 300 employees, the peak of the distribution for Japanesefirms was at a point higher than the 2.5 mark, while for Korean firms, it was around 2. The
difference in the distribution leads to a wider gap in the average score in firms in medium andsmall sized firms in both countries than that in large firms. In contrast to the relatively highmean in the distribution of Japanese firms (2.64), the mean in Korean firms is 2.25. This gap in
the mean can be explained by the difference in the distribution in the average score in humancapital. The mean in the average score in human capital in Korean firms is very low (2.00),
while the corresponding mean in Japanese firms is 2.45. These results imply that humanresource management practices in Korean small and medium sized firms are more conservative11

than those in Japan.7
4. Do Management Practices Affect Firm Performance?
Using the management scores explained in the previous section, we examine the effects
of management practices on firm performance. Following Bloom and Van Reenen (2007) we
estimate the following equations:(1) ln Yi = cos t. + α 1 ln Li + α 2 ln K i + α 3 ln M i + α 4 Z i + Dummy i + ε i

2(2) FPi = const. +∑ β W + β Z + β E + Dummy + u
j

ij

3

i

4

i

i

i

j =1

Equation (1) is a standard production function including the management practices score(Z). Y is output, L is labor input, K is capital input, and M is intermediate input. Because wehave information about recent organizational reforms from the interview survey, we make adummy variable (Dummy) that indicates that organizational reform was conducted in the past
10 years. We include a cross term between Z and a dummy variable in the estimation. We also
include an industry dummy in the estimation. E is the logarithm of employees, which controls
the firm size.
In Equation (2), the measure of firm performance (FP) is the dependent variable. We takelabor productivity or TFP as a measure of firm performance. TFP is a Tornqvist measure, which

7

However, all differences in means in distributions between Japanese firms and Korean firms are not significant.

12

is expressed as follows.
(3) ln TFPt = ln Yt − s L ln Lt − s K ln K t − s M ln M t ,where s X ( X = L, K , M ) denotes the share of each production factor.
W represents both the capital labor ratio (K/L) and the intermediate input labor ratio(M/L).8 We include the same dummy variable as used in Equation (1).
As for Z, we use two types of variables as explanatory variables; one is the average scorein each firm and the other is the first factor calculated by factor analysis. If some of thequestions focus on a specific management factor in our survey, an average score may overstatethat specific management factor. Therefore, using factor analysis, we extract a neutral measurethat reflects each management factor evenly and include it in the estimation. The results infactor analysis in Japan and Korea are shown in Appendix 2. Because the Kaiser=Meyer= Olkinmeasures in Japan and Korea are 0.81 and 0.87 respectively, the application of factor analysis isappropriate in both countries.
4.1 Estimation Results for the Entire Sample
In Tables 3-1, and 3-2, we estimate Equations (1) and (2) using the average score in allquestions in the interview surveys in Japan and Korea. Because we have only cross-section data,
the estimation method utilized is OLS. In Table 3-1, the average score shows neither the8

When TFP is a dependent variable, we exclude W.

13expected sign nor a significant effect on firm performance. Some coefficients in theorganizational dummy in Table 3-1 are positive and significant, while they are negative andinsignificant in Table 3-2. In Table 3-2, the average score positively affects firm performance. In
particular, the coefficient in the average score is positive and significant when TFP is adependent variable. These results imply that organizational reform contributes to firm
performance in Japan and improvements in management practices are positively related to good
firm performance in Korea.
(Place Table 3-1 & 3-2 here)

As seen in Section 3, we divide the interview scores into two categories; those inorganizational capital and those in human capital. Tables 4-1 and 4-2 show estimation results
using the average score in organizational capital. In Table 4-1, the average score inorganizational capital shows a negative and significant sign when the dependent variable isoutput or labor productivity. These results imply that the manifestation of organizational goals
or communication within an organization does not contribute to firm performance in Japan. As
in Table 3-1, it is organizational reform that improves firm performance in Japan. In Table 4-2,
we find similar results to Table 4-1. We find a negative sign on the coefficients in an averagescore in organizational capital. Organizational reform affects TFP in Korea.
(Place Table 4-1 & 4-2 here)

14

In Tables 5-1 and 5-2, we show the effects of the average score with respect to humancapital on firm performance in Japan and Korea. The results in Table 5-1 are similar to those in
Table 3-1. The average score in human capital does not affect firm performance, butorganizational reform contributes to improvements in firm performance. The results in Table 5-2
are also similar to those in Table 4-2.
(Place Table 5-1 & 5-2 here)

Finally, we use the first factor of factor analysis using all interview scores on firm
performance instead of average score as independent variables in the estimations in Tables 6-1
and 6-2. While the results for Japanese firms (Table 6-1) are similar to the previous results, wefind that the first factor affects Korean firm performance significantly when the laborproductivity or TFP is a dependent variable (Table 6-2). From the factor analysis in Korea, thismeasure represents human resource management. These results imply that the measureindicating human resource management in Korean firms contributes to improving firm
performance. In Table 6-2, organizational reform also contributes to the improvement in TFP as
seen in Table 3-2, 4-2, and 5-2.
(Place Table 6-1 & 6-2 here)

4.2 Estimation Results in the Manufacturing Sector
Using the entire sample, we are unable to find clear evidence that organization and human15resource management within a firm affects the firm’s performance. Thus, we focus on
manufacturing firms in both countries and conduct similar estimations to those where we usedthe entire sample. When we conduct the estimation, we include cross terms between theorganizational dummy and the average interview score (or first factor of the interview scores) inEquations (1) and (2).
In Table 7-1 using the average score of the whole interview survey in Japan as anindependent variable, we obtain different results from those in Table 3-1. While theorganizational reform dummy becomes insignificant, the coefficient in the average score ispositive and significant in the estimation where TFP is a dependent variable and the cross term
is included. The negative and significant sign on the cross term implies that high average scoresin organizational reform does not contribute to improvements in productivity. We also finddifferent estimation results in Table 7-2 from those in Table 3-2. Some coefficients in the
average score are positive and significant. These results imply that improvements inorganizational and human resource management within a firm enhance firm performance in
Korean manufacturing firms.
(Place Table 7-1 & 7-2 here)

In Tables 8-1 and 8-2, we conduct estimations including the first factor of the interview
survey instead of the average score in Japanese and Korean firms. The estimation results in

16

Table 8-1 are similar to those in Table 7-1. The coefficient in the first factor is positive andsignificant when TFP is a dependent variable and the cross term between the organizational
reform dummy and the first factor is included as an explanatory variable. On the other hand, theresults in Table 8-2 are different from those in Table 7-2. All coefficients in the first factor are
positive and significant. Because the first factor in Korean manufacturing firms also represents
the degree of human resource management as seen in Appendix 2, this implies that
improvements in human resource management in Korean manufacturing firms contribute tobetter firm performance.9(Place Table 8-1 & 8-2 here)

4.3 Summary of the Estimation Results
In sum, in Japanese firms, the interview score measuring organizational and humanresource management does not affect firm performance directly in the estimation using theentire sample. Organizational reform, however does contribute to improvements in firm
performance. In the Japanese manufacturing firms, the interview score contributes positively tofirm performance. However, its effects are not significant except in the case where TFP
represents firm performance and the cross term between the interview score and organizational
reform is included.

9
When we conducted the estimations in the manufacturing sector, we recalculated the first factor using the sample ofmanufacturing firms.

17

In contrast to the Japanese firms, we find clear empirical evidence that when we take thefirst factor representing human resource management from the factor analysis, the measurecontributes to an improvement in Korean firm performance. However, organizational reform
does not improve productivity in Korean firms. When we conduct the estimation focusing on
the manufacturing firms, we find that the average interview score also affects the firm’s
performance. In the Korean manufacturing sector, improvements in organizational and humanresource management are likely to improve the firm performance.
5. Conclusions
Intangible assets have played a key role in productivity growth in the information age.
Among several kinds of intangibles, management skills and human capital are crucial to theimprovement in a firm’s performance. Bloom and Van Reenen (2007) examined the effects oforganizational and human resource management on firm performance using interview surveys
conducted in France, Germany, the U.K., the U.S. Following their study, we conducted theinterview survey on organizational and human resource management in Japan and Korea.
Following Bloom and Van Reenen (2007), we constructed scores on management
practices in each firm based on the interview surveys. For organizational management, firmsthat have clear organizational targets, better communication amongst employees, and conductorganizational reforms would have a higher score. For human resource management, firms that18

evaluate human resources flexibly and strive to keep employees motivated would mark highscores.
The overall average score in Japanese firms is higher than that in Korean firms. Even
when we study the average score in the manufacturing firms only (which dominate the sample
in the Korean survey) the result is similar to that in all firms. We compared the the average score
between Japanese firms and Korean firms by size.

We found that the gap in the average scorein firms with fewer than 300 employees is higher than that of firms with more than 300
employees. The gap in average scores between Japanese and Korean small and medium sized
firms is explained by the difference in the score of human capital between both countries. As aresult, we conclude that in Korea, small and medium sized firms are more conservative inhuman resources management than in Japan.
Using these scores, we examined the effects of management practices on firm
performance in Japan and Korea. In Japanese firms, we did not find any direct evidence thatmanagement practices contributed to better firm performance. In Korean firms, the first factor
representing human resource management has a positive and significant effect on firm
performance. The results in Korean firms are consistent with our findings in the score
distribution in Korean firms in Section 3. Organizational reform contributes to improvements infirm performance in Japan, while it only affects TFP in Korean firms.

19

When we conducted the estimations using the sample in the manufacturing firms, someestimation results showed that management practices contribute to improving Japanese firm
performance. In Korea, the average interview score as well as the first factor had positive effects
on firm performance.
Our study suggests that organizational reform and human resource management are key
factors to improving firm performance. When we have the opportunity to conduct further
surveys, we will focus on a detailed examination on the above two factors.

20

References
Black, S. and L. Lynch (2005), “Measuring Organizational Capital in the New Economy,” in C.
Corrado, J. Haltiwanger, and D. Sichel (eds.), Measuring Capital in the New Economy, The
University of Chicago Press, Chicago.
Bloom, N. and J. Van Reenen (2007), “Measuring and Explaining Management Practices acrossFirms and Countries,” Quarterly Journal of Economics 122, pp.1351-1408.
Corrado, C., C. Hulten, and D. Sichel (2005), “Measuring Capital and Technology: An Extended
Framework,” in C. Corrado, J. Haltiwanger, and D. Sichel (eds.), Measuring Capital in the
New Economy, The University of Chicago Press, Chicago.
Corrado, C., C. Hulten, and D. Sichel (2006), “Intangible Capital and Economic Growth,”
NBER Working Paper No. 11948.
Fukao, K., T. Miyagawa, K. Mukai, Y. Shinoda, and K. Tonogi (2009), “Intangible Investment
in Japan: Measurement and Contribution to Economic Growth,” Review of Income and
Wealth 55, pp. 717-736..
Hao, J., V. Manole, and B. van Ark (2008), Intangible Assets in Europe: Measurement andInternational Comparability,” paper presented at the final conference of EUKLEMS Project
held at Groningen.
Ichikowski, C. (1990), “Human Resources Management System and the Performance of U.S.

21

Manufacturing Businesses,” NBER Working Paper No. 3449.
Kanamori, T. and K. Motohashi (2006), ‘Centralization or Decentralization of Decision Rights?
Impact on IT Performance of Firms,’ RIETI Discussion Paper Series 06-E-032.
Kurokawa, F. and K. Minetaki (2006), “How Can IT Raise Productivity Linked with Workplace
Re-organization and Human Capital in Japan?,” (in Japanese), The Economic Analysis No.
178, pp. 54-95.
Lee, K., T. Miyagawa, S. Kabe, J. Lee, H.Kim., and Y. Kim (2009), “Management Practices andFirm Performance in Japanese and Korean Firms,” JCER Discussion Paper No. 120.
Marrano, M. G., J. Haskel, and G. Wallis (2007), “What Happened to the Knowledge Economy?
ICT, Intangible Investment and Britain’s Productivity Record Revisited,” Department of
Economics, Queen Mary University of London Working Paper No.603, Queen Mary
University of London, London.
Miyagawa, T., M. Ozaki, A. Kawakami, and K. Edamura (2008), “Organizational Reform andFirm Performance in Japan,” (in Japanese), RIETI Discussion Paper Series 08-J-062.
Shinozaki, A. (2007), “Effective Reforms with Information Technology: Logit Model Analysis
on Business Process Reengineering, Business Unit Restructuring, and Human Resource
Management,” (in Japanese), The Economic Analysis No. 179, pp. 36-54.

22

Figure 1 – 1 Distribution of Management Scores (All firms)
b. Korea

0

0

.2

.5

Density.4

Density

1

.6

.8

1.5

a. Japan

1

2

3

4

1

2

3

4

3

4

Score

Score

Figure 1 – 2 Distribution of Management Scores (Manufacturing firms)
b. Korea

0

0

.2

.4

Density.5

Density
.6

.8

1

1

a. Japan

1

2

3

4

1

2
Score

Score

Figure 1 – 3 Distribution of Management Scores (Information-related firms)
b. Korea

0

0

.2

.5

Density.4

Density

1

.6

.8

1.5

a. Japan

1

2

3

4

1

2

3
Score

Score

23

4

Figure 1 – 4 Distribution of Management Scores (Retail firms)
b. Korea

0

0

.5

.5

DensityDensity

1

1

1.5

1.5

a. Japan

1

2

3

4

1

2

3

4

Score

Score

Figure 2 – 1 Distribution of Management Scores in Organizational Capital (All firms)
b. Korea

0

0

.2

.2

.4

.4

Density.6

Density
.6

.8

.8

1

1

a. Japan

1

2

3

4

1

2

3

4

Score

Score

Figure 2 – 2 Distribution of Management Scores in Organizational Capital(Manufacturing firms)
b. Korea

0

0

.2

.5

.4

Density.6

Density

1

.8

1

1.5

a. Japan

1

2

3

4

1

2

3
Score

Score

24

4

Figure 2 – 3 Distribution of Management Scores in Organizational Capital(Information-related firms)
b. Korea

0

0

.5

.5

DensityDensity

1

1

1.5

1.5

a. Japan

1

2

3

4

1

2

3

4

Score

Score

Figure 2 – 4 Distribution of Management Scores in Organizational Capital (Retail firms)
b. Korea

0

0

.2

.5

DensityDensity
.4

1

.6

.8

1.5

a. Japan

1

2

3

4

1

2

3

4

Score

Score

Figure 3 – 1 Distribution of Management Scores in Human Capital (All firms)
b. Korea

0

0

.2

.2

Density.4

Density
.4

.6

.6

.8

.8

a. Japan

1

2

3

4

1

2

3
Score

Score

25

4

Figure 3 – 2 Distribution of Management Scores in Human Capital (Manufacturing firms)
b. Korea

0

0

.2

.2

.4

Density.4

Density
.6

.6

.8

1

.8

a. Japan

1

2

3

4

1

2

3

4

Score

Score

Figure 3 – 3 Distribution of Management Scores in Human Capital (Information-related
firms)
b. Korea

0

0

.2

.2

.4

Density.4

Density
.6

.6

.8

1

.8

a. Japan

1

2

3

4

1

2

3

4

Score

Score

Figure 3 – 4 Distribution of Management Scores in Human Capital (Retail firms)
b. Korea

0

0

.2

.5

.4

DensityDensity
.6

1

.8

1

1.5

a. Japan

1

2

3

4

1

2

3
Score

Score

26

4

Figure 4 – 1 Distribution of Total Scores of Firms with 300 or More Employees (All firms)
b. Korea

0

0

.2

.5

Density.4

Density

1

.6

.8

1.5

a. Japan

1

2

3

4

1

2

3

4

Score

Score

Figure 4 – 2 Distribution of Total Scores of Firms with Fewer than 300 Employees (Allfirms)
b. Korea

0

0

.2

.2

.4

.4

Density.6

Density
.6

.8

.8

1

1

a. Japan

1

2

3

4

1

2

3
Score

Score

27

4

Table 1 ． The Distribution of Firms in Japan and Korea by IndustryJapan

Ko re aNumber of Firms

Number of Firms

Electric machinery

44( 7.7% )51( 14.6% )Information and communication
machinery73( 12.7% )96( 27.4% )Motor vehicles

52( 9.1% )140( 40.0% )Precision machinery25( 4.4% )10( 2.9% )15( 4.3% )11( 3.1% )Industry

Internet-based services
135( 23.6% )Information service
Media activities14( 2.4% )9( 2.6% )Retail230( 40.1% )18( 5.1% )

Total

573

350

Table 2 ． The Distribution of Firms in Japan and Korea by Numbaer of Employee
Japan

Kore aNu mber od Employee

Number o f Employe eIndustry
50-99100299300499500999

1000-

Total

50-99

100299300499500999

1000-

Total

Manufacturing

25

63

31

32

43

194

42

180

31

30

14

297

Information related
services

43

59

13

17

17

149

5

22

3

0

5

35

Retail

43

80

42

40

25

230

0

11

1

0

6

18

Total

111

202

86

89

85

573

47

213

35

30

25

350

28

29

2

Observations

0.990 ***
[17.909]
520
0.991
0.991
6328

0.030 ***
[4.887]0.189 ***
[14.570]0.780 ***
[69.115]-0.009[-0.572]

0.979 ***
[17.819]
520
0.991
0.991
6027

-0.012[-0.757]
0.029 *
[1.898]0.030 ***
[4.836]0.191 ***
[14.711]0.779 ***
[69.427]

R
2
Adjusted-R
F value
Note 1. Robust t statistics in parentheses.
2. * significant at 10%; ** significant at 5%; *** significant at 1%.

Constantln(M/L)ln(K/L)

lnM

lnL

lnK

Dummy

Average score (all scores)

lnY

Table 3-1 Estimation results of the production function (Japanese firms)

0.068 ***
[5.064]
0.468 ***
[19.067]
0.623 ***
[4.503]
520
0.832
0.828
278

0.006
[0.505]-0.040[-1.086]ln(Y/L)0.067 ***
[5.012]
0.467 ***
[19.086]
0.603 ***
[4.379]
520
0.832
0.829
257

0.009
[0.694]-0.045[-1.222]0.052[1.606]-0.076[-1.469]510
0.006-0.0101

0.006[1.171]-0.076[-1.436]
510
0.018
0.000
2

0.008
[1.407]lnTFP (Tornqvist index)-0.007-0.010[-0.438][-0.670]0.034 **
[2.500]30

2Observations

1.498 ***
[7.032]
349
0.983
0.983
1587

0.032 **
[1.991]0.133 ***
[5.535]0.858 ***
[41.02]0.00771[1.457]1.505 ***
[7.056]
349
0.983
0.983
1491

0.00859[1.477]-0.0153[-0.788]
0.0323 **[2.023]0.132 ***
[5.549]0.858 ***
[41.16]R
2
Adjusted-R
F value
Note 1. Robust t statistics in parentheses.
2. * significant at 10%; ** significant at 5%; *** significant at 1%.

Constantln(M/L)ln(K/L)

lnM

lnL

lnK

Dummy

Average score (all scores)

lnY

Table 3-2 Estimation results of the production function (Korean firms)

0.032 **
[1.991]0.858 ***
[41.02]
1.498 ***
[7.032]
349
0.954
0.952
390

0.0229 *[1.961]0.00771[1.457]0.0323 **[2.023]0.858 ***
[41.16]1.505 ***
[7.056]
349
0.954
0.952
379

0.0228 *[1.959]0.00859[1.477]-0.0153[-0.788]

ln(Y/L)-0.107 **[-2.200]
340
0.083
0.061
3

0.0167 *[1.922]-0.105 **[-2.114]
340
0.083
0.058
3

0.0167 *[1.921]lnTFP (Tornqvist index)
0.00777**
0.00798 **[2.099][2.063]-0.0035[-0.277]

31

2

Observations

1.017 ***
[19.132]
520
0.991
0.991
6290

0.030 ***
[4.959]0.189 ***
[14.730]
0.780 ***
[69.253]-0.019[-1.403]

1.008 ***
[19.130]
520
0.991
0.991
6008

-0.024 *[-1.744]0.032 **
[2.098]0.030 ***
[4.915]0.192 ***
[14.908]0.779 ***
[69.682]

R
2
Adjusted-R
F value
Note 1. Robust t statistics in parentheses.
2. * significant at 10%; ** significant at 5%; *** significant at 1%.

Constantln(M/L)ln(K/L)

lnM

lnL

lnK

Dummy

Average score (organizational capital)

lnY

0.069 ***
[5.155]0.469 ***
[19.230]
0.676 ***
[5.242]
520
0.832
0.829
278

0.007
[0.588]-0.058 *[-1.933]ln(Y/L)

0.068 ***
[5.109]0.467 ***
[19.282]
0.661 ***
[5.156]
520
0.834
0.830
258

0.010
[0.819]-0.066 **[-2.183]
0.059 *
[1.827]

Table 4-1 Estimation results using the average score with respect to organizational capital (Japanese firms)-0.073[-1.446]510
0.006-0.0101

0.006[1.188]-0.078[-1.510]
510
0.019
0.001
2

0.008
[1.451]lnTFP (Tornqvist index)-0.007-0.012[-0.560][-0.962]0.035 ***
[2.602]32

2Observations

1.501 ***
[7.303]
349
0.983
0.983
1803

0.0313 *[1.934]0.135 ***
[5.606]
0.861 ***
[39.99]-0.0219[-1.431]1.501 ***
[7.319]
349
0.983
0.983
1678

-0.0216[-1.410]-0.00735[-0.420]0.0315 *[1.947]0.135 ***
[5.612]0.861 ***
[40.03]R
2
Adjusted-R
F value
Note 1. Robust t statistics in parentheses.
2. * significant at 10%; ** significant at 5%; *** significant at 1%.

Constantln(M/L)ln(K/L)

lnM

lnL

lnK

Dummy

Average score (organizational capital)

lnY

0.0313 *[1.934]0.861 ***
[39.99]1.501 ***
[7.303]
349
0.954
0.952
395

0.0269 **[2.303]-0.0219 *[-1.431]0.0315 *[1.947]0.861 ***
[40.03]1.501 ***
[7.319]
349
0.954
0.952
383

0.0272 **[2.316]-0.0216 *[-1.410]-0.00735[-0.420]ln(Y/L)

Table 4-2 Estimation results using the average score with respect to organizational capital (Korean firms)-0.1 **[-2.072]
340
0.075
0.052
3

0.0211 **[2.420]-0.101 **[-2.078]
340
0.075
0.05
3

0.021 **
[2.403]lnTFP (Tornqvist index)-0.0142-0.0143[-1.489][-1.507]0.00385[0.317]33

2

Observations

0.945 ***
[18.172]
520
0.991
0.991
6332

0.030 ***
[4.883]0.187 ***
[14.320]0.780 ***
[69.636]

0.013[0.868]0.926 ***
[18.000]
520
0.991
0.991
6059

0.014
[0.934]0.029 *
[1.852]0.030 ***
[4.829]0.189 ***
[14.415]0.779 ***
[69.958]

R
2
Adjusted-R
F value
Note 1. Robust t statistics in parentheses.
2. * significant at 10%; ** significant at 5%; *** significant at 1%.

Constantln(M/L)ln(K/L)

lnM

lnL

lnK

Dummy

Average score (human capital)

lnY

0.068 ***
[5.003]0.468 ***
[19.103]0.502 ***
[3.826]
520
0.831
0.828
280

0.001
[0.067]0.017[0.499]ln(Y/L)

Table 5-1 Estimation results using the average score with respect to human capital (Japanese firms)

0.067 ***
[4.948]0.467 ***
[19.120]0.470 ***
[3.572]
520
0.832
0.828
259

0.002
[0.190]0.018[0.549]0.048[1.505]-0.074[-1.643]510
0.005-0.0111

0.006[1.070]-0.101 **[-2.112]510
0.017-0.0012

0.007[1.211]lnTFP (Tornqvist index)-0.0010.000[-0.091][-0.004]
0.033 **
[2.392]34

2

Observations

1.462 ***
[7.002]
349
0.983
0.983
1611

0.0323 **[2.066]0.134 ***
[5.621]0.86 ***[40.07]-0.00882[-0.492]

1.462 ***
[7.018]
349
0.983
0.983
1527

-0.00856[-0.481]-0.00829[-0.481]0.0324 **[2.078]0.134 ***
[5.628]0.86 ***[40.12]R
2
Adjusted-R
F value
Note 1. Robust t statistics in parentheses.
2. * significant at 10%; ** significant at 5%; *** significant at 1%.

Constantln(M/L)ln(K/L)

lnM

lnL

lnK

Dummy

Average score (human capital)

lnY

0.0323 **[2.066]0.86 ***[40.07]1.462 ***
[7.002]
349
0.953
0.952
388

0.0268 **[2.287]-0.00882[-0.492]

0.0324 **[2.078]0.86 ***[40.12]
1.462 ***
[7.018]
349
0.953
0.952
381

0.0271 **[2.306]ln(Y/L)-0.00856[-0.481]-0.00829[-0.481]

Table 5-2 Estimation results using the average score with respect to human capital (Korean firms)-0.148 ***[-2.849]
340
0.071
0.048
3

0.0216 **[2.456]-0.149 ***[-2.843]
340
0.071
0.046
3

0.0215 **[2.442]lnTFP (Tornqvist index)
0.006310.00624[0.710][0.701]0.00243[0.199]35

2

Observations

0.964 ***
[20.984]
520
0.991
0.991
6313

0.030 ***
[4.897]0.189 ***
[14.568]
0.780 ***
[69.120]-0.003[-0.740]0.944 ***
[21.076]
520
0.991
0.991
6014

-0.004[-1.012]0.030 *
[1.964]0.030 ***
[4.847]0.192 ***
[14.722]0.779 ***
[69.449]

R
2
Adjusted-R
F value
Note 1. Robust t statistics in parentheses.
2. * significant at 10%; ** significant at 5%; *** significant at 1%.

Constantln(M/L)ln(K/L)

lnM

lnL

lnK

Dummy

The first score (all scores)lnYln(Y/L)

0.068 ***
[5.077]0.468 ***
[19.083]0.512 ***
[4.583]
520
0.832
0.828
277

0.007
[0.543]-0.010[-1.257]

Table 6-1 Estimation results using the first factor as an explanatory variable (Japanese firms)

0.067 ***
[5.026]
0.467 ***
[19.109]
0.475 ***
[4.257]
520
0.833
0.829
256

0.009
[0.758]-0.012[-1.455]
0.054 *
[1.685]-0.079 **[-2.042]510
0.006-0.0101

0.006[1.150]-0.111 **[-2.449]
510
0.018
0.000
2

0.008
[1.414]lnTFP (Tornqvist index)-0.001-0.002[-0.357][-0.681]0.035 **
[2.534]36

2

Observations

1.498[7.032]
349
0.983
0.983
1587

0.032 **
[1.991]
0.133[5.535]0.858[41.02]0.00771[1.457]1.505[7.056]
349
0.983
0.983
1491

0.00859[1.477]-0.0153[-0.788]
0.0323 **[2.023]0.132[5.549]0.858[41.16]R
2
Adjusted-R
F value
Note 1. Robust t statistics in parentheses.
2. * significant at 10%; ** significant at 5%; *** significant at 1%.

Constantln(M/L)ln(K/L)

lnM

lnL

lnK

Dummy

The first score (all scores)

lnY

0.0325 **[2.103]0.85 ***[39.44]
1.595 ***
[7.233]
342
0.952
0.950
364

0.0244 **[1.991]0.0102 *[1.742]-0.013[-0.661]ln(Y/L)0.032 **
[1.991]0.858 ***
[41.02]
1.498 ***
[7.032]
349
0.954
0.952
390

0.0229 *[1.961]0.00771[1.457]

Table 6-2 Estimation results using the first factor as an explanatory variable (Korean firms)-0.107 **[-2.200]
340
0.083
0.061
3

0.0167 *[1.922]-0.105 **[-2.114]
340
0.083
0.058
3

0.0167 *[1.921]lnTFP (Tornqvist index)
0.00777 **0.00798 **[2.099][2.063]-0.0035[-0.277]

37

2

Observations

0.722 ***
[13.815]
180
0.997
0.997
11360

0.021 *
[1.661]0.188 ***
[8.129]0.808 ***
[52.837]0.016[0.896]

0.721 ***
[13.773]
180
0.997
0.997
11471

0.007
[0.416]0.020 *
[1.662]0.188 ***
[8.130]0.808 ***
[53.049]lnY
0.016[0.882]R
2
Adjusted-R
F value
Note 1. Robust t statistics in parentheses.
2. * significant at 10%; ** significant at 5%; *** significant at 1%.

Constantln(M/L)ln(K/L)

lnM

lnL

lnK

Dummy

Average score × Dummy

Average score (all scores)

0.718 ***
[12.520]
180
0.997
0.997
10165

0.017
[1.003]-0.004[-0.091]
0.020[0.142]0.020 *
[1.663]0.188 ***
[8.158]0.808 ***
[53.157]

Table 7-1 Estimation results of the production function (Japanese manufacturing firms)

0.064 *
[1.931]0.525 ***
[16.076]-0.061[-0.405]
180
0.898
0.893
189

0.036 *
[1.899]0.013[0.277]0.064 *
[1.938]0.524 ***
[15.920]-0.059[-0.390]
180
0.898
0.893
167

0.036 *
[1.889]-0.015[-0.342]ln(Y/L)
0.013[0.292]

0.063 *
[1.948]0.523 ***
[15.740]-0.107[-0.652]
180
0.898
0.893
147

0.035 *
[1.889]0.033[0.664]-0.084[-0.728]0.222[0.664]-0.254 ***[-5.153]
177
0.177
0.153
7

0.027 ***
[5.248]0.014[0.919]-0.254 ***[-5.204]
177
0.180
0.151
7

0.027 ***
[5.162]0.010[0.615]lnTFP (Tornqvist index)
0.014[0.891]-0.298 ***[-6.280]
177
0.203
0.170
7

0.026 ***
[5.141]0.032 **
[2.109]-0.077 *[-1.893]0.226 *
[1.903]38

2

Observations

1.548 ***
[5.973]
296
0.981
0.981
1469

0.00824[0.376]
0.153 ***
[4.757]0.868 ***
[35.82]0.0236[1.474]

1.535 ***
[6.036]
296
0.981
0.981
1336

-0.0325[-1.391]0.00855[0.393]0.15 ***[4.771]0.868 ***
[36.01]lnY
0.0361 *[1.770]R
2
Adjusted-R
F value
Note 1. Robust t statistics in parentheses.
2. * significant at 10%; ** significant at 5%; *** significant at 1%.

Constantln(M/L)ln(K/L)

lnM

lnL

lnK

Dummy

Average score × Dummy

Average score (all scores)

1.407 ***
[5.374]
296
0.981
0.98
1283

0.0949 ***[2.866]-0.0816 *[-1.958]
0.142[1.476]0.009[0.413]0.148 ***
[4.670]0.869 ***
[36.28]

Table 7-2 Estimation results of the production function (Korean manufacturing firms)

0.00824[0.376]
0.868 ***
[35.82]
1.548 ***
[5.973]
296
0.948
0.947
372

0.0283 *[1.908]0.0236[1.474]0.00855[0.393]0.868 ***
[36.01]
1.535 ***
[6.036]
296
0.949
0.947
346

0.0271 *[1.854]-0.0325[-1.391]ln(Y/L)0.0361 *[1.770]0.009[0.413]0.869 ***
[36.28]1.407 ***
[5.374]
296
0.949
0.948
320

0.0261 *[1.802]

0.0949 ***[2.866]-0.0816 *[-1.958]
0.142[1.476]-0.154 ***[-3.337]
287
0.057
0.041
3

0.0186 **[2.353]0.0151[1.171]-0.155 ***[-3.347]
287
0.059
0.039
2

0.0183 **[2.337]-0.0101[-0.705]lnTFP (Tornqvist index)
0.019[1.248]-0.214 ***[-3.984]
287
0.067
0.043
3

0.0179 **[2.357]0.0494 **[2.421]-0.0418[-1.496]0.0798[1.251]

39

2

Observations

0.767 ***
[15.424]
180
0.997
0.997
11622

0.021 *
[1.664]0.188 ***
[8.133]0.808 ***
[53.063]0.004[0.996]

0.765 ***
[15.710]
180
0.997
0.997
11578

0.006
[0.377]0.020 *
[1.664]0.188 ***
[8.134]0.808 ***
[53.231]lnY
0.004[0.974]R
2
Adjusted-R
F value
Note 1. Robust t statistics in parentheses.
2. * significant at 10%; ** significant at 5%; *** significant at 1%.

Constantln(M/L)ln(K/L)

lnM

lnL

lnK

Dummy

The first score × Dummy

The first score (all scores)

0.765 ***
[16.015]
180
0.997
0.997
10270

0.004
[1.101]-0.001[-0.106]
0.007[0.393]0.020 *
[1.664]0.188 ***
[8.164]0.808 ***
[53.391]
0.063 *
[1.928]0.525 ***
[16.082]-0.027[-0.236]
180
0.898
0.893
188

0.036 *
[1.888]0.003[0.261]

Table 8-1 Estimation results using the first factor as an explanatory variable (Japanese manufacturing firms)

0.064 *
[1.937]0.525 ***
[15.927]-0.022[-0.194]
180
0.898
0.893
167

0.036 *
[1.878]-0.016[-0.353]ln(Y/L)
0.003[0.290]0.064 *
[1.947]0.523 ***
[15.743]-0.016[-0.140]
180
0.898
0.893
147

0.036 *
[1.878]0.007[0.630]-0.019[-0.718]-0.007[-0.155]-0.215 ***[-5.648]
177
0.177
0.153
7

-0.216 ***[-5.802]
177
0.180
0.151
7

0.027 ***
[5.145]0.010[0.587]lnTFP (Tornqvist index)
0.003[0.871]0.027 ***
[5.205]0.003[0.922]-0.211 ***[-5.930]
177
0.203
0.170
7

0.026 ***
[5.130]0.007 **
[2.036]-0.018 *[-1.892]
0.018[1.018]40

2Observations

1.632 ***
[6.285]
296
0.981
0.981
1457

0.00814[0.374]0.15 ***[4.717]0.867 ***
[36.22]0.0116 *[1.938]1.64 ***[6.363]
296
0.981
0.981
1317

-0.0245[-1.178]0.00842[0.390]0.149 ***
[4.735]0.867 ***
[36.37]lnY
0.013 **
[1.974]R
2
Adjusted-R
F value
Note 1. Robust t statistics in parentheses.
2. * significant at 10%; ** significant at 5%; *** significant at 1%.

Constantln(M/L)ln(K/L)

lnM

lnL

lnK

Dummy

The first score × Dummy

The first score (all scores)

1.638 ***
[6.350]
296
0.981
0.981
1196

0.0185 **[1.993]-0.00784[-0.618]-0.0274[-1.324]0.0088[0.401]0.148 ***
[4.627]0.868 ***
[36.51]0.00814[0.374]0.867 ***
[36.22]
1.632 ***
[6.285]
296
0.949
0.948
378

0.025 *
[1.693]0.0116 *[1.938]

Table 8-2 Estimation results using the first factor as an explanatory variable (Korean manufacturing firms)

0.00842[0.390]0.867 ***
[36.37]1.64 ***[6.363]
296
0.949
0.948
353

0.0246 *[1.674]-0.0245[-1.178]ln(Y/L)0.013 **
[1.974]0.0088[0.401]0.868 ***
[36.51]1.638 ***
[6.350]
296
0.949
0.947
317

0.0241[1.633]0.0185 **[1.993]-0.00784[-0.618]-0.0274[-1.324]-0.108 **[-2.416]
287
0.064
0.047
3

0.0168 **[2.100]0.00672 *[1.757]-0.104 **[-2.336]
287
0.064
0.044
3

0.0168 **[2.099]-0.0985 **[-2.253]
287
0.068
0.044
3

0.0164 **[2.096]lnTFP (Tornqvist index)
0.00707 *0.0125 **[1.779][2.022]-0.00768[-0.972]-0.0063-0.00889[-0.511][-0.686]

41）（
3 Are such checks made on a periodic basis rather than being made as necessary? And how frequently are suchchecks made?
4 Are additional checks made that are decided by the section or department involved itself, rather than just being fixed checks?

4 Are adjustments made to ensure that the degree to which goals have been achieved at different divisions is fairly compared? (for example, utilizing common scales such as overtime hours?)

3 Are the results of such checks made openly available within not only your division but also between relevant divisions?

2-3-1. Implementation of organizational goals (permeation of degree to which goals are achieved, and results of checks on performance)
2 Are the results of such checks made openly available within your division?

）

2 Are checks made to see how far goals have been achieved? Please give an example of how such checks are made. （2-3. Implementation of organizational goals (degree to which goals are achieved, checks on performance)

3 If goals exist on various levels (such as company-wide, divisional and sectional goals), do all employees understand the level of priority of the goals?
（）（）
4 Do all employees accept the target levels? Please give an example if possible.

4 Are target levels checked to ensure there is fairness between divisions or sections? Please give an example of how they are checked.
（）
2-2. Implementation of organizational goals (permeation of goals)
2 Do all employees know about the goals?

2-1. Implementation of organizational goals (setting target levels)
2 For example, are the settings for the divisional or sectional target levels simply given to you from the division or section above you? Or are they given to you while considering theopinions of your division or section?
3 Are the target levels appropriately set as non-binding chanllenges?

4 Is consistency maintained between these goals and the goals of the management principles or of the long-term company-wide goals?

3 Are the goals of each division adjusted in each division to ensure consistency between divisions?

2. Implementation of organizational goals
2 Are there specific numerical goals on multiple levels that go beyond being just a vision or a slogan, regardless of the level of the goals (such as company-wide or divisional or sectional goals)?

4 Are the management principles also supported by parties such as external partners or the shareholders?

3 What kind of schemes are in place to have those management principles shared by all employees? (For example, announcing them at the morning assembly, or making them
portable by writing them on cards or such like.)

About the scoring
Quantitative accompanying information
1. Permeation of management principles (vision)
2 Does your company have management principles that it has upheld for many years?

Appendix 1. Questionnaire

42）

3 Were the effects of the reform shown between divisions, and not just within one division? If they were shown between divisions, please give an example of the effects.
（）
4 Were the effects of the reform shown between the company and the business partners, and not just within the company? If they were, please give an example of the effects.
（）
4-3. Details of the organizational reform (delegation of authority)
When a company undergoes organizational reform, sometimes the employees' decision-making authority is also revised. In the case of your company,
2 Was decision-making authority given to those in a lower position as a result of the organizational reform?

4-2. Scope of the effects of organizational reform
2 Were the effects of the reform shown in the divisions or sections? If they were, please give an example of the effects.
（Write the example here）

4 During the organizational reform, did the mid-level management also strive to achieve the reform, thereby giving a sense of unity in the company?

4-1. Period of organizational reform or strategic change
2 Did it take time to implement the organizational reform over one year? How many years were spent including preparation period?
（
3 Why was the organizational reform necessary? Was is to do with the leadership of the top management?

By what percentage did profits increase or by what percentage were costs reduced?
（
）

）

（

4 Did you determine the results of the reform in a quantified manner?

）

（

）

How much did it cost?

When did it occur?

（

3 Did your company use a consulting company at that time?

4. Implementation of organizational reform
2 Has your company undergone any organizational reforms in the last ten years?

4 Are informal meetings held with persons of various ranks?

3 Are informal meetings held between divisions?

3. Non-stylized communication within the organization
2 Are measures and activities other than stylized meetings used to increase informal communication?
(for example, informal meetings consisting only of key personnel)? Please give an example.

4 Are these measures institutionalized on a company-wide level?

3 How long is it between the setting of higher goals and the operation / implementation of those goals?

4 Are problematic issues and countermeasures made thoroughly known throughout the relevant division, and if necessary, other divisions? Please give an example if possible.
（）
2-3-3. Implementation of organizational goals (results of checks - handling when goals have been achieved)
2 When goals are achieved are investigations made so that those goals renewed on a continuous basis or so that higher goals are set?

3 After investigations, are points to revise spread throughout the division, and are measures for handling the failure to achieve the goals promptly implemented?
(In this case, exclude personnel matters.)

2-3-2. Implementation of organizational goals (results of checks - handling when goals have not been achieved)
2 Is a meeting consisting of managerial staff and employees promptly held as soon as it is known that the goals were not achieved?

43

（

（

）

）

4 Could you prevent the loss of such excellent employees?

9. Securing good manpower
2 Can you identify the high perfomance and core employees, mentioned in the question 9, in your company? Please give an example.
（（
3 Such excellent employees are treated well comparede with ordinary employees? If so, how they are treated?

4 Was the motivation of the employees raised through introducing such system?

3 Is there a system to connect good performance to things such as financial reward or promotion?

））

8. Handling employees that perform well
2 Is it made clear within the division that the employee's performance is good, for example by management praising employees at meetings?

4 Are the measures implemented as soon as a problem is confirmed (before a routine rotation) ?

3 Does that handling include measures that are implemented faster than the average term of office?

7. Handling employees that perform poorly
2 Are they handled in some specific way other than by giving them oral warnings?

4 Do you monitor when the employees' motivation, retention rate or job performance increases as a result of such scheme?

6. Schemes to improve motivation
2 Are there any schemes other than promotion-related or pay-related systems to increase the motivation of the employees? Please give an example.
（）
3 Is that scheme used on an institutional basis throughout the company?

4 Did the performance of the employees improve as a result of using the management-by-objectives system and introducing a performance-based promotion system?

3 If the promotion system is mainly a performance-based one, does your company have a management-by-objectives system? If it does, when did that system begin?

5. Promotion system
2 Does your company mainly have a performance-based promotion system?

4 Did an opportunity to earn new profits arise as a result of the organizational reform by the organizational reformbaseo on the IT system? Please give an example.

3 In the last decade, did your company launch organizational reform, rather than raise business efficiency, by utilizing the IT system ?

4-4. Details of the organizational reform (IT activities)
2 Did the IT system make your company more streamlined, for example by reducing the amount of paper-based documentation ?

4 As a result, was there a change in the details of the job or the way of doing the job? Please give an example.

3 Were posts simplified in conjunction with decision-making authority being given to those in a lower position?

44

（

）

）

4 Is there a systematic program in place to ensure the employees acquire some expertise?

（）

What percentage of the supervisor's working time is spent on giving instructions to those ina lower position?
（）（）

3 To improve the expertise of the employees, are they assigned to a set position for a long time?

13. Employees' expertise
2 Are employees rotated in a fixed schedule, such as once every two or three years?

4 Are the effects of OJT monitored? Please give an example of the methods used.

3 Does OJT contribute to business results? Please give an example.

．Nurturing human resources through OJT
12．
2 Is OJT performed on a daily basis?

4 Are the effects of those training activities adaptable to other companies?

3 Do those training activities help to improve business results? Please give an example.

11. Nurturing human resources through training（
2 Is there training on an occupational ability basis or an assignment basis, aiming to improve the work skills of theemployees? Over the course of one year, on average how long is spent on training?
(Training on an occupational ability basis means training in specialist capabilities that are required in each field, suchas management, business, research and development, and manufacturing. Assignment-based training means training
in areas such as languages, OA, computing, and acquisition of official certifications.)

4 Did the motivation of the managers increase as a result of introducing such system?

3 Is there an incentive system, such as a pay-related or promotion-related system, to reward managers that have nurtured excellent staff of a lower position?

10. Evaluating the interpersonal skills of the managers
2 Do the managers give clear criteria such as the degree to which persons of a lower position should be nurtured?

Appendix 2 The results of principal component analysis

Japan

QuestionsKorea

1st component

2nd component

1st component

2nd component

q1

0.17

0.13

-0.02

0.31

q2

0.25

0.04

0.07

0.28

q2_1

0.22

-0.06

-0.06

0.29

q2_2

0.22

0.20

0.04

0.40

q2_3

0.22

-0.04

-0.03

0.41

q2_3_1

0.18

0.07

-0.11

0.44

q2_3_2

0.23

0.23

0.06

0.37

q2_3_3

0.20

0.04

0.15

0.19

q3

0.16

0.03

0.19

0.11

q4

0.24

-0.38

-0.06

-0.02

q4_1

0.29

-0.37

-0.05

0.01

q4_2

0.30

-0.34

0.07

0.01

q4_3

0.21

-0.14

0.03

0.08

q4_4

0.24

-0.25

0.10

-0.03

q5

0.15

0.29

0.40

-0.01

q6

0.22

0.12

0.38

-0.08

q7

0.17

0.15

0.29

0.02

q8

0.20

0.35

0.28

0.01

q9

0.10

0.20

0.34

-0.07

q10

0.17

0.25

0.38

-0.03

q11

0.24

0.10

0.24

0.04

q12

0.15

-0.15

0.24

0.05

q13

0.14

0.17

0.23

0.07

45