JAPAN MNE Insights
Volume 1, Issue 2

December, 2014

Academy of Multinational Enterprises (Japan)

TABLE OF CONTENTS

1 Special Essay:
Management
Research in Japan:
An Academic
Sojourners Tale ofInteresting Research
Opportunities inJapan
2 Special Essay:
Multinational
Enterprises andReverse Innovation
by Newly-emerging
Countries

www.mne-jp.org

Special Essay:
Management Research in Japan:
An Academic Sojourners Tale of Interesting
Research Opportunities in Japan
N. Sue Bruning, Ph.D.
Professor of Business Administration at I.H. Asper School of Business
University of Manitoba, Manitoba, Canada
About eight years ago I visited Japan for the first time. The
International Federation of Scholarly Associations of Management(IFSAM) was having their Executive and Council meeting in Osaka, rightbefore the Japanese Society of Business Administration (JSBA) annual
meeting. At a reception with many Asian faces I saw a Caucasian acrossthe room and I trekked over to find out about his experiences in Japanand in the Japanese academic community. That night I had a wonderfulconversation with Ralf Bebenroth from Kobe University and we begancollaboration on research focused on German expatriates working inJapan and the roles they played in the host environment. But my
fascination with Japan started much earlier, in 1971 I worked for Sharpelectronics in LaGrange, Illinois, for a summer. The dual management
structure with one manager for the Japanese employees and anothermanager for the “American” employees was at first an odd structure tome, but in retrospect the system worked. There was little integration
between the cultures but the managers that matched the cultural roots ofthe employees minimized much of the culture conflicts that have occurredin the many organizations over time. I did find it a bit odd that anorganization would have two sets of policies, one for employees from eachcountry but it was a lesson in cultural contrasts that has stayed with mefor many years.

1Vol.1 Issue 2"There are a number ofways that research
conducted in Japan canfacilitate our knowledgeof management whichmakes Japan and theacademic/practitioner
communities aninteresting and fruitfulresearch region"

JAPAN MNE Insights
Fast forward to the summer of 2013 when I was researching places
to take a research leave, places where the environment was rich inopportunities to study and advance management knowledge and practice.
I contacted a number of Japanese colleagues that I had met since early inthe new millennium and was fortunate to connect with Chie Iguchi who,
even though she had just joined Keio University, was willing to facilitate
arrangements for my visiting appointment. We worked through thearrangements and over the next six months she dealt with every little
needed detail to perfection. All of the pre-arrangements and a walking
tour of the area upon my arrival was the beginning of a fruitful three monthvisit; and a bit more understanding of the Japanese academic environment
and management issues. My research interests run across a number ofareas, some continue to involve research in Japan and with Japaneseorganizations, and others without a direct Japanese connection. In thisbrief essay I have been invited to share a bit about my Japanese researchinterests and I would also like to indicate how your support facilitated theaccomplishment of and progress on a number of research studies. But
first, I want to give my thanks to all of the people that facilitatedconnections with the Japanese management academic community, as wellas, practitioners who are interested in academic research related to theirdisciplines. I would like to mention just of few of the individuals that I am
indebted to for making various arrangements to visit their
universities/institutes and/or provide speaking opportunities while I was inJapan: Toshio Takahashi (Bunkyo Gakuin University), Chie Iguchi (Keio
University) , Ralf Bebenroth (REIB at Kobe University), Keiji Natsume(Ryukoku University), Koji Shimohata (Shikoku University), Tetsuya Usui
(Nihon University) and Florian Kohlbacker (Formerly with the German
Institute of Japanese Studies).
There are a number of ways that research conducted in Japan canfacilitate our knowledge of management which makes Japan and theacademic/practitioner communities an interesting and fruitful researchregion. Within my research domains there are a number of areas ofresearch that I have and would like to continue collaborations withresearchers at Japanese universities. The following are brief descriptionsof the topics of personal interest that I hope Japanese connections will leadto continued collaboration and research:2Vol.1 Issue 2JAPAN MNE Insights

1.
Leadership of virtual R&D teams and team absorptive capacity. We
have developed a research team of Tomoki Sekiguchi (Osaka University),
Fabrian Froese (University of Goettingen), Bradley Alge (Purdue University),
Patrick Bruning (University of New Brunswick) and me to develop a
research study that is proposed to examine the role of leadership and ateam’s absorptive capacity in innovation outputs from global virtualresearch and development teams. New product development within
multinational firms is fundamental to success in an increasingly dynamic
and global business environment (Cascio, 2003; Hitt, Bierman, Uhlenbruck,& Shimizu, 2006); and requires the development of transnational products,
those developed to simultaneously meet unique demands of multiple
markets (Subramaniam & Venkatraman, 2001). These products often
require culturally diverse and often geographically dispersed teams(Subramaniam & Venkatraman, 2001). However, both spatial and culturalbarriers present problems for global product development teams. The
geographic dispersion of the teams has led to a focus on virtual structures
for the team's activities. As such, leadership, group processes, and supportof global product development teams represents a challenge for thedevelopment of innovative products by firms competing in the global
arena. In a similar vein, team-based work structures have also experienced
increased popularity, becoming an integral work form in today's businessworld as a means to develop innovative products. This is evidenced by theirincreased importance as a research topic in the areas of work design, work
structure, work dynamics, as well as innovation and new productdevelopment (Brown & Eisenhardt, 1995; Campion, Medsker, & Higgs,
1993; Cordery, Soo, Kirkman, Rosen & Mathieu, 2009; Hackman, 1987;
Kozlowski & Bell, 2003; Mathieu, Maynard, Rapp, & Gilson, 2008). The study
plans to focus on firms from three regions as represented by the research
team: Asia (represented by Japan), Europe (represented by Germany) andNorth America (represented by Canada and the United States). The major
objective of the study will be to provide a basis for further research on how
teams can be designed to aid innovation; and will focus on leader-teamexchanges within global virtual research and development teams and theteam’s absorptive capacity, or a teams' ability to absorb and utilize
knowledge (Cohen & Levinthal, 1990). New product introductions will be
the major outcome variables. Japan as one of the focal countries in the
study offers a rich opportunity to understand the development of effective
virtual R&D teams that can be compared and contrasted with virtual teams
from other geographic regions.

"Japan as one of the
focal countries in the
study offers a rich
opportunity tounderstand thedevelopment of effective
virtual R&D teams thatcan be compared andcontrasted with virtual
teams from othergeographic regions."3

Vol.1 Issue 2" Thus, it would appear
that some of theresearch ideas we havealready examineddeserve further
examination in Japan,
and results from theresearch might betransferable to local
management practice."

JAPAN MNE Insights

2.
Global performance reviews and the role of networks and role
expectations. In a collaborative research study with Ralf Bebenroth andWerner Pascha (2011), we discovered that the data on desired
management roles of expatriate employees (primarily German employees
assigned to Japan) differed depending on who was asked the question.
Tungli and Peiperl (2009) surveyed human resource managers at
headquarters and compared results obtained from HR managers from
Germany, the UK, US and Japan. While the perspectives from the HR
managers contrasted somewhat, when we compared the data fromexpatriate managers, their local counterparts and the results from the HR
managers in the Tungli and Peiperl study the contrasts were even greater.
The contrasting perspectives suggest that depending on whose
perspective governs the global performance review process, the results of
the review could be drastically different. Yet the expatriate manager’s
career success and future assignments might be heavily dependent on the
results of the review. Thus, a planned study (with the study team still tobe developed) is to examine how the networks and negotiated roles that
expatriates develop play a role in the resulting performance review, andwhether global performance review processes can be improved throughthe incorporation of negotiated role expectations into the process.
3.
Emotional labour and employee burnout in healthcareorganizations. A third area of research was spurred by a news article that
I read while in Japan. I have been involved in health and safety researchand the examination of employee well-being for a number of years. WhenI arrived in Japan a graduate student (Anastasia Sizykh) and I had justcompleted collecting data on the relationship between emotional labour(the contrast between expected emotions to be displayed and actual felt
emotions) in a healthcare setting. We are currently collecting additional
data on the topic and seek to expand the research question to additional
contexts to understand the cultural transferability of the relationships
between emotional labour and employee burnout. Soon after my arrivalin Japan there was an article that reported on the high levels of stressexperienced by nurses in Japan. Thus, it would appear that some of theresearch ideas we have already examined deserve further examination in
Japan, and results from the research might be transferable to local
management practice. There are researchers in Japan that are actively
examining similar topics (e.g. Vesa Peltokorpi, Japan Advanced Institute of
Science and Technology). Thus, it would be a fruitful endeavor to develop
new collaborative projects and opportunities on topics related to the work
environment and health related outcomes.

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Admittedly, the ideas and topics in this short synopsis are restricted tothis author’s research interests, but the brief time in Japan reinforced theperception that Japan is a country that could offer a great deal of research
opportunities that expand upon the topics already explored by the current
group of prolific and well-known academics in the management area; and isalso an environment where new research ideas are generated and studied. The
IFSAM conference, held in Tokyo in September, 2014, provided a stimulating
venue and provided a number of opportunities to continue to foster
collaborative relationships between academics from around the globe. Thankyou for the opportunity to develop relationships with colleagues and students
at a number of Japanese universities. For further information and discussion
please cact me at sue.bruning@umanitoba.ca.

REFERENCES
Brown, S. L. & Eisenhardt, K. M. (1995) “Product development: Past research, present findings,
and future directions.” Academy of Management Review, 20: 343-378.
Bruning, N.S., Bebenroth, R. & Pascha, W. (2011) “Valuing Japan based German expatriate andlocal manager’s functions: Do subsidiary age and managerial perspectives matter?”International Journal of Human Resource Management, 22: 778-806.
Cascio, W. F. (2003) “Changes in workers, work, and organizations.” In W. C. Borman, D. R. Ilgen,&
R. J. Klimoski (Eds.), Handbook of psychology and Industrial and organizational
psychology, Vol. 12: 401-422.
Campion, M. A., Medsker, G. J., & Higgs, A. C. (1993) “Relations between work groupcharacteristics and effectiveness: Implications for designing effective work groups.”
Personnel Psychology, 46: 823-850.
Cohen, W. M. & Levinthal, D. A. (1990) “Absorptive capacity: A new perspective on learning andinnovation.” Administrative Science Quarterly, 35: 128-152.
Cordery, J., Soo, C., Kirkman, B., Rosen, B., & Mathieu, J. (2009) “Leading parallel global virtual
teams: Lessons from Alcoa.” Organizational Dynamics, 38: 204-216.
Hackman, J. R. (1987) “The design of work teams.” In J. W. Lorsch (Ed.), Handbook oforganizational behavior, Englewood Cliffs, NJ: Prentice Hall, 215-242.
Hitt, M. A., Bierman, L., Uhlenbruck, K., & Shimizu, K. (2006) “The importance of resources in
the internationalization of professional service firms: The good, the bad, and the ugly.”
Academy of Management Journal, 49: 1137-1157.
Kozlowski, S. W. & Bell, B. S. (2003) “Workgroups and teams in organizations.” In W. C. Borman,
D. R. Ilgen, & R. J. Klimoski (Eds.), Handbook of psychology: Industrial and organizational
psychology, Vol. 12: 333-375.

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Vol.1 Issue 2JAPAN MNE Insights

Special Essay:
Multinational Enterprises and Reverse
Innovation by Newly-emerging Countries
Takabumi Hayashi, Ph.D.
Professor of Kokushikan University,
Professor Emeritus of Rikkyo University, Tokyo, Japan
When I first visited the Philippines in 1972, I used to take a boat from
Davao to Manila. It took a week. When I peered down into the hold area ofthe boat, I was shocked by the harsh labor conditions of the workers there.
The workers, each carrying a bag weighing 30-40 kilograms in the poorly
ventilated space, were all children around 12-15 years of age.
In 1989, I had an opportunity to teach Japanese Business and Laborat De La Salle University in Manila. I was again surprised by the many children
just in front of the University, begging for money. And again in the last sevenor eight years, I have travelled, mainly in the Philippines, for research surveys,
and I have again been surprised by how issues of poverty and poor living
conditions remain.
Through such personal experience, I, as a researcher, have developed
interests in the following key areas, and the concepts and contexts associatedwith them:•
Newly-emerging Countries,•
Technology Transfer,
•
MNEs,
•
Innovation and Reverse Innovation, and•
BOP.
1. Newly-emerging Countries in the context of economic history
Recently, the term “newly-emerging countries” (NECs) has been used
increasingly often in parallel with “newly-industrializing economies” (NIEs), as
proposed by the Organization for Economic Cooperation and Development.
In terms of economic history, the former has the same meaning as the latter.
In 1995, with Professor Bing-Fu Chen of Nankai University, I wrote
Technology Development and Technology Transfer in Asia, wherein I noted
that:
In the economic history of the world, when Great Britain experienced
the first industrial revolution in the second half of the 18th century,
Germany, France, and the United States were at the stage of NIEs.
When Germany, France, and the United States were in the final stagesof their industrial revolution at the end of the 19th century, Japan wasat the NIE stage. Asian NIEs (South Korea, Taiwan, Hong Kong, andSingapore), whose industrial infrastructure has developed rapidly
since the end of the 20th century, must also be ranked in world
economic history as NIEs (Hayashi, 1995, p.47)" Thus, if NECs suchas China, India,
Russia, Vietnam,
Indonesia, and Turkey
can be considered
NIEs in terms of world
economic history, a
new paradigm isrequired for the world's
economic system inthe 21st century."6Vol.1 Issue 2JAPAN MNE Insights
Thus, if NECs such as China, India, Russia, Vietnam, Indonesia, andTurkey can be considered NIEs in terms of world economic history, a newparadigm is required for the world's economic system in the 21st century.

" On the other hand, theflow of reverse
innovation which is now
attracting public attention
consists of, rather thanpartial technologies, final
products that have beendeveloped within a
newly-developing
country in which thesubsidiary is located.”

2. Technology Transfer and Reverse Technology Transfer
When reverse innovation is examined within the context of world
economic history, various technologies that served as engines of theIndustrial Revolution in Great Britain were transferred to the United States
and the European continent, and became the technological basis for
subsequent industrial revolutions in these countries. These technologies
were then transferred to Japan, which experienced its own industrial
revolution at the beginning of the 20th century. Internationallytransferred technologies are then improved in the countries to which thetechnologies have migrated, and innovative technologies are newly
developed there. As part of the process of innovation, these technologies
are eventually transferred back to home countries; termed reverse
technology transfer, this is the historical process of reverse innovation.
Historical change in techno-hegemony between major countries andregions also represents a historical flow of innovation and reverse
innovation.
3. MNEs, and Technology Transfer & Reverse Technology Transfer
The appearance of multinational enterprises (MNEs) and theestablishment of international production and development bases after
the Second World War stimulated a flow of technology transfer fromhome to host countries of MNEs. After MNE host countries hadconstructed their own national innovation systems, a flow of reverse
technology transfer from host countries to home countries developed(Hayashi, 1987; Mansfield & Romeo, 1984). The former constitutes aknowledge flow of international intra-firm technology transfer from MNEs
in home countries to foreign subsidiaries; the latter is an international
reverse knowledge flow of intra-firm reverse technology transfer fromforeign subsidiaries to MNEs in their home countries. In the case of
American MNEs, reverse knowledge flow of international intra-firm
reverse technology transfer from foreign subsidiaries to MNEs in the
United States has been witnessed since 1980.
However, these aspects of reverse innovation between homecountry headquarters and subsidiaries were seen as knowledge flows
between subsidiaries in developed countries and headquarters in homecountries – which were usually developed countries – and consisted ofparts of the overall technologies required to manufacture a product.
On the other hand, the flow of reverse innovation (Govindarajan &Trimble, 2012) which is now attracting public attention consists of, rather
than partial technologies, final products that have been developed withina newly-developing country in which the subsidiary is located.

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Vol.1 Issue 2JAPAN MNE Insights

4. Reverse Innovation and Disruptive Innovation
The noteworthy point is that, although reverse innovation is a flowof innovation from an MNE's subsidiary in an emerging country to the MNE
in its home country, reverse innovation indicates a knowledge flow that
contains the characteristics of disruptive innovation (Christensen et al.,2006). International intra-firm reverse technology transfer has hitherto
implied that once the partial technologies developed in a subsidiary in an
emerging country are transferred to a home-country headquarters, theheadquarters will then customarily produce an end product by integrating
those partial technologies with the marketing knowledge and other skills
developed in the home country.
5. Reverse Innovation as Social Innovation
The important point is that innovation which succeeds in an
emerging country contains elements which satisfy requirements of thelocal market. Therefore, reverse innovation, wherein innovation ismaterialized in the form of products and services, can satisfy conditions
applicable to low-income and good-enough markets in advanced
countries. In other words, reverse innovation from markets in emerging
countries to markets in advanced countries can be disruptive, graduallyeroding mainstream markets. Reverse innovation also contains thecharacteristics of social innovation, able to improve the life quality ofpeople with low income regardless of nationality. The most importantsocial problems that can potentially be solved by MNEs include how toestablish a strategy to eliminate poverty among people at the base of theeconomic pyramid (BOP) in NECs, and how to achieve reverse innovation,by which NEC-developed innovation developed in NECs can be transferred
to other NECs and advanced countries.
To realize social innovation that can create employment and raise
income levels in the process of developing and distributing products andservices which people at BOP level can buy, it is crucial to create and use
marketing knowledge and technological information applicable to thecultural conditions and social infrastructures peculiar to such people inemerging countries, whose lives can be improved. To develop andcommercialize new products and services based on the cultural conditions
and social infrastructures locally characteristic of BOP situations, locallyembedded knowledge and wisdom must be taken into consideration. In
other words, to develop, manufacture, and distribute new products andservices for those at BOP level, grassroots innovation must be adopted insome form or other. Moreover, locally-driven frugal innovation, or
innovation by economizing on the use of limited resources, must be
nurtured to create the kind of social innovation that accommodates theneeds of BOP society. Such frugal innovation needs to be sustainable andtransferable to facilitate reverse innovation (Asakawa, Cuervo-Cazzura andUn, 2014).

"The important point isthat innovation which
succeeds in an emerging
country contains
elements which satisfy
requirements of the local
market."8

Vol.1 Issue 2" Future BOP strategy for
MNEs must determine
how to cope with local
value chains by making
use of a global value
chain and the global
R&D resources owned
by MNEs."

JAPAN MNE Insights
6. MNEs and BOP Strategies as Social Innovation
If the prime purpose of social innovation is to free BOP people
from poverty, it is important to construct a local value chain that creates
employment and reasonable income, so that BOP people can participate
in the development, manufacture, and distribution of products andservices. For that purpose, it is essential to establish a sustainable businessecosystem that can construct a local value chain.
Future BOP strategy for MNEs must determine how to cope withlocal value chains by making use of a global value chain and the global
R&D resources owned by MNEs. Such local value chains can develop,
manufacture and distribute products and services for BOP consumers
based on grassroots innovation, in which people at the BOP participate. A
local value chain is thus able to create employment and income throughits local business eco-systems.
However, should MNEs successfully cope with a local value chain,
they will also have to cope with reverse innovation, which may become
distinctly disruptive in both MNEs' home countries and in other advanced
countries.
7. Japan-based MNEs and BOP Strategies
Although many Japanese MNEs try to tackle NEC markets, very few
have successfully coped with BOP markets in NECs. Only Ajinomoto,
MANDAM and Fumakilla (which provide seasoning materials, cosmetic
products, and anti-mosquito insecticides respectively) appear to provide
products to BOP consumers through local traditional retail outlets. Of
these three Japan-based companies, MANDAM and Fumakilla haveestablished local value chains from local production through local retailing
networks. These companies are not typical MNEs, but rather SMEs,
employing 100-300 regular employees. On the other hand, Ajinomoto, alarge-scale MNE employing nearly 4,000 regular employees (excluding
those of associated companies), has established a globalized value chainthat concentrates production on low-cost locations such as China andThailand, and provides products to overseas channels. However, local
value chains in other overseas subsidiaries of Ajinomoto are limited interms of the width and depth available in the local business eco-system
network. While the company has succeeded in creating competitive
advantages in leveraging global value chains, it appears to fall short increating employment and income for BOP people and local suppliers.
In NEC markets, the targets for Japan-based MNEs in both theelectronics and automobile-related industries are more than the uppermiddle classes. In this sense, current BOP strategies by Japanese MNEs are
not those that BOP people in NECs really require. If Japanese MNEs are to
succeed in coping with BOP markets, they will need to address reverse
innovation from NECs.
These points represent my current avenues of research interests.

9Vol.1 Issue 2JAPAN MNE Insights

REFERENCES
Asakawa, K., Cuervo-Cazzura, A., and Un, A. (2014) “Frugality-based advantage.” Paper presented
at the Academy of International Business Annual Meetings, Vancouver, Canada, June.
Christensen, C. M., Baumann, H., Ruggles, R., and Sadtler, T. M. (2006) “Disruptive Innovation forSocial Change.” Harvard Business Review, 84(12), 94−101.
Govindarajan, V. and C. Trimble (2012) “Reverse Innovation.” Harvard Business Review Press.
Hayashi, T. (1995) “Technology Accumulation in East Asia and the Japanese Style Technology
Transfer System.” In C. Binfu and T. Hayashi (eds.), Technology Development and Technology
Transfer in Asia, Tokyo, Bunshindo, 47-73.(In Japanese)
Hayashi, T. (1987) “International R&D Network and the International Intra-firm Reverse Technology
Transfer Strategy of MNEs.” Mitashougaku Kenkyu, 30(5), 116−131. (In Japanese)
Iguchi, C. (2014) “National Innovation System and the Role of MNE Subsidiaries on the Global Value
Chain: The Case of Japanese MNEs in the Philippines.” Mitashougaku Kenkyu, 56 (6), 33−46. (InJapanese)
Mansfield, E. and Romeo, A. (1984) “Reverse Transfer of Technology from Overseas Subsidiaries to
American Firms.” IEEE Transactions on Engineering Management, 31 (3), 125−136.
Prahalad, C. K. (2002) "The Fortune at the Bottom of the Pyramid: Eradicating Poverty throughProfits.” Upper Saddle River, Prentice Hall
Prahalad, C. K. and Allen Hammond (2002) “Serving the World's Poor, Profitably.” Harvard Business
Review, 80 (9), 48−57.

Japan MNE Insights will be published twice a year on the AMNE official website(www.mne-jp.org). Please feel free to contact with the editorial team if you have any question
or request.

Japan MNE Insights Editorial Team
Editor-in-Cheif
Chie Iguchi, Keio University

EditorMasashi Arai, Kyorin University
Tamiko Kasahara, University of Shizuoka
Tetsuya Usui, Nihon University
Japan MNE Insights Editorial Team is currently located at
Office of Dr. Tamiko Kasahara,
University of Shizuoka, School of Management and Information
52-1 Yada, Suruga-ku, Shizuoka, 422-8526, Japan
TEL/FAX:+81-54-264-5435 (direct)
Contact e-mail address: kasahara@u-shizuoka-ken.ac.jp
Copyright @ Academy of Multinational Enterprises (Japan)

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