Asian Regional Integration from “an Elite Employee”
in Japanese Companies based in Taiwan
Floating Local Managers and Network Formation towards Asian Integration

Yasuyuki Kishi
Waseda University
Graduate School of Asia Pacific Studies0Abstract
In the late of 1960’s, Japanese manufacturing companies started to establish
companies in Taiwan which are to be the case studies for this paper. Inside Japanese companies,
a certain volume of core local mangers are maintained. They are highly trusted by Japanese
expatriates or head quarters and subsequently they are sent to mainland China to run factories ordirectly collaborate with Hong Kong or Singapore branches.
In many cases, employees who have been cultivated in Japanese companies in Taiwan
eventually relocate to other parts of Asia. One of the important by-products of this movement isthe establishment of strong networks in Asia in terms of economic activities. This networking
process through multinational enterprises can be viewed as one of the contributors to Asia
integration.
We can also view HRM and cultivation of employees inside Japanese companies asimportant contributors to Asia integration and cooperation through the movement of people inAsia. In consideration of the important role the movement of culturally competent managers andtheir movement in Asia have on Asian integration, this study will focus on core local Taiwanesemanagers working beyond national boundaries in terms of conducting interviews with them.
As a result of this investigation we expect to demonstrate that deepening Asia
integration can and should be viewed through the movement of people as exemplified by local
core managers accumulated in Japanese companies in Taiwan.

11.

Introduction
Generally speaking, it must be common sense for any organizations to recruit

excellent personnel if they want to maximize the benefits to the organization (Watson
Wyatt, 2003: 1). One of the measurements used to determine whether certain personnel
are excellent or not depends on their academic background (Hioki, 1998). The higher aperson’s academic background, the higher their position may be, and likewise the lower
a person’s academic background, the less chance they have to reach a higher position.
In a Japanese company in Taiwan, people who have lower education tend tostay in the company for a long time. Especially in managerial positions, the percentageof people with a low educational background is increasing in accordance withappreciation of their long term commitment. Judging from this, people with higher
educational backgrounds (so called “elites” in Taiwan) always seem to seek “the bestpractice” and look for a company that estimates their ability adequately. Thus, they
always look for a company which estimates their ability higher and then move to thatcompany. On the other hand, people with lower academic backgrounds seem to choose
to stay in the Japanese company for a long time because they do not appear as elites of“high educational background” and cannot stand up against competition in the
personnel-labor market. People with high academic backgrounds literally look for “thebest practice” and people with low academic backgrounds seek “the second bestpractice”. This is the reason that, in a Japanese company in Taiwan, one of the2characteristics of people who work for a long time is a low academic background.
Moreover, the “the second best practice” allows these people to more easily gain thetrust of the Japanese company, and as a result the percentage of people with low
academic backgrounds in managerial positions is high.

2.

Problem setting
A lot of Japanese enterprises have advanced to East Asian countries, which are

Asian NIEs ――Taiwan, South Korea, Hong Kong, and Singapore―― because of the
sharp appreciation of the yen since the Plaza Accord in 1985 with the Nixon shock in1971 (Itou, 2000). However, Japanese companies advanced to East Asian countries
come to face many problems. One of the biggest problems is outflow of a good
personnel (Suzuki, 2000). Generally speaking, it is said that in East Asia a rate ofjob-hopping is relatively higher than that of in Japan. So, inside Japanese companies in
East Asia, even though Japanese companies tend to have a sonority system which iscommonly adopted in Japan, many local staff resign and it’s difficult to stabilize aseniority system (Okamoto, 1998: 254). Moreover, many Japanese expatriates often
mention that job-hopping of local staff bothers them and even local companies are alsobothered by employee’s job-hopping (Sonoda, 2001: 62).
Besides, it is often pointed out that Japanese companies have a kind of equalsalary system and local staff complains this kind of salary system (Sonoda, 2001: 150).

3

In this way, because there is a principle of “prolonged competition” in Japanesecompany (Koike, 1998), the average of the amount of first salary of Japanese university
graduates in a Japanese company is lower than those of an American one (Shiraki, 1999:
12). This kind of discussion concludes that a Japanese company is likely to lose an
outstanding human resource, and it would be difficult for Japanese companies to attractsuch kind of excellent human resources if they do not rearrange a condition of salarysystem or promotion practice when they are in abroad (Yoshihara, 1996, Sonoda, 2001).
This kind of issue is often related to the merit system for salaries. In otherwords, a Japanese company should pay salary based on his or her individual
achievement because otherwise outstanding human resources in a Japanese company
quit easily and flow into an American company which has the merit system for salaries
instead (Yoshihara, 1992, Keizai Sangyoushou, 2001).
In this paper, I describe an idea of facilitating of the use of excellent humanresources as “the first best practice” in terms of human resource management. However,in this paper, I focus on local employees who have been working for a long term in a
Japanese company rather than outstanding human resources so called “elites”. As I
mentioned above, it is often discussed that outstanding human resources in Japanesecompanies in Asia search for a better work place which evaluates their ability
appropriately in the labor market because of “prolonged competition” or “slowpromotion” practices of a Japanese company. However, on the reverse side of this4

phenomenon, there are certain employees who stay in a Japanese company for a longtime as a result. In this paper, I describe an idea of facilitating of the use of such kind of
employees who stay in Japanese company as “the second best practice” in terms ofhuman resource management.
A main purpose of this paper does not discuss why many excellent humanresources so called “the first best” leave Japanese company easily, but why “the secondbest” human resource who does not have “educational capital (Bourdieu, 1979)” stay in
a Japanese company as a result.

3. Research Outline
In this paper, I use the result of two researches, which are qualitative andquantitative data.
Regarding the quantitative data, I re-analyze the data of 1000 local employees
working in 35 Japanese companies (manufacturing) in Taiwan which professor Sonoda
at Waseda University conducted on March, 2002. Especially in this paper, I mainly
focus on items of “Education”, “Job ranking” and “length of service”.
Regarding the qualitative data, I interviewed 11 local employees on March to
April of 2003. They have been working for Japanese companies (manufacturing) in
Taiwan which have a long history. I use this data as a qualitative in this paper.
The outline of the interview is as follows. First I picked up Japanese companies

5

in Taiwan which have a long history, and then I called those companies directly andasked to accept my interview. Regarding selection of companies, I focused on Japanesecompanies of manufacturing who have a long history. Besides, I picked up large-scale
manufacturing companies because it’s obvious to see Japanese characteristic
management style from such kind of companies (Okamoto, 1998: 5). Besides, I thought
it would be easier to see issues of transfer of Japanese management style fromlarge–scale of Japanese companies. Regarding of selection of informants, I asked
companies to select local employees who have been working for a long time. The lengthof interview ranged from one hour to two hours for each person. The interview was
mainly conducted in Japanese due to limitation of my language proficiency.

Table 1.
Company

Profile of Companies and informants of interview
EmployeenumberType of businessadvancement

ownership

A（case1、2）Years inBusinee in
Taiwan
33 年

746

100％

B（case3、4）

36 年

－

Ｃ（case 5）

40 年

106

Ｄ（case 6、7、8）

25 年

103

Ｅ（case 9、10）Ｆ（case 11）

32 年
19 年

338
45

independent
management
independent
management
independent
management
independent
management
joint management
independent
management

6

100％
100％
100％
93.3％・6.7%
100％

Case
(informant)

age

sex

１

54

M

2

50s

M

3

55

F

4

47

M

5

59

M

6

49

M

7

50

M

8

52

M

9

51

M

10

51

M

11

47

M

academic
backgroundexperienceof residing
in JapanJunior College（Taiwan）
Junior College（Taiwan）
University(Taiwan)
University(Japan)University(Taiwan)High School(Taiwan)Junior College（Taiwan）
Junior College（Taiwan）

None
None
None
5 years――
Junior College（Taiwan）
Junior College（Taiwan）

category ofbusinessMusic
instrument
Music
instrument
electronic
components
electronic
components

None

Medicine

None

Watch

None

Watch

None

Watch

None

fishing gear

None

fishing gearNonewatachserviceyears

status

32 years

Vice president

25
years
29
years
16
years
39
years
25
years
26
years
25
years
28
years
27
years
23
years

ManagerManagerManagerManager
Vice president
Vice presidentManagerManagerManagerManager

Among my 11 informants, case 5 has been working for 39 years since hiscompany established in Taiwan. Most informants have been working for 20 to 30 years,
and the shortest one is case 5, which is for 15 years.
Age of informants ranges from the late 40s to 50s. Job position of myinformants is above manager level. The highest rank is vice president. Only case 4 has
stayed in Japan for more than one year because he graduated from a university in Japan.
Except case 4, all informants have been educated in Taiwan. Regarding educational
background, three informants have bachelor degree, and the rest of them are either
junior college graduates or high school graduates. Moreover, among three vicepresidents, one is high school graduates and the other two are junior college graduates.

7

4. Results of analysis
4.1 Results from quantitative dataa) Company preference in terms of inter-generation and the length of service
Chart 4-1 below is the relation between inter-generation and company
preference. Judging from Chart 4-1, young employees prefer an American or otherforeign company to a Japanese or Taiwanese company. However, old people prefer
Japanese or Taiwanese company in the contradiction to young people. Middle age
people stand between two of them. This means that Japanese company is preferredalong with the development of generation. It is often mentioned that local employees inJapanese company do not highly appreciate a Japanese company, but if I see thepreference of local employees in details, old generation appreciates a Japanesecompany.

Chart 4-1: Generation and company preference(N=1000)
7.2%

3.8%
old (40-)

27.4%

middle (30-39)

21.1%

young (-29)

18.5%
0%

Taiwanese

43.9%

17.7%

33.2%

30.8%
20%

40%

Japanese

American830.3%

9.2% 6.3%

33.3%
60%

other foreighn

9.4% 8.0%
80%

others100%

I have got the almost same result from the relation between length of service
and company preference. According to chart 4-2 below, employees who have beenworking for more than 6 years appreciate a Japanese company. In this data this time,
length of service positively correlates with age (correlation coefficient .622**).

Chart 4-2: Length of service and comapny preference

above 6 years

23.9%

above 2 to lessthan 6 years

19.1%

28.2%

35.9%

11.4% 5.4%

less than 2 years

19.5%

30.5%

34.5%

5.7% 9.8%

0%

Taiwanese

41.3%

20%

Japanese

40%

American

20.8%

60%

6.1%8.0%

80%

100%

other foreighnothersb) Educational background and length of service
Chart 4-3 shows that a relation between academic background and length ofservice. There is a difference between academic back ground and length of service.
Employees who have high academic background are mainly in short term commitmentgroup. On the other hand, almost 50% of employees who have working for a long time
mainly have low academic background.

9Chart 4-3: Academic background and length of service
2.3%

above 6 years

47.2%

27.6%

15.3%

7%
4%

2-less than 6
years

22.1%

less than 2 years

35.9%

29.3%
0%

high school

29.9%

20%

40%

junior college

31.9%

6.4%

32.2%

2%
6.3%

60%

80%

under graduate

graduate

100%

other

Moreover, chart 4-4 gives us a very interesting finding. Chart 4-4 is across-tabulation between length of service of above mangers and their educational
background. According to chart 4-4, the more length of service of employees increase,the more employees with low educational background increase. Length of service has
weak correlation with academic background (.221**).

Chart 4-4: Above manager and educational
background (n=208)
above 5 years

39.9%

above 2 to lessthan 5 years

23.9%

less than 2 years

14.3%
0%

high school

29.7%
47.8%

21.4%

junior college

17.4% 8.7%

35.7%

20%

40%

80%

under graduate

graduate

2%

0%

28.6%

60%

10

6.8% 2%

21.6%

100%
other

Shiraki’s survey conducted in a Japanese company in southeast Asia also
supports this result. Shiraki compared a Japanese company to Euro-American company
in southeast Asia in terms of promotion, and he concluded that the average of managersof high school graduates or junior high school graduates in Japanese company was
higher than those people in Euro-American company. Then, finally he mentioned that inJapanese company in southeast Asia, possibility of promotion is widely open to people
who do not have high educational back ground (Shiraki, 199:11).

4.2 Results from qualitative data
Here, I move to results of interview in 2003. By using interview data, I clarify
the meaning of staying in a Japanese company for a long time.
My informants told me that they developed a sense of loyalty or understanding
to a company in accordance with accumulating a certain amount of experience there.
Moreover, some informants told me that working for a long time leads to internalizationof Japanese way of thinking or a way of Japanese business.

Case 10 pointed out that it is important for understanding Japanese people tohave a lot of contact experience.

“I understand Japanese people in terms of contact with them. I have been

11

working here for more than 20 years, so I have spontaneously become to understandthem better than other local staff” (case 10)
However, in East Asia including Taiwan, people do not have positive value tocommit for a long time in one company (Chan, 1995, Wong, 1999). On contrary, they
have strong orientation to be a business owner so called LaoBan(老板)(Numazaki,
1996:298). In the society that has strong orientation to be a business owner, myinformants have been working for a long time against local logic that becoming abusiness owner is better than staying one company and getting salary, and as a result,they paradoxically promoted in Japanese company in Taiwan. They finally internalized
the way of Japanese thinking and the way of Japanese management style in terms oflong-term commitment in Japanese company.
Case 10 pointed out that the way of Japanese thinking or the way of Japanesemanagement which he learned has a profound influence on his daily life.

“For my 27 years in this company, I was influenced by the way of Japanese
thinking and the way of doing business. This company has been operated as anorganization and has rules. Those rules influence on my daily life without realizingthem” (case 10)

Moreover, case 6 told me that he often read and studied Japanese management

12books or books related to China business.

Ａ：

Nowadays, China is the biggest market, right?!

K：

That is right.

Ａ：

Yes, and I like a Japanese scholar named Daizen Kenichi.

K：Oh, yes. Oomae Kenichi

Ａ： Yes, yes, yes. His name is Oomae Kenichi. I like his books. I often read his books
and learn a lot of things from his books. Actually, I have to study and get information as
much as possible.
(case 6)

Besides, case 9 mentioned that his way of thinking got close to Japanese one
because of working together every time.

Ａ：

One Japanese expatriate who came here long time ago told me that I am a half

Japanese.
K：

Why is that？

A： Because my way of thinking or my decision process is quite close to Japanese way
because I have been contacting Japanese since I entered this company.
K：

I see.

13

Ａ：

I work with Japanese everyday, so my thinking got close to Japanese. Besides,

now I can understand Japanese well because of contacting.
(case 9)Thus, working for a Japanese company for a long time has one meaning ofinternalizing the way of Japanese management, or the way of Japanese thinking.
In other words, as mentioned above, people in Taiwan generally do not havepositive value for a long time commitment in one company. That is why the average oflabor fluidity is extremely high in Taiwan. However, long time commitment has become
cultural capital for people who stay Japanese company as a result. Long timecommitment in Japanese company finally leads to making a trust formation withJapanese company (Whitely, 1997, Arai, 1990). In Taiwan society, people who work for
one company for a long time are judged as they reluctantly stay one company. However,for Japanese company, that reluctant stay for a long time in Japanese company isevaluated by Japanese way of trust formation beyond culture (Fukuyama, 1995). For
local employees, especially for local employees who do not have high educational
capital, staying for a long time leads to making a high trust formation, and helps them toget promotion.
Thus, local employees who do not have enough educational capital enable tostay in a Japanese company for a long time in terms of implicit practice called “long14

term commitment”. They succeed in gaining implicit knowledge in the process ofcollaborating with Japanese expatriates.

5. Summary

As I introduced the result of questioner so far, most of long-term-service local
employees in Japanese company in Taiwan have low educational background. People
who stay in Japanese company are those who do not have high educational background.
Due to their low academic back ground, it is difficult to survive in an outer labor market.
On contrary, however, inside a Japanese company, they are highly appreciated by
Japanese company and are regarded as “elite employee” because of their “long term
commitment (Abegglen, 1958)”. In other words, they are highly appreciated in the
inner labor market inside a Japanese company.
An “elite employee” seems to be different depending on a system of anorganization (Fujimoto, 2004). This paper raises the question who is an “elite” inJapanese company in Taiwan. Generally speaking, an idea of outstanding humanresources often connects to their educational background. People tend to believe thatthose who have higher educational background easily promote in an organization.
However, in Japanese company in Taiwan, do elite outstanding human resources mean

15

people who have higher educational background? The answer is no. Actually defining
an outstanding human resource is very difficult (Takahashi, 2004). This paper implies
an outstanding human resource for Japanese company is created in organization rather
than people who have high educational background.
In a society, highly-educated people called “social elites” search for a bestpractice and easily move to a better working place which will satisfy them. In otherwords, they switch working places to find a better company which gives high praise tothem. Contrary to them, those who do not have high educational back ground, theycannot stand up against an outer labor market because of their low educational background. Accordingly, it seems that they choose a long term commitment in a Japanesecompany. On the one hand, social elites search for the best practice, but on the other
hand, those who have low educational back ground search for the second best practice.
As this result, most of the people who have been working for a long time can be
relatively seen in the group of low academic background.
It is difficult to make it clear whether a Japanese company is aware of this issue
or not. However, this kind of low-educated people working for a Japanese company fora long time will become key persons for future Japanese management in East Asia. It's
an indisputable fact that local managers support Japanese company in Taiwan, and mostof them are those who have been working for a long time. They became a managerial
position in the process of long-term commitment. Those employees who have been16

cultivated in Japanese companies in Taiwan eventually relocate to other parts of Asia.
One of the important by-products of this movement is the establishment of strong
networks in Asia in terms of economic activities. This networking process throughmultinational enterprises can be viewed as one of the contributors to Asia integration.
We can also view HRM and cultivation of employees inside Japanesecompanies as important contributors to Asia integration and cooperation through the
movement of people in Asia. In consideration of the important role the movement of
culturally competent managers and their movement in Asia have on Asian integration,
core local Taiwanese managers work beyond national boundaries. In this sense,
deepening Asia integration can and should be viewed through the movement of people
as exemplified by local core managers accumulated in Japanese companies in Taiwan.

17

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