Southeast Asian Studies, Vol. 23, No. I, June 1985

A Commentary on Hideki Imaoka's "JapaneseManagement in Malaysia"
Hideichiro N AKANO*

the racial violence of 1969, the "May 13th
incident," the country has endeavoured toIntroduction

The purpose of this paper is not to criticize

further development and integration under

but rather to supplement Imaoka's "Japanesethe strong leadership of the Malays, at theManagement in Malaysia," which focusessameupon the process of "localization."cultural traditions and Islam.

The

time

placing emphasis

on

Malay

From theresearch in Malaysia constitutes only a small

beginning, political leaders were acutely awarepart of a larger comparative study dealingof the importance of the private sector andwith the same problem area in the ASEAN

multinational corporations for capital ac-

countries, Hongkong, Taiwan and Korea.

cumulation and technology transfer, which

The

they recognized as being indispensable forpresent

authorparticipated

in

the

program, helping Imaoka carry out thetheattainment

of

their

questionnaire survey made in Malaysia in

Accordingly,

goals.

the summer of 1982, when he and I had thepolitical and social conditions and a hospit-

opportunity to visit Japanese joint ventures
to observe factories, to talk with Japaneseable climate for foreign business enterprises.
The late 1960s witnessed, for example, theand local managerial staff, and obtain firsthand information. The present comments

enactment of the Investment Incentives Act(1968), and other tax incentives which,are made on the basis of my personal experi-

together with the creation of Free Tradeences, data collected, and an analysis ofZones (1973), encouraged foreign industrial

the survey results.

enterprises and other businesses to open

to create stable

they tried

branches in Malaysia.

national

The Federal Indus-

trial Development Authority, a government

The Local Situation

Malaysia, a new nation which attained

agency, was established with offices in New

independence from Great Britain in 1957,
is rich in natural resources and politically

York, San Francisco, London, Dusseldorf,
and Tokyo to invite foreign capital into thestable, and is regarded as one of the most

Malaysian industrial sector.

successful nations in the region in the fieldof economic development.

Particularly since* 9='Jl!T*-~~, School of Sociology, Kwansei
Gakuin University, 1-1-155,
Nishinomiya 662, Japan

Uegahara,

The

Malaysian economy has,

on

the

whole, been developing steadily.

The stagecorresponding

Malaysian

totheSecondPlan was reached in the early 1970s, theThird Malaysian Plan in the late 1970s, and109

now the Fourth Malaysian Plan is in progress.
The economy faces

Generally speaking, Malaysian attitudes

difficult problems,

toward Japan are relatively favorable, andhowever, which were aggravated by thethis is reflected in the "Look-East-Policy"

general recession of the world economy.

originally initiated by Dr.

An economic report issued by the Ministry

prime minister.

of Finance in October, 1982, attributed theeconomic difficulties of Malaysia to the low

the secret of Japanese economic success,particularly the conditions underlying the highvolume of exports to the OEeD countries,

morale of Japanese workers and the excellent

and especially to declines in the export of

rapport between labor and management.

oil (down 13 % from the previous year) and

The present M-M (Mahatir-Musa) regime ofrubber (down 10.5 %).

As a result, theMalaysia proposed plans to train Malaysian

growth rate of the GNP in 1982 was 6.9%, orindustrial workers in Japan, soliciting as-

0.7 points lower than the initial prediction.

sistance and cooperation from both the

The long-run picture of the Malaysian
economy in terms of the export of manu-

Japanese government and business circles.
This was prompted by the shortage of skilled

factured products is, however, more rosy;
while the value of exports between 1970 andworkers and managers in the industrial
sector and the lack of adequate training

1981 increased almost fivefold, their composition changed drastically during thoseinstitutions. This is undoubtedly a majorarea where problems of technology transfer

10 years.

are inevitable, but at the same time where

In 1970, the share of rubber in the totalexport value was 33 %, and that of tin 20 %,Mahatir, theHe seems eager to learn

Japanese joint ventures have much to contribute.

together they accounted for 53 % of the total
value of Malaysian exports.

By 1981, how-Japanese Joint Ventures

ever, the share of manufactured products

On average, the Japanese joint ventures in(which was only 4 % in 1970), had increased
to 24 %, while that of rubber and tin had

our sample began operating in Malaysia
in 1971. This was earlier than in otherdecreased to 16 % and 8 %, respectively. At
the same time, to the country's good fortune,

ASEAN countries except Thailand.
top

the share of oil in the total export value had

responded to our questions, 87 % stated thatrisen to 24% in 1981 (compared with 4% in1970), due mainly to the sharp rise of oilthey try to adapt their management style to the

managers

Of theof these companies

local situations.

who

Nevertheless, the Japaneseprinciples of management such as groupism,

prices in the early 1970s. The share-increaseof industrialized products in the total value ofhuman

Malaysian exports was the result of thebenefits within the company, communication

determination of the government to industrialize the country with the active participationfrom the bottom up, on-the-job training, etc.,
have firmly become part of everyday practiceof foreign capital, including Japanese joint

in Japanese joint ventures in Malaysia.

ventures.
110

relations,mensualization,

welfareIn our sample companies, most middle

H. NAKANO:A Commentary on Hideki Imaoka's "Japanese Management in Malaysia"

managers were recruited locally: 92 % of

ever, our sample shows a highly desirable

the supervisors, 70 % of the administrators,

picture in this respect.

and 68 % of the personnel managers.

These

breakdown of workers in Malaysian manu-

local middle managers, whose average age

facturing industry as a whole is 36 % Malay,

is 36.5, and whose average working period in

56 % Chinese, and 7 % Indian, that in our

their respective companies is 7.1 years, showedsample companies was 63 % Malay, 19%

a strong commitment to their companies.

Chinese, and 14 % Indian.

Whereas the ethnic

For example, 73 % of them responded thatthey are ready to substitute for sick colleagues

Local Adaptations of the Japanese Style ofwithout receiving additional pay.

Management

A special issue in employment in Malaysia

The Japanese style of management is

is closely related to the government policy

often said to have contributed much to theof Bumiputra Priority.

miracle of economic growth in Japan after

This policy was

introduced to deal with the problems andWorld War II.

lower the tensions of this multiracial society.

opposing hypotheses about Japanese manage-

The tensions were largely a result of British

ment.

colonial administration, which subordinatedwhich emphasizes unique social and cultural

the Malays, mostly poor farmers in kampongs,

traits in the Japanese style of management.

to the Chinese, who were city-dwellers with

The other denies such uniqueness and con-economic

inferior

tends that Japanese principles of manage-socioeconomic status underwent a drastic

ment are universal and, therefore, applicablechange after the "May 13th incident" in 1969elsewhere.

power.

The

Malays'as the New Economic Policy was forcefully
carried out under the Constitution.

In this context there are two

One involves "specific culturalism"

The opposition between these two hy-

In thepotheses, "specific culturalism" and "universal

economic sphere, it was decided to increase

rationalism," however, is not as stark as it

the Malays' share of employment in sectorsof high productivity and capital accumulation

might first appear. Although it is natural
to expect that the Japanese style of manage-

in order to narrow the income gap among

ment with its emphasis on the group might

the different ethnic groups.

By 1990, thebe more acceptable in Asia, where some of

economic plan calls for the share of workers

the basic Japanese values of collectivity arein the secondary industry to be 50 % Malay

shared, than in Europe and America, where

and 50 % non-Malay, and the share of themodern individualism is firmly established,capital to be 30% Malay, 40% non-Malay,

it is also true that business behavior, theand 30 % foreign. Accordingly, joint ventures

behavior of a "living system," should be aof foreign origin in Malaysia are compelled

rational adaptation to the environment, at

to employ a designated ratio of Malay

the least, for survival's sake.

The factors

workers.

which

independent

This may lead to problems when

can

be

regardedas"talents" are unevenly distributed among thevariables

different ethnic groups.

regardless of whether a business is foreign

Fortunately, how-determining

businessbehavior,111

or local, can be separated into three groups.

commitment of workers to other institutions

The first group is found in the nearest envi-

such as family and neighbourhood com-ronment to the enterprise concerned, and con-munity, the weaker their loyalty to thesists of scale, capital share ratio (in the caseof capital of foreign origin), the kind ofcompany where they work just to make aliving.

industry (or major products), market share

It may be argued that the kind of wage-

ratio, and so forth.

These factors may

scale system,

promotion system,

generalbe called "management-industry variables."management strategy, and the method of

The second group consists of such variables

decision-making a particular joint-venture

as the general economic trend or climate

employs are, primarily and directly, de-at a given point in time, and the government's

termined by the first group of variables:

economic policy, which are beyond the control

a larger capital share ratio (in the case ofcapital of foreign origin) can be interpretedof any single corporation.

These factors

may be called "politico-economic variables."Thirdly, there are the "socio-cultural variables," which include various conditions inas meaning a larger "say;" and a monopolistic
market situation may permit companies tothe national and international societies in

employ a softer system of wage, promotion,
fringe-benefits, and decision-making than awhich the business concerned is located, andcompetitive situation.

such cultural and symbolic idea systems aswith relatively abundant capital can afford to

those of religious beliefs and traditional

pay more attention to the workers' benefits

values. These stipulates the normative pattern of human relations or groupings, and are

and welfare than smaller companies withpoorer finances. In the second and third

completely given to business corporations.

categories of variables, business rationality

The present survey research is not aimed
at clarifying systematically the pattern ofhas to take cultural factors into consideration.
It is necessary to recognize that to install amanagement and labour relations of Japanese

small "mosque" for factory workers next

joint ventures in Malaysia in terms of theseto the workplace (to allow Muslims tothree groups of variables.

pray in the traditional manner) is not neces-

But one of the

Also large companies

merits of distinguishing these categories issarily to give up rationality.

that we can employ a much more compre-

example of adaptation to local conditions.

hensive explanatory framework, for example,A

to understand job-hopping, a troublesome

welfarephenomenon widely observed in Southeast

wealthy) would install a "mosque" in Malaysia

Asia, instead of simply attributing it to a lackof commitment or loyalty on the part ofand provide a tennis court in other countries.
Concerning the historical background of

local workers.

the country, it is appropriate here to mention

Other conditions being equal,

It is a perfectcompany sufficiently sensitive toof its(andrelationsinsufficiently

we can reasonably anticipate that the fewer

briefly

the job opportunities, the less common willAmong our sample companies, 47 % of thembe job-hopping, and that the stronger the(23 companies out of 49) responded that112

industrial

workers

the

Malaysia.

H. NAKANO:A Commentary on Hideki Imaoka's "Japanese Management in Malaysia"

they have trade unions.

These were mainly

industry-wide unions (as high as

Singapore.

The principal supporters of DAP

82 %),are mainly of Chinese origin, which reflects

although in exceptional cases there were

the historical fact that the main activists ofother types, enterprise unions and craft

labor movements in this area were neverunions.

This pattern can also be observed in

Malays who were engaged in rice-cultivation

Singapore, but contrasts clearly with that in

in insulated kampongs, but Chinese and

the Philippines and Thailand, where enter-

Indians.

prise unions are more common.

Needless

British colony to work the tin mines, andto say, the present pattern of industrial

the latter to work the rubber plantations.

relations in Malaysia and Singapore is a

As ahistorical product of the British coloniallabor movements could not help but retain aadministration, where labor unions werecertain element of anti-Malay sentiment.

organized along industrial lines and labor-

Even today,

capital negotiations took place at the national

local Chinese, seems to resist the Malays

and central level between representatives of

who, in the citadel of power, propound theworkers and employers.

Malay

Historically,

Malaysia

andSingapore

The former were brought into thisresult,the ideologically socialistic

the DAP,

Prioritytransferred

policies.

political

representing the

As

power

the
to

Britishthe local(which were politically united from 1963 togovernment rather effectively, socialist and1965 as the Federation of Malaysia, before

labor movements have been successfully

Singapore seceded as an independent state)

incorporated as part of the established social

were under British colonial rule; and during

institutions.

a long succession of independence movements

Congress was organized on a nationwidea British tradition of labor movements andlevel with different industry-wide unions associalism became established in the region.

its members.

Lee Kuan Yew, the present prime minister

enterprise unions widely observed in theof Singapore, for example, having read

Philippines and Thailand (as well as Japan)

jurisprudence in Lincoln's Inn, Cambridge

have not developed.

The Malaysian Trade Union

This is why, in Malaysia, theUniversity, began his career as a consultant

The analysis of the answers to our question

lawyer to labor unions in the peninsula andin 1954 organized a democratic socialist

asking what policy the top Japanese managersof our sample companies consciously adopt inparty called PAP (People's Action Party).

order to promote the Japanese style ofCurrently, Malaysian politics is run by the

management reveals the following: the three

Alliance (Barisan Nasional), whose threemostmain pillars are, UMNO (United MalayinNational Organization), MCA (Malaysian(2) emphasis on management philosophy

Chinese Association), and MIC (Malaysianand objectives, and (3) emphasis on smooth

Indian Congress).

human relations.

There is also a viablefrequently

order,(1)adoptedemployment

policiesare,stabilization,

Although the order ofopposition party, DAP (Democratic Action

priority may differ from country to country,

Party), which derived from the PAP inthese three policies are universally adopted
113

by the top Japanese managers of Japa-

paper advertisement.

nese joint venturesAsia.

be higher than we expected, believing that

These managers have also been trying tolocalize some of the typical Japanese organi-networks of relatives and close friends arestill very strong in this society. Perhaps thiszational practices such as on-the-job training,seniority-based wages, internal promotion,is part of a local (social) climate in whichrational and universalistic organizationaland smooth human relations between workers

practices become accepted and establishedand managers.

QC circles had been intro-

regardless of whether they are introduced

duced by 61 % of the sample companies, theby foreign business corporations or local

percentage being highest among the sample

entrepreneurs.

inSoutheast

This figure seems to

ASEAN countries.
As the traditional Asian value of mensua-

Concluding Remarks

lization is, in some form or other, sharedin this region, it is understandable that

Since early this century, Japanese havebeen economically involved in the Malay

many local managers are favorable to theircompany's policy of "equalizing" managers

Peninsula to an appreciable extent, bothin scale and commitment, running rubber

and workers.

As a result, 80.5 % of theplantations and exploiting iron ore.
the

Japan

local managers in our sample companies

also occupied this area underpre-answered that they like to participate insumptuous cause of the Great East-Asiangames or club activities with general workers:

Co-prosperity Sphere. By March 1982, Japan

94.0 %of them said that they like to participate

had reemerged as the largest investor inin an annual dinner party sponsored by thethis nation (681 million dollars US), and thiscompany or a recreational committee: and78.2 % answered that they have lunch withis paralleled by an ever-growing presence

workers at the company canteen.
These local middle managers, however, are

The main incentive for coming to Malaysia

not committed to their company for reasons

undoubtedly that they can obtain cheap laborof "humane sentiment."

The reasons theyof good quality (endurance, good sight,

cited as most important for choosing theirmanual dexterity, and so forth), though otherpresent company were (1) better prospect ofadvancement, (2) more chance of learning

considerations like access to certain natural
resources or to the nearby market are also

new technology, and (3) stable employment,

involved.

of Japanese joint ventures or subsidiaries.
(as well as to other developing countries) is

Needless to say, when it comes to helping

in that order. Closely related to this rational
choice is the way they came to know of theirdeveloping countries in their own efforts topresent company.

Not many learnt of their

help themselves, Japanese assistance shouldpresent company through friends or relatives

emphasize technology transfer and manpowerwho

training.

were

somehow connected with it.

Almost 40 % of them said that they came toknow the present company through a news114

So far, in this respect, Japanese

joint ventures have done well in Malaysia,
putting into practice such policies as on-the-H. NAKANO:A Commentary on Hideki Imaoka's "Japanese Management in Malaysia"

job training and sending trainees to Japan,
References

and these programs are highly evaluated by
the local managers.

The subject-matter of(1)

this report has to be explored and analyzed
further by specialists and this commentary
only claims to be a stepping stone for such
future studies.

(2)

Mikuni, Motoaki. 1977. Kokusai Keieishano Joken. Tokyo: Aoba Shuppan.
Nakano, Hideichiro. 1978.
Politics in A
Multi-Racial Society - The Case of Malaysia Today - . Kwansei Gakuin University
Annual Studies XXVII (Dec.): 81-87.

115