『地域政策研究』（高崎経済大学地域政策学会）

第３巻

第２号

2000年11月

１頁〜19頁

Hideo HASEGAWA
長

谷

川

秀

男

There is no doubt that small firms have, in spite of many adverse influences, shown a great tenacity insurviving． This is especially surprising in view of the apparently very low profits and the frequent failures．
Whereas small business owners in North America may be described as managing independent businesses,
small firm, in Japan seldom stand alone. Rather, it is normal in Japan for enterprises to participate in several
types business alliance. Such linkages among firms in Japan have resulted in a unique small business sector.
A variery of business alliances has evolved in Japan, including: (１) the keiretsu (a diversified enterprisegroup; (２) the sanchi (a grouping of small businesses in a similar line of business); (３) kyodokumiai (a cooperative of small businesses); and (４) the shita-ukegyosha (the subcontract system).
As an alternative to joining a keiretsu with large enterprises, small may join a sanchi. In contrast to thediversified keiretsu, the sanchi is a grouping of small firms that are in a similar line of business. Usually, thisinvolves a physical cluster of many firms who co-operate in similar work or divide labor into different
processes.
Usually, members of a sanchi cooperate together rather than compete amongst each other. Sanchi operateon the principle that a small business may be lacking competitive advantage simply because of its size and its
limited ability to achieve economies of scale. Under such conditions, a cluster of nurturing small firms canbe stronger than individual small businesses each on its own.
Small business are central to the Japanese economy.

The Economist reported that the self-employed andtheir unpaid family workers account for nearly a third of the labor force in Japan, compared with less than 10
percent in America.
More recent statistics obtained by the author from the Ministry of International Trade and Industry (MITI)
indicate that there are over six million small businesses in Japan, representing 99 percent of all firms in the
country and employing 75 percent of the working population. Since the 1980s, most Japanese investment
projects abroad have been undertaken by small and medium sized firms.
With Small and Medium Enterprise Basic Law of 1963, the Ministry of International Trade and Industry
created the Small and Medium Enterprise Agency to safeguard the interests of this sector.
But since December 3rd 1999, SME New Basic Law has been in operation. As a result these small and−1−

Hideo HASEGAWA

medium sized enterprises are legally defined as (１) service operations with fewer than 100 employees ( orwith a capital less than ¥ 50 million); (２) retail operations with fewer than 50 employees (or with a capitalless than ¥ 50 million); (３) wholesale enterprises with fewer than 100 employees (or with a capital lees than
¥ 100 million); or (４) industrial enterprises with fewer than 300 employees (or with a capital less than ¥ 300
million).
Here small firm will be used in a way that reflects the structure ofkonnyaku industry, where mostfirms have fewer than 20 employees and are owner - managed or family businesses. And micro firm will be
used as businesses, defined by the EU, employing less than 10 employees.
This paper aims to provide an empirical insight into the diverse problems and surviving in the micro-small
firms. The research is focused on the konnyaku industry which are predominantly neither fast growing or
failures, but average performers and survivors. The purpose of this article is to shed some light upon thebusiness alliances and the competition in this industry which members of a sanchi cooperate neither together,but compete amongst each other.

Profil of konnyaku industry
Konnyaku that is traditional and particular foods in Japan has some characters as well as it follows:----it is a food of dough with a light taste in the mouth and elastic texture----it is manufactured by what one mixes milling, water and lime to congeal powders.
---- konnyaku mannanthat is the polysaccharide contained in the amorphous tubers forms a rigid colloid

coagulated with weak alkali solution.
----it is evident, in this last time, that konnyaku mannan can reduce the level of cholesterol in the humanserum.
The konnyaku industry is composed, besides, of three groups: farmings to cultivate konnyaku potatoes,

konnyaku milling industry and konnyaku food manufactures.

The production of konnyaku potatoes isconcentrated in Gunma prefecture during recent fifty year as in table 1 ( its proportion : 85.3% of Gunma,
6.2% of Tochigi, 1.9% of Saitama,1.8% of Fukushima and Ibaragi etc. in 1998) and figure 1.

−2−

Survival and Problems in Small-Micro Film

Table 1 Trends in main prefectures cultivating k
o
n
n
y
a
k
u potatoes (ton)
５

N.P

1905

F.Y
I

１
11,297

FS

２
4,236

FO

３
2,150

O

４
1,672

H

1,615

35,535

1906

I

11,654

FS

2,519

O

2,222

H

1,635

T

1,556

33,654

1907

I

8,649

FS

3,980

O

3,279

H

1,863

T

1,299

31,899

1912

O

7,731

FS

6,298

I

5,674

H

3,783

G

1,901

45,384

1916

FS

6,873

O

4,615

H

5,746

I

4,569

G

3,071

42,736

1921

O

6,437

H

5,014

FS

3,642

G

3,331

Y

2,882

37,707

1926

G

9,647

FS

6,847

H

6,088

O

5,472

I

4,657

54,985

1935

H

7,587

G

5,884

O

5,592

FS

5,172

I

4,532

55,498

1945

FS

3,943

G

3,275

SZ

2,394

H

2,214

M

1,577

22,421

1947

T

1,472

G

1,241

H

844

FS

821

SZ

582

10,280

H

8,088

SZ

3,278

FS

3,038

52,800

M

8,200

I

7,530

ST

5,010

103,100

T

8,820

I

8,060

ST

3,240

105,400

12,800

F

6,550

I

5,120

ST

2,370

98,300I

1955

G

14,771

1965

G

33,8001975

G49,9006,645
FS 13,500
FS 16,600

1985

G

63,200T

1989

G

56,900

T

9,510

F

6,680

I

2,800

ST

2,630

85,6001994

G

72,000

T

7,940

F

3,270

ST

2,170

I

1,940

90,8001995

G59,700

T

6,590

F

2,330

I

1,980

ST

1,850

75,1001996

G73,000

T

7,120

I

2,080

FS

1,930

ST

1,710

88,700

2,220

FS

2,060

ST

1,630

98,700

1,778

FS

1,660

I

1,659

91,8001997

G82,700

T

6,790

I

1998

G

78,300

T

5,700

S

Notes :
F.Y = fiscal year N.P = national production of konnyaku potatoes
M = Miyagi FS = Fukushima I = Ibaragi T = Tochigis
G = Gunma ST = Saitama SZ = Shizuoka H = Hiroshima
O = Okayama Y = Yamaguchi FO = Fukuoka
Source : Japan Konnyaku Institute ; orig.Census of agriculture/foretry/fishery

Table 2 Number of miller, device driver and pound installation
Pound installation

MillerDevicedrier

Pestle

N.M

1965

194

20

20,598

―

1967

194

33

20,598

―

1970

190

103

23,264

―

1975

198

148

31,055

―

1980

185

194

34,627

―

1985

169

194

27,643

16

1989

159

207

23,290

52

1993

145

174

18,995

79

1998

133

149

13,652

87

1999

116

133

10,94282

Notes :
N.M = number of milling machine
Source : Japan Konnyaku Institute− 3−

Hideo HASEGAWA

１ Miyagi
２ Fukushima
３ Ibaragi
４ Tochigi
５ Gunma
６ Saitama
７ Shizuoka
８ Okayama
９ Hiroshima
10 Yamaguchi
11 Fukuoka
１

２
５

４
６

９

３

７

８

10
11

Figure 1 Main prefectures cultivating k
o
n
n
y
a
k
u potatoes

In the konnyaku milling industry which has been relatively the mass production by the modernization andmechanization in this last time, it results in the reduction of miller and the surplus investment as in table 2.
In the konnyaku food manufactures the buying power emerges in the relations between the owner / manager−4−Survival and Problems in Small-Micro Filmof konnyaku food industry and the store of mass purchase / sale ( par example supermarket ) in this lasttime ( cf. Figure 4 ). The demand- supply of konnyaku milling and products is, further, composed as infigure 2.

▼

Noodles/bread▼

Products▼

ImportH.C
D.I
HM

Food raw

Jelly

Milling

Konnyaku products▼

Demand▼▼ ▼▼ ▼ ▼Domestics

SupplyNotes :
H.C = konnyaku products for home cooking
D.I = konnyaku products for diner-out industry
HM = for half meal industry which exits between the home cooking and the diner-out industry
Source : Japan Konnyaku Institute

Figure 2 Demand-supply of k
o
n
n
y
a
k
u milling and products

We will treat here a part of my research result as well as it follows.
１) While observing the shape of firm, one can understand that the individual firm is the crushing majorityof 65.8% at the object of the investigations and that the other side the corporation (L.td.) is a quarter of it.
The firm managed by only one owner and family is 78.8%.

Nearly all millers establish, besides, theircommercial offices in the same way with their lodgings.
There is, so, a lot of firms that don’t separate “property and management” . And most its conducts arestrong of the domestic profession character.
２)

As for the account books, the simple style (47.8%) is more of a current use that the double style(32.8%). Two third of firms confide their holding of the books to the owner/manager and their unpaid family
workers, and the other side the dependent millers of employees are only 14.5 percent.
To this point, it is doubtful that they clearly separate their domestic savings and their managements. In
most firms, the self - employed and family workers is not paid in rate of the wages which is achieved in thelabor market. And the working costs of owner/manager and family workers are equal to their expenses oflife.

In other words, their essential goal of activity of production and sale is to be well - off, so that itremains strongly the nature of

profession to earn a living.

３) Besides, there is somewhat of firms that shape precisely the attribute of enterprise as following senses:− 5−

Hideo HASEGAWA----the family workers takes care of managed work as the nominal employees. And there are also only thesalaried employee in the process of manufacture.
----the owner moves away completely of process of manufacture and devotes himself to manager’s job.
----the salaried employee works at normal pay which is achieved in the labor market.
----In these firms, the capitalistic conscience presents itself precisely.
--- The concept of “Capital and Labor” is clearly separated.
But neither accumulating the profit nor enlarging production is difficult, in order to have the inclination torealize a large of profit on the rise/drop of speculative prices ( figure 3 ), although it uses some salaried
employee, has the system of the economic calculation and has the strong advantageous conscience.
If it is possible to accumulate the profit, owner/manager and family workers accumulate them as theindividual goods and has luck hardly to reinvest them to the main business.

16.0
15.0
14.0
13.0
12.0
11.0
10.0
9.0
8.0
7.0
6.0
5.5
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0

（156,000）（98,000）（76,000）（42,000）（35,000）（39,000
39,000）（39,000）（32,000）（18,000）（8,000）

14
13
12
11
10
9
8
7
6
5
4
3
2
1

Price
Product
34 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98（￥） 〜（T ton）
36

f i s c a l y e a r （ 1934 〜 1998 ）Notes :
Figures in ( ) = average amount of konnyaku milling in ¥ per 20 kg(¥) = 10 thousand yen (T ton) = one thousand tons
Line graph = konnyaku milling priceBar graph = konnyaku milling productSource : Japan konnyaku Institute

Figure 3 Movement of product and price at konnyaku milling−6−

Survival and Problems in Small-Micro Film

４)

With regard to the composition of age of owner/manager, 13.0% of them are less than thirty years,

35.7% for the age of forty, 32.0% for the age of fifty and 20.0% for age of more than sixty years. It seems
that there are enough young owner/manager relatively.
It reflects itself that the konnyaku milling industry has the habit of speculative trade by which anyone candream to accumulate suddenly a big fortune, and that it presents itself the high risk for the speculative politics
of the business.
Otherwise, it means that the occupation of market of the big millers is not steady nor big because of being
difficult to form the high wall of entry, the traditional politics of the prices in the konnyaku milling industry,
the strong seasonal change of consumer’s demands against the konnyaku food products, the low level ofconsumption with a gradual decrease of their demands, and the unsteady offer of konnyaku potatoes
influenced by the natural phenomenon etc.
５) About 72% of firms are founded since the age of 1955. A lot of enterprises are very news. 35 millers
existed, whereas their association has been established in 1916, but now it only remains 7 millers of it.

The

succession of management is weak.
The fact that the anyone who has no experience of manufacturing milling can enter positively or merely inthis market, has relations with the particular conventions to this industry, for example the excessivecompetition and the instability of management having serious relation to the speculative character.
There is, besides, the excessive competition which is a loss of price at high and also decrease the prices
until expenses of life, because anyone can start a new firm with the small capital and it is not necessary tohave the good technique, the full knowledge and the sufficient experience.
It seems that this industry has the dominant cause of excessive competition as well as it follows.
----even if one firm acts up to its principles, it cannot take the price leadership under the atomic market
structure.
----it is not difficult to enter in this market, because the level of appropriate scale is extremely low, and thatthe economy of scale is very small to the point of view of the technique level, of the productive manner, of
the rate of wages and the level of prices.
---- always it is possible to lower the rate of wages in this industry, and it has inclination to depend on family
workers and temporary employee.
While looking at the result of research as above, it seems that the milling of konnyaku has particularconventions as follows:----most millers are an owner/manager of micro - firm in which his housing doesn’t separate from the place ofbusiness. They will rather promote congruity between the place of business and housing, becoming a modelindustry for indiscrete the co - existence of housing, industry and commerce.
----a lot of millers are arbitrary people. The conduct lets itself influence by the capacity and the discernment− 7−

Hideo HASEGAWA

of owner/manager.
----all millers are an owner/manager, even though the enterprises are under the shape of corporation, and they
are all the society directed by only one family.
----the difference between the growth and the stagnation is very big, because the millers don’t have strategic
activity sufficiency for the various outside changes. And the new entry to the market is frequent, when themarket spreads, especially as the power of capital is very small. It results, besides, that the market produces
the character of excessive competition today.
----most millers have a vivacious strength of surviving, the other side it is easy to go into bankruptcy.

Finding of Joseph Steindl:
There is no doubt that small firms have, in spite of many adverse influences, shown a great tenacity insurviving. This is especially surprising in view of the apparently very low profits and the frequent failures.
According to Joseph Steindl who wrote Small and Big Business in 1947, the reasons for the tenacious
defence put up by small business are summarized below.
１)

The basic factor which explains why small firms are only slowly losing ground, is the fact that they can

do so only to the extent to which bigger firms grow, and this again depends on their accumulation of capitalwhich takes place at a certain pace; and therefore needs time.
Big scale entrepreneurial capital does not spring from the ground, even if there are many large scaleeconomies available for it; it comes into existence mainly by the growth of already existing large
entrepreneurial capital (it is only a technical difference, whether this growth takes place, as it does in Britain,
inside enterprises, or whether the profits distributed as dividends to the big shareholders who control thecompanies are accumulated and reinvested).
The process of growth of big capital at the expense of small capital is therefore a gradual process whichtakes time. The pace of this process is very much influenced by a few further factors.
２) Imperfect competition by protecting the small firms’ market constitutes an important factor in its ability
to survive. The imperfection may be due to rational factors, like transport cost, which can hardly beeliminated.
It may be due to differentiations in taste; that is, there may be an individuality of product to which theconsumers really attach a significance. And finally the differentiation of the product and attachment ofcustomers to particular firms may be simply due to irrational factors; that is, force of habit, ignorance of
relevant facts, or laziness.
The irrational factors are probably the most important; they account for a considerable cost to society
without offering any advantage (gardening tools can be standardized without harm to individualists).
−8−

Survival and Problems in Small-Micro Film

It may be asked whether imperfection of the market can be such an important force in protecting small
firms in view of the fact that these firms have a high mortality and are again and again replaced by new small
firms. It is true that the small firms which die lose their

good- will

; but the new small firms come in on

a wave of good trade and acquire a limited small market quite easily from new “unattached” customers
without any particular cost; and once they have got it, the goodwill is established, and helps them to endure
the crises longer than they could without it.
Imperfection in the labour market is perhaps even more important than that in the market of the product. A
great part of the small firms are in the industries of unorganized cheap labour supply, where pressure on
prices is more easily passed on to wages, and where there is thus little incentive for technical advancement bylabour saving devices. In other industries, small firms competing with big ones often exist on the basis of acheaper labour supply (such as can be secured in small towns for example).
３) Oligopolistic conditions in an industry are apt to secure the continued existence of a certain number ofsmall firms in that industry. The reason is that the big firms which have established themselves as priceleaders there have in most cases little to gain from the elimination of small firms which account only for asmall part of total supply (and, on the other hand, they will successfully obstruct the replacement of thesefirms by a new big entrant).
A certain high proportionate share in the market of an industry gives practically all the control over prices
which can be desired. At the same time, the retention of the remaining small firms is desired by thedominating concerns as a matter of policy; they will, if need arises, render conclusive proof that there is nomonopoly in the industry, and in any collective representation they will appear as so many
representatives

independent

to support the policy of the leading firm.

An enterprise with an expansive tendency, seeking an outlet for its accumulating capital, will therefore
stop short of absorbing the whole of an industry and will rather expand into other industries m order toachieve influence over prices there.
What has been said above applies similarly to a cartellized industry. Indeed, a (voluntary) cartel could in
most cases be correctly described as a means of strengthening the oligopolistic position of a few big firms in
an industry, while at the same time tolerating the continued existence of small firms for political reasons.
４) Tenacious survival of small firms, lastly, is explained by the “gambling” attitude of small entrepreneurs.
It may seem odd to call them gamblers, but they certainly are, in the sense that they accept unusually highrisks at very low remunerations.
To judge from American data, a steady stream of small entrepreneurs is entering industry, only in order tofail after a short time and be replaced again by new hopeful candidates. The explanation of this phenomenon
is very easy: The social position of the entrepreneur ( “to be his own master” ) is valued as such, and any
small entrepreneur will struggle to the last to retain it, sustaining losses and still not giving up hope of success− 9−

Hideo HASEGAWA

until he is financially unable to carry on. In the same way the potential entrants into the ranks ofentrepreneurs will value this position highly, and will therefore not be deterred by the low average profits andhigh risks from the hope of succeeding and acquiring permanently a higher social status.
The position of the entrepreneur, apart from all social advantages, gives also a tangible immediate
economic advantage, namely the possibility for the small entrepreneur to give employment to himself, andperhaps also to members of his family.
This factor will gain the more importance the greater the unemployment among wage - earners. The small
entrepreneur will then be the more determined to stick to his business, and a certain number of new entrants
will appear simply as a consequence of general unemployment.
Indeed, the self - employed small entrepreneurs are in a position to reduce their remuneration in real terms
to any amount, whereas as wage - earners they would not be able to get employment by offering themselves
at a lower rate.
It is therefore likely that high unemployment (especially of a secular character) contributes considerably tothe determined “holding on” of small firms as a group. This factor probably played a certain role in the
United States in the 1930’s.
The survival of small firms is thus dependent on a series of factors not very creditable to our economic
system: Monopolistic exploitation of labour, imperfection of markets due to “irrational” reasons,
unemployment, and the “gambling preference” of small entrepreneurs, with all the waste of energy attendanton the high “turnover” of small businesses.
In other cases their continued existence is only due to toleration by big business, and affords a mere
semblance of independence. For this a further example may be found in the vertical disintegration of certain
processes, parts of which can be performed on a small scale.
This type of vertical disintegration was mentioned by Marshall as offering the prospect of newopportunities to small entrepreneurs. But in fact these “subcontractors” , or small processors and distributors
of products made by big firms, being numerous and small partners in a bargain with few big firms, areeconomically quite weak and their independence is largely fictitious.
This fact of gradual loss of economic and consequently political independence of small entrepreneurs is
worth attention. If small business would, for example, be faced with the choice of either adopting cooperative methods and accepting a greater degree of government interference, or of opposing such measures,
they might well consider that the latter alternative only means falling more and more under the domination of
big business.

− 10−

Survival and Problems in Small-Micro Film

Inspection:
１) Joseph Steindl said that

The basic factor which explains why small firms are only slowly losing

ground, is the fact that they can do so only to the extent to which bigger firms grow, and this again depends
on their accumulation of capital which takes place at a certain pace; and therefore needs time.
Even if there are many scale economies available for big scale entrepreneurial capital, and so the processof growth of big capital at the expense of small capital is a gradual process which takes time, there is always
a lot of micro - small firms. Over the long term, its proportion has been remarkably stable (cf. table３).

Table 3 Establishment, output, value added by manufacturing size
（％）

1983
Est.
size

Est.
size

Employees

4-9

58.7

10-19

19.5

20-99

1993
Output

Value
added

Est.
size

Employees

Output

Value
added

14.6

5.5

7.9

55.4

12.6

4.8

6.8

11.2

6.2

7.5

19.8

10.4

5.6

6.8

18.6

29.9

22.4

23.2

20.9

30.8

22.3

23.9

100-299

2.4

16.5

17.8

17.4

2.9

18.0

19.0

19.3

300-999

0.7

13.7

22.7

19.7

0.8

14.6

22.1

20.9

1000+

0.1

14.0

25.5

24.2

0.2

13.6

26.2

22.4

Notes :
Est. size = establishment size by number of employees
N = 446,942 (1983) and 413,563 (1993)
Figures do not necessarily add up to 100 because of rounding.
Source : Chusho kigyo cho (ed.) (1992, 1995), statistical appendices; orig. Kogyo tokei hyo (Census of Manufactures).

The world of small firms in Japan is simply fascinating and every bit as representative of modern Japan asthat of large firms. In the machi koba, or small factories packed into back alleys and narrow streets in themetropolitan centers, you will find antique machines and tools cluttering one side of a workshop, andgleaming laser cutters and machining centers on the other.
Around three quarters of Japanese manufacturing workers are employed in establishments with less than
300 employees, a quarter in establishments with less than 20 employees (cf. table 3). If self-employed andfamily workers are included, the small firm share of employment is even more pronounced. More are
employed in establishments with less than ten employees than those with over 1,000 . The proportion
increased in the 1970s, and has declined since the mid 1980s, but over the long term it has been remarkably
stable.
Given these statistics, a model of “Japanese style employment” could just as easily be based on small firms− 11−

Hideo HASEGAWA

as on large firms, but it would be much harder to construct given the greater diversity of employment
practices.
Small firms are crucial to the Japanese economy, and always have been. Revenue from their exports playeda crucial role in funding early industrialisation and reconstruction after World War II. They have provided
employment for the majority of the labor force, easing the social transition as Japan industrialised andenabling an effective mix of capital and labor resources.
Existing as theprofession to earn livingin the composition of capital, the formation of price, the levelof income and the category of income，the konnyaku milling is also the ability to survive.
２) Joseph Steindl said that

Imperfect competition by protecting the small firms’ market constitutes animportant factor in its ability to survive.-------- Imperfection in the labour market is perhaps even more
important than that in the market of the product. A great part of the small firms are in the industries of
unorganized cheap labour supply, where pressure on prices is more easily passed on to wages, and where
there is thus little incentive for technical advancement by labour saving devices.
The relative strengths of large firms lie mostly in resources, while those of small firms are generally argued
in terms of behavioral characteristics. In the small business, par example, one or two persons are required tomake all the critical management decisions: finance, accounting, personnel, purchasing, processing orservicing, marketing, selling, without the aid internal specialists and with specific knowledge in only one or
two functional areas.
Small business owners are generally regarded as being creative and entrepreneurial. Small business has
been considered as a major driving force in local market. This often results in the imperfect competition.
There is, particularly, imperfect competition in the konnyaku industry which form “the special industry inregion” , because of having the habit to consume a konnyaku as one article of food in winter or fall. It resultsin the surviving of small firms.
Employment in small firms has been the subject of debate in many countries. On the one hand job spans
tend to be wider than in large firms, where they may be broken down into discrete components performed bydifferent workers. The “personal touch” and lack of bureaucracy add a human dimension to the employment
relationship. Small firm workers often score more highly than large firm workers in job satisfaction surveys.
On the other hand, the human dimension is not always salutary. Owners can be dictatorial, and there is little
recourse to collective support when disagreements occur. Working conditions, including health and safety,
are often inferior.
Wage differentials have doggedly persisted (cf. table 4 ). And, at the end of the day, job seekers withability and academic qualifications prefer to work in larger companies. True, wages in Japan are strongly
related to age, gender, education, years of employment and employment status, in addition to company size,
and when these are controlled for, and apples are compared with apples not pears. the wage gap shrinks− 12−

Survival and Problems in Small-Micro Film

Table 4 Wage and labor cost differentials by size of firm, 1991
Firm size (employees)
1,000-4,999
Cash earnings

100

300-999

100-299

30-99

90.8

81.2

73.6

80.7

67.0

62.9

90.8

81.2

82.0

64.3

54.1

53.9

73.0

49.2

37.1

57.0

43.9

27.4

93.5

75.1

56.6

(417,756)
Other labor costs

100(82,934)

Of which:

100

statutary welfare benefits(41,174)

non-statutary welfare benefits

100(14,470)

retirement/severance

100

money

(20,818)

education and training

100(2,635)other100(3,837)

Notes :
Size category 1,000-4,999 employees = 100, other figures are relative to this.
Figures in ( ) = average amount in ￥ per month.
Source : Rodosho (1992), Rodosho fukushi shisetsu chosa hokoku (Survey Report on Systems of Worker Wefere
Provision, 1991).

considerably.
But the fact is, there are many “pears” in small firms. Pears here means a disproportionate number of older
workers (where the wage gap is greatest; many are part of a “downward drift” into smaller firms), a
disproportionate number of women (particularly middle-aged women who have reentered the labor market
after early child rearing, usually on a part time basis), workers with lower education levels (those with higher
education seek employment in elite companies higher up the size scale) and fewer years of continuous
employment (because of job changing, due to personal career development or job loss), and a higher
proportion of non-regular employees.
Statistics on non-regular employment are slippery since a wide range of definitions is used, but figures forpart timers in table 5 illustrate the last point (between 50 per cent and 60 per cent of non-regular employees
are classified as part timers). Almost half of female part timers worked in firms with less than 30 employees
in 1990. Working hours can be taken as an indicator of differences in conditions.
Stereotypes color, however, our image of employment in small firms in Japan. Core employees in large
firms have benefited from job security throughJapanese style employment , while employees in small

firms are viewed en masse as a peripheral workforce, subject to exploitative conditions and layoffs.
− 13−

Hideo HASEGAWA

Table 5 Part-time and workers by firm size, 1992
Firm size (employees)
1,000+

300-999

100-299

30-99

5-29

Total

6.8

12.8

13.5

13.7

15.4

12.4

11.7

14.3

17.9

19.2

34.3

100

Proportion of employees
who are part timers
Percentage
composition

Notes :Part timers are defined as workers whose scheduled working hours per day or days per week are less than those of regular
employees.
Source : Japan Institute of Labour (1995), Japanese Working Life Profile, p.26; originally Rodosho, Koyou doukou chosa(Survey on Labour Trends).

The reality is more complex. Some of factory owners have to rely on skilled workers and adopt a variety
of strategies to recruit and retain them. It is evident that small firms competing with big ones often exist on
the basis of a cheaper labor supply.
In the konnyaku milling which has generally the higher proportion of small, the possibility plain of the
reduction of wages exists because of periodic demand and seasonal works. Some of their older craftsmen
have remarkable lengths of continuous employment, but they too are reaching retirement age, and owners
have been in difficulties for attracting the new generation to take their place.
In Japan, one has the habit to consume konnyaku as one article of food in winter or fall. And the konnyaku
potatoes of these raw materials are, more or less, harvested of the mid - October in the beginning ofNovember. The millers of this way have, so, the inclination to put them in powder since the end of the monthof October until the last ten days of December to face the demands.
Therefore, the operation of the productive installation and the employ of laborer concentrate during thisseason. They make the plan to lower the level of wages by the use of temporary workers who give somehours per day in this season. Out of there, they depend on the family workers.
３)

Joseph Steindl said that “oligopolistic conditions in an industry are apt to secure the continued existenceof a certain number of small firms in that industry”.
A firm already in possession of monopoly power is less motivated to protect against the entrance of newsmall firm because it feels less threatened by rivals or because sales of new products may be at the expense of
the sales from existing products.
In the keiretsu ( a diversified enterprise group ) it is evident that oligopolistic conditions are apt to secure
the continued existence of a certain number of small firms. A keiretsu network consists of a group of large
and small companies, each firm voluntarily cooperating with the others for mutual gain. Their linkage isusually implicit.
− 14−

Survival and Problems in Small-Micro Film

In the konnyaku industry there is not a firm in possession of monopoly power, but it exits the buying
power which emerges in the relations between the owner / manager of konnyaku food industry and the storeof mass purchase / sale ( par example supermarket ) .
Preferential treatment within them gives each member an advantage in procurement and distribution, while
the owner / manager of konnyaku food industry feels threatened by the supermarket because of drop andmaintaining at wholesale price as in figure 4.

Fiscal year
Estimated rate

1998
（45％）

686 ¥m1992（53％）

943 ¥m1989（55％）

760 ¥m1987（62％）

870 ¥m1985（68％）

1,050 ¥m

Estimated value

P.W

P.R

490 ¥m630 ¥m620 ¥m837 ¥m839 ¥mNotes :
Estimated rate = estimated rate of wholesale price
Estimated value = estimated total value of wholesale
P.W = proportion of wholesale price
P.R = proportion of retailer charge contained the distribution expence¥m = 100 million yen
Source : Japan konnyaku Institute

Figure 4 Estimated value of wholesale price at konnyaku products− 15−

Hideo HASEGAWA

In the konnyaku food industry which has been relatively the mass production by the modernization andmechanization, the manufacturer of konnyaku food was controlled by a store in possession of buying power
because it results in the surplus investment and the overproduction.
４)

Joseph Steindl said that Tenacious survival of small firms, lastly, is explained by the “gambling”

attitude of small entrepreneurs. It may seem odd to call them gamblers, but they certainly are, in the sensethat they accept unusually high risks at very low remunerations. ”
To judge from Japanese data, a steady stream of small entrepreneurs is entering industry, only in order tofail after a short time and be replaced again by new hopeful candidates. The drive to be “lord of a castle” isessentially individualistic, but it is nurtured in industrial communities or districts.
As Marshall wrote:

The strong individuality of the British race may find its highest development under

the guidance of the spirit of constructive cooperation.
industrial districts:

This was most fully developed, he argued, in

The broadest, and in some respects most efficient forms of constructive cooperation areseen in a great industrial district where numerous branches of industry have been welded together almost
automatically into an organic whole.
According to Florence:

The localisation of a great number of medium-sized or small firms, eachspecialising in some single process or service and depending on a general background of metal and services
in an alternative to a few large firms integrating those processes and services.
Such industrial districts enable the proliferation of small, specialized firms which can make use of
economies of scale external to them, with the result that average firm sizes are smaller in industrial districts
than outside them.
Tenacious survival of small firms is also regarded in the konnyaku industry, in spite of accepting unusuallyhigh risks at very low remunerations. A steady stream of small entrepreneurs is entering industry, only inorder to fail after a short time and be replaced again by new hopeful candidates. The reasons is the drive tobelord of a castle.

A lot of konnyaku millers serve to the local society by what they offer odds of work or jobs to the
inhabitants of this region, take an active part like politician of the various levels, are in charge of several
commissioners of the provincial administration and produce others different opportunities to serve there.
It seems that the charm of the independent owner/manager that can take a lot of odds of work or jobs to fill
the social responsibility is also one of his existence conditions.

It holds, I want to say, the entrepreneur’ssocial place in high esteem, although the average profit is very low with high risks.
A micro - small firm has various problems because of high risks and low remunerations. An understandingof the problems faced by small businesses is of practical importance for those involved in small businesses.
For small business owners/ managers, the perception of a situation as a problem can influence their behavior,such as information searching, knowledge acquisition, attention directing and business performance.
− 16−

Survival and Problems in Small-Micro FilmAccording to Xueli Huang / Alan Brown, these problems were either expressed by the small business
operations or identified by the program manager from their conversation results of the problems encounteredby the small business operators are shown in Table 6.
The most prevalent area in which the small businesses have problems are sale/marketing (40.2 per cent),
human resource management(15.3 per cent), and general management(14.3 per cent). Specifically,
promotion, marketing, research, and training are the most frequently encountered problems, all of which areknowledge or skill related, reflecting the general shortage of expertise in small business sector.
Sales and marketing issues were, par example, found to be the most dominant problems encountered bysmall business operators. Marketing has been widely acknowledged as being the most important of all
business activities and critical for the survival and growth of small business. Specifically, Table 6 shows thatproblems in promotion and market were most frequently encountered by the small business operators.
It was found that these problems included the selection of promotional media(local newspaper or radio,
direct mails, outdoors), content design and format of the promotional materials, market size, and location andaddresses of the potential customers. Lack of financial resources to employ specialists of has also been
attributed to this marketing inefficiency in small business.
Therefore, the high frequency of occurrence may be due to a number of reasons, such as 1) the resource
constraints for information searching, 2) lack of a management information system and 3) the concentrationof decision-making with one or a few owner/managers.
Part of the problem may relate to the lack of financial and human resources to engage in these activities.
Human resource management, general management and production management. The high proportion ofproblems categorized as human resource management and general management is probably not all thatsurprising given the varied background of small business proprietors and the relative ease of entry into small
business. The most frequent general management issue faced was planning while the next most importantones deal with lack of management experience, general management problems and the issue of managing
growth.
It can be concluded, by the analysis above, that three areas that small businesses are more likely to haveproblems with are marketing human resources and general management. Specifically, promotion, market
research, general marketing, training, and business planning are the most prevalent ones.
It is not doubt, in the konnyaku industry, that small firms have been variant problems for generalmanagement（e.g.; Inadequate working capital, Cash flow problems, Successor problem, Controlling
margins/profits/expenses, Lack of management experience etc.,）, for production／operation management（e.g.; Old machine and equipment, Loss of productive process, Production capacity problem, Lack of skilled
staff, Employment conditions, Maintaining quality control/ raw materials/resources, Becoming computerized,
etc.,）and for sales／marketing （e.g.; Marketing or distribution channels, Promoting/public− 17−

Hideo HASEGAWA

Table 6 Detailed Analysis of Small Business Problems
Problems
１. Obtaining External Financing
Obtaining financing for growth
Other general financing problems
２. Internal Financial Management
Inadequate working capital
Cash flow problems
Other or general financial management problems
Controlling margins/profits/expenses
Collection of accounts receivable
３. Sales/Marketing
Market researcha
Low sales
Dependence on one or few clients/customers
Marketing or distribution channels
Promoting/public relations/advertising
Other or general maeketing problems
Changes in markets
Increased competition
４. Product Development
Developing products/services
Other general product development problems
Product line changees
５. Production/Operation management
Establishing or maintaining quality control
Raw materials/resources/suppliers
Other or general production/operations management problems
Production capacity problem
Becoming computerised
６. General Management
Lack of management experience
Only one person/on time
Managing/controlling growth
Administrative problems
Other or general management problems
CEO overworked/overwhelmed
Planning
Leading
Bench-marking
７. Human Resource Management
Recruitment/selection
Turnover/retention
Satisfaction/morale
Employee development
Training/development
Other or general human resource management
８. Organisation Structure/Design
New Division
Changing from custom programming to product
Other or general organisation structure/design problems
９. Economic Environment
Poor economy/recession
Other or general economic environment problems
Stock market problems
10. Regulatory Environment
Insurance
Licensing/bonding
Changes in federal/state regulations
Other or general regulatory environment problems
Creditability
Taxation
Copyright
11. Export
Source : International Small Business Journal, Vol.18 No. 1− 18−

Frequency

％

95
44
51
53
8
20
14
10
1
671
212
32
11
61
233
101
9
12
111
89
18
4
144
73
23
25
3
20
238
37
14
30
22
26
17
80
1
11
255
36
7
5
27
132
48
6
1
0
5
3
0
1
2
69
1
3
32
4
4
13
12
23

5.7
3.2

40.2

6.7

8.6

14.3

15.3

0.4

0.2

4.1

1.4

Survival and Problems in Small-Micro Film

relations/advertising, Increased competition, Pricing, Buying power, etc., ）.

Conclusion:
The sample konnyaku industry comprises businesses which are predominantly neither fast growing or
failures, but average performers and survivors. For policy-makers, such understanding, among other things,
will aid in formulating policies and developing small business assistance programs.
Since December 3rd 1999, SME New Basic Law has been in operation. As a result business support policy
interventions have shifted from a focus on protection of existing businesses towards business start-ups andincreasing their competitiveness with a view to their growth and development.
But the sheer number of micro business and small firms make them an important constituent of local,
regional and national economies and subsequently a potential target for policy intervention.
It is necessary, therefore, to aid in formulating policies and developing micro-small business assistanceprograms. Government policy-makers need to address issues aforementioned to create a favorite
environment for small businesses in product development, particularly the costs involved in applying theintellectual property protection, given the importance of new product development to the survival and successof micro - small businesses.
Bibliography
Hasegawa Hideo ( 1979 ) , Les Conditions d’Existence en Meunerie de konnyaku , The Journal of Takasaki City
University of Economics, Vol.21 No.4.
Xueli Huang / Alan Brown ( 1999 ) , An Analysis and Classification of Problems in Small Business, International
Small Business Journal, Vol.18 No.1.
Robert W. Vossen ( 1998 ) , Relative Strengths and Weaknesses of Small Firms in Innovation, International Small
Business Journal, Vol.16 No.3.
John Walson and Jim Everett ( 1999 ), Small Business Failure Rates : Choice of Definition and Industry Effects,
International Small Business Journal, Vol.17 No.2.
Whittaker D．Hugh ( 1997 ), Small firms in the Japanese economy, Cambridge University Press.
Hasegawa Hideo ( 1978 ) , Weaknesses of Small Firms in the konnyaku milling, The Journal of Industrial
Institute at Takasaki City University of Economics, No.13.
Hasegawa Hideo ( 1991 ) , Innovation in the konnyaku industry ; par example, the management of konnyaku
food manufacture , The Journal of Industrial Institute at Takasaki City University of Economics, Vol.17 No.2.
Michael J．Peel / Nicholas Wilson / Carole Howorth ( 2000 ), Late Payment and Credit Management in the Small
Firm Sector : Some Empirical Evidence, International Small Business Journal, Vol.18 No.2.
Marshall, A．( 1923 ), Industry and Trade: A Study of Industrial Technique and Business Organization, Macmillan.
Florence, S．( 1948 ), Investment, Location and Size of Plant, Cambridge University Press.

− 19−