The rising companies and the Establishment 1905-1931 : the forerunners of Japanese expansion and their struggle for emergence
Creators: name: Walton, Robert Derwent
Publisher: name: University of British Columbia
Year: 2010

description: The two main themes of the thesis are the growth of the highly distinctive rising companies and their conflict with the Establishment in the period 1905 to 1931. The three rising companies discussed are the Suzuki Shōten, Japan Nitrogenous Fertilizers and Shōwa Fertilizers. The rapid expansion of these firms, each under a single, bold, dynamic entrepreneur, is contrasted with the sluggishness of established capital, as represented by the two Great Zaibatsu—Mitsui and Mitsubishi—and the textile majors. The difference in investment behaviour was especially notable in the rayon and ammonia synthesis industries, where a great opportunity existed for those sufficiently resolute to seize it. By the end of World War I, chemists and chemical technologists existed in abundance, and specific foreign processes were available at prices low enough to allow profitable production. Domestic demand for both rayon and ammonium sulphate rose dramatically throughout the twenties. There was, however, considerable risk as the technologies were difficult and total failure was possible. The origins of the dynamism of the rising companies and the lethargy of the established firms are discussed. The creative activity of the entrepreneurs of the rising companies was not the product of factors associated with any region, social group, type of education, or early work experience. It is possible that it was the consequence of moral debt repayment to the mother. The sluggishness of the Great Zaibatsu cannot be attributed to their managerial structure. It was probably of compound origin, being rooted in their sense of security and attitudes to the West. The rising companies clashed with the Great Zaibatsu-dominated Establishment on three occasions. From mid-World War I, Mitsui felt threatened by the explosive growth of Suzuki, and the giant combine, together with its political allies, attacked the rising company twice. Suzuki suffered a setback in the Rice Riots of 1918, when the firm's head office was destroyed by mobs incited to violence by the Seiyukai. Suzuki, which was closely associated with the Bank of Taiwan, was forced into bankruptcy in 1927, as Mitsui engineered a run on the bank at a time when it could not be supported by the Kenseikai Cabinet. With the Fujihara-Bosch Agreement of 1930, Mitsui and Mitsubishi, in collaboration With the Western nitrogen industry, moved to halt the construction of the two gigantic ammonia synthesis plants owned by Japan Nitrogenous Fertilizers and Showa Fertilizers, with the intent of forcing these firms into bankruptcy. The two rising companies defied this pressure by allying with anti-Establishment forces, activated by the revolutionary mood of the early thirties. The main motive of foreign capital in the Fujihara-Bosch Agreement was a desire to eliminate the emergence of new productive capacity in an industry that was already suffering from serious overproduction. The Great Zaibatsu may have acted under the duress of Western pressure, or in an attempt to attack the revolutionary forces which threatened their hegemony. In the political changes of the early thirties, the bold, expansionist spirit which had characterized the rising companies in the twenties, spread to the nation as a whole. These companies were the forerunners of Japanese expansion. Of the minor themes, perhaps the most notable is the high ambition of certain sectors of Japanese society, as evidenced by the great oversupply of technical graduates and the often, almost fanatical response of the technicians to opportunity. The importation of technology comes sharply into focus; the technology gap, methods of technology transfer, and other related matters are discussed. In the final section, some interpretations of the philosophy of Japanese business are criticised.