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Title: Japanese Takeovers: The Global Contest for Corporate Control by W. Carl Kester, Harvard Business School Press ISBN: 0071033661 Publisher: McGraw-Hill Pub. Date: 01 January, 1992 Format: Paperback List Price(USD): $16.95

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Summary: Japanese Takeovers
Comment: Throughout the 80's and the early '90s, a deeply ingrained myth existed in the American collective psyche that believed that; Japanese corporations, in collusion with Japanese government were bent over to control the US and world economy. A series of economic events further encouraged and fortified this belief. Among these events were financial success of Japanese corporations during a contractionary period in the US, followed by a series of acquisition of US companies by Japanese including some national cultural icons, the ever burgeoning US trade deficit and National debt, and the consistent complaint of US business leaders about the un-receptiveness of the Japanese economy to outside competition and acquisition. W.C Kester, attempts to answer few fundamental questions relevant to the Japanese M&A activity. The questions he attempts to answer include; Should nations be threatened by Japanese M&A activity? Should the Japanese be more proactive in opening up their system so that others gain access to M&A activity in Japan? What should policy makers and policy makers of other countries do about the issues? The search for these answers leads him into a complete analysis of the Japanese corporate governance system, which he defines as "the overall mechanism that coordinates the activities of Japanese corporation's various stakeholders such as lenders, shareholders, managers, employee, suppliers and customers". Through a historical case study of a company, he demonstrates how this system has evolved separate from the western culture and in the process enmeshed and optimized itself to and with the Japanese culture. He then discusses primary factors of this corporate governance mechanism which are; implicit contracting based on trust; reciprocal shareholding and implicit trading agreements between stakeholders; Management incentives based on overall growth rather than transfer of value between stakeholders and; Financial institutions as stakeholders and their early, selective power of active intervention. It becomes obvious to the reader, how an interwoven structure such as this makes redundant the need to acquire each other while; layers of cultural barriers make the system impermeable to foreign acquirers. The time series/case approach of the first part of the book puts the reader in touch with the origin and the reason behind the Japanese corporate culture. The subsequent few chapters use cases to demonstrate the amicable nature of mergers between Japanese companies; a characteristic that crosses borders when Japanese companies merge with foreign companies. The book then shifts to what the future of Japanese corporate governance will evolve to. Driving factors such as scarcity of growth opportunities, widening objectives among stakeholders, primarily between lenders and managers and, the increase in the inflow of global capital with differing objectives than the existing culture as three primary reasons for future trend changing forces. Greenmailing is a result of the conflict between efficiency concerned financial institutions and cash rich corporations who have been less needy of banks. Buttressed by financial deregulation, international trading and indeed Japan's very success; ensuing Global flow of capital has forced Japanese financial institutions to compete by international standards of capital. Thus, capital is setting Japan's future trend and is demanding shorter term and higher returns. As this happens other stakeholder relationships will have to be redefined; especially the company employee lifetime employment relationship will be challenged. The book was written in 1991 and was forecasting future trends. Off course reviewing this book in 2000, gives us the advantage of assessing the forecasted trends. So much has changed to the Japanese economy since then. Some of the large financial institutions were liquidated and or were acquired by foreign companies. Lifetime employment has become a thing of the past. The system so heralded as the most in the '80s and early '90's has been forced to go into major restructuring. The after effects of the shock still subside. A nation so used to permanent job security, faced with the unfolding events has grown so pessimistic as to drastically curtail consumption thus propelling the economy to an extended period of recession.