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Future of Business and Finance

Anshuman Khare
Hiroki Ishikura
William W. Baber Editors

Transforming
Japanese Business
Rising to the Digital Challenge
Future of Business and Finance
The Future of Business and Finance book series features professional works aimed
at defining, describing and charting the future trends in these fields. The focus is
mainly on strategic directions, technological advances, and challenges and solutions
which will affect the way we do business tomorrow. We also encourage books which
focus on the future of sustainability and governance. Mainly written by practitioners,
consultants and academic thinkers, the books are intended to spark and inform
further discussions and developments.

More information about this series at http://www.springer.com/series/16360

Anshuman Khare • Hiroki Ishikura
William W. Baber
Editors

Transforming Japanese
Business
Rising to the Digital Challenge
Editors
Anshuman Khare Hiroki Ishikura
Faculty of Business Faculty of Commerce
Athabasca University Osaka Gakuin University
Edmonton, AB, Canada Suita-shi, Osaka, Japan

William W. Baber
Graduate School of Management
Kyoto University
Kyoto-shi, Kyoto, Japan

ISSN 2662-2467     ISSN 2662-2475 (electronic)

Future of Business and Finance
ISBN 978-981-15-0326-9    ISBN 978-981-15-0327-6 (eBook)
https://doi.org/10.1007/978-981-15-0327-6

© Springer Nature Singapore Pte Ltd. 2020

This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of
the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation,
broadcasting, reproduction on microfilms or in any other physical way, and transmission or information
storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology
now known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication
does not imply, even in the absence of a specific statement, that such names are exempt from the relevant
protective laws and regulations and therefore free for general use.
The publisher, the authors, and the editors are safe to assume that the advice and information in this book
are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the
editors give a warranty, expressed or implied, with respect to the material contained herein or for any
errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional
claims in published maps and institutional affiliations.

This Springer imprint is published by the registered company Springer Nature Singapore Pte Ltd.
The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721,
Singapore
Dedicated to the fond memory of
Dr. Katsumdo Hitomi - A profound scholar
and a prolific mentor whose influence was as
far reaching as it was impactful
Preface

Business today is facing unprecedented change mainly due to the adoption of new,
primarily digital, technologies. From the Internet of Things to blockchain to cyber-
security, digital technologies are pushing the envelope of how we interact and view
our world. We are noticing manufacturing and services as they further transform
due to advanced robotics; the emergence of artificial intelligence; the growth of
digital networks, which are increasing in size and capability as the number of con-
nected devices explodes; advanced manufacturing (such as 3D printing); and col-
laborative connected platforms, including machine-to-machine communications.
The adoption of digital technology has caused process disruptions in both manufac-
turing and service sectors and has led to new business models and new products.
The title of the book, Transforming Japanese Business: Rising to the Digital
Challenge, captures the theme. It includes chapters from key management areas
impacted by digital technologies, such as the manufacturing, economic, and finan-
cial sectors, along with service perspectives.
While examining the preparedness of the Japanese economy to embrace these
changes, this book explores the impact of digitally influenced changes on selected
sectors from a Japan-based perspective. Japan’s economy was highly successful in
developing new business models and management techniques when it was and cen-
tered on manufacturing, especially during the postwar recovery. At the same time, it
successfully selected and adapted ideas from overseas. The long stagnation follow-
ing the Bubble Economy until recent years drew criticism that Japan could not or
would not adapt to the digital era. Are new ideas growing up locally in Japan’s chal-
lenging environment? Are existing ideas being adopted from outside and adapted
locally? This book examines the landscape of manufacturing and services to con-
sider some problems and some bright points related to these overarching
questions.
The book presents the impact of digital technologies in three sections—the soci-
etal and economic outlook, innovations in businesses, and the future outlook:

• The first section sets the stage and discusses the Japanese business environment.
It examines where Japan stands in terms of economic, infrastructural, and cul-
tural perspectives.

vii
viii Preface

• The second section presents some interesting developments and case studies
from organizations that have adopted digital technologies or have been forced to
move in that direction.
• The third section looks at the future and tries to extrapolate the benefits and chal-
lenges that would emerge from the adoption of digital business technologies and
models.

The authors of the chapters are drawn from academia, the industry, and consul-
tancies closely involved with implementing and inventing digital transformations.
The editors targeted individuals with strong ties and the understanding of Japanese
business. This, they considered, was necessary to present an unbiased view of how
Japanese business thinks and adopts digital business transformation.
The authors and the editors have targeted business educators and leading work-
place managers who have interest in Japanese business systems and processes. The
book will also be of interest to those looking to gain a better understanding of global
manufacturing and how one of the world’s leaders in manufacturing, Japan, is react-
ing to digital revolution engulfing all parts of the world.

Edmonton, AB, Canada Anshuman Khare

Osaka, Japan  Hiroki Ishikura
Kyoto, Japan  William W. Baber
Acknowledgements

The editors are thankful to the contributors of this book (editorial board members,
reviewers, and the authors), who helped to showcase the Japanese industry to an
international audience.

ix
Contents

Part I The Societal and Economic Outlook

Why Japan’s Digital Transformation Is Inevitable....................................... 3
Anshuman Khare, Kriti Khare, and William W. Baber
Rating Japan’s Readiness for an Evolving Digital Economy....................... 15
Jerry Platt
Digital Transformation Execution in Japan.................................................. 31
Kieran Gane
Digital Transformation Challenges in the Japanese Financial Sector:
A Practitioner’s Perspective............................................................................ 45
Raja Karim
The Japanese B2C Retail Industry in the Digital Age.................................. 55
Philippe Huysveld
Does the Japanese Work Ethic Conflict with the Needs of Retail
in the Digital Era?............................................................................................ 71
Hiroki Ishikura and Anshuman Khare

Part II Innovations in Businesses

Business Model Innovation: A Japanese SME Driven to Full
Digitalization by Corporate Philosophy......................................................... 91
William W. Baber, Makoto Sarata, and Muga Tsukamoto
A Study of a Three-Part Entrepreneurial Strategy in an MRO
e-Procurement Platform in Japan.................................................................. 105
Yutaka Mizuno and Nobutaka Odake
The Beginnings of Automated Loan Decisioning During Japan’s
Lost Decades: The Case of Gate Finance....................................................... 127
James Howard

xi
xii Contents

Innovation of Small- and Medium-Sized Manufacturers

in the Digital Age.............................................................................................. 139
Nobutaka Odake
Digitalization and Evolution of Business Model Pathways
Among Japanese Software SMEs................................................................... 153
William W. Baber, Arto Ojala, and Ricardo Martinez
Digital Disruption in Japanese Market Research: Disrupters
and a Startup Connecting Incumbents with New Technology..................... 167
Genjiro Kosaka
Recovery from Significant Adversity: How Japanese Retailers
Deal with Digital Disruption........................................................................... 179
Katrin Horn and Sierk Horn
Foreign Investors’ Acceptance and Usage of PropTech
in the Japanese Real Estate Market............................................................... 197
Daniel J. Mills and David Gotsill

Part III The Future

Artificial Intelligence in Japan: Policy, Prospects, and Obstacles
in the Automotive Industry............................................................................. 211
Faith Hatani
The Evolution and Strategic Operations Perspective
on 3D Printing: The Global and Japanese Experience................................. 227
Abubaker Haddud, Anshuman Khare, and Hiroki Ishikura
The Future of Fintech in the Context of the Japanese
Main Bank System........................................................................................... 247
Kanji Kitamura

Index.................................................................................................................. 261
About the Editors, Contributors, Editorial
Board and Reviewers

Editors1

Anshuman Khare is a professor for Operations Management at Athabasca

University, Canada. He joined Athabasca University in January 2000. He is an
Alexander von Humboldt Fellow and has completed two post-doctoral terms at
Johannes Gutenberg Universität in Mainz, Germany. He is also a former Monbusho
Scholar, having completed his postdoctoral assignment at Ryukoku University in
Kyoto, Japan. He has published a number of books and research papers on a wide
range of topics. His research focuses on environmental regulation impacts on indus-
try, just-in-time manufacturing, supply chain management, sustainability, cities and
climate change, online business education, etc. He is passionate about online busi-
ness education. Anshuman serves as the editor of IAFOR Journal of Business and
Management and associate editor of the International Journal of Sustainability in
Higher Education published by Emerald and is on the editorial board of the
International Journal of Applied Management and Technology.

Hiroki Ishikura is a professor at the Faculty of Commerce in Osaka Gakuin

University, Japan, and used to be an assistant professor in Kyoto University. He
received a Doctor of Engineering degree from Kyoto Institute of Technology and
graduated from Fukui University textile engineering department. His research inter-
ests lie in manufacturing systems. He is closely involved with academic societies
such as the International Journal of the Japan Society for Production Management
(editor in chief), International Journal of Standardization (editor in chief),
International Journal of Manufacturing Technology and Management (UK) (edito-
rial board member), the Society for Standardization Research (Vice Chairman), the
Japan Society for Production Management (President), the Textile Machinery
Society of Japan (Fellow), International and Domestic Technologies, Japan
(Secretariat), and Textile Research Journal, USA (reviewer).

William W. Baber has combined education with business throughout his career.
His professional experience has included economic development in the State of
Maryland, language services in the Washington, DC, area, supporting business

1
Indicates that editor is also an author.

xiii
xiv About the Editors, Contributors, Editorial Board and Reviewers

starters in Japan, and teaching business students in Japan, Europe, and Canada. He
taught English in the Economics and Business Administration Departments of
Ritsumeikan University, Japan, before joining the Graduate School of Management
at Kyoto University, where he is an associate professor, in addition to holding
courses at University of Vienna and University of Jyväskylä. His courses include
Business Negotiation, Cross Cultural Management, and Management
Communication. He is the lead author of the 2015 textbook Practical Business
Negotiation and conducts research in the areas of business models, negotiation, and
acculturation particularly in relation to Japan. He completed his PhD on intercul-
tural adjustment of expatriate workers in Japan in 2016 at the University of Jyväsklä,
Finland. Earlier in 2004, he earned a Master of Education from University of
Maryland in Instructional Systems Design.

Contributors

Kieran Gane is an independent consultant who has spent over 25 years in Japan
working on IT and business transformation. In this time, he has worked with a vari-
ety of foreign and domestic companies as an employee and consultant mainly in
program or project management roles. His projects have included company start-­
ups, restructuring and new business rollouts, as well as digital transformations.
Having learned to speak Japanese in his first years in Japan, he has been the link
between senior management, both domestic and foreign, and the team, which
always consists mainly of Japanese. As such he has always been sandwiched in-­
between the irresistible force of management goals and the immovable object of
reality at the working level. Negotiating between these Scylla and Charybdis has
given him the opportunity to see transformation from the eyes of both his foreign
and Japanese colleagues, enabling a panoramic view of transformation in Japan.

David Gotsill is a practicing attorney in the Real Estate group at Orrick, Herrington
& Sutcliffe in San Francisco, USA. After majoring in Japanese language and litera-
ture at the University of Colorado Boulder, David spent more than six years work-
ing in Kagawa and Tokyo, first in the Kagawa International Affairs Division as a
CIR on the JET Program and then at the Council of Local Authorities for International
Relations (CLAIR) in Tokyo. David obtained his JD from the UCLA School of Law
as a participant in the Business Law Program and served as the editor in chief of
UCLA’s Pacific Basin Law Journal. Prior to transferring to San Francisco, David
spent six years in Orrick’s Tokyo office as part of their Real Estate Finance team,
where he assisted clients in all manners of complex international real estate finance
transactions. Through his studies at UCLA, and client and industry interaction in
Tokyo, David became an active real estate investor. David therefore has a keen inter-
est in PropTech and actively follows how it can aid and effect the transactions of his
clients, as well as his own portfolio.
About the Editors, Contributors, Editorial Board and Reviewers xv

Abubaker Haddud is an assistant professor of Operations Management at

Southwest Minnesota State University. He has a PhD in engineering management
from Eastern Michigan University (USA), where he was a Fulbright scholar, and an
MBA from Coventry University in the UK. His teaching and research interests
focus on disruptive technology management, operations and supply chain manage-
ment, lean manufacturing, and business performance measurement and analysis. He
is an active researcher, and his recent research activities focused on the use of dis-
ruptive technology to create unique competitive advantages and to enhance business
performance. Abubaker also has more than 10 years of industrial experience work-
ing for different industry sectors.

Faith Hatani is associate professor in International Business at Copenhagen

Business School, Denmark. She has a PhD from Cambridge University, United
Kingdom (UK). Previously she held positions as Lecturer in International Business
(Alliance Manchester Business School, University of Manchester, UK) and Lecturer
in Strategy (University of Surrey, UK) and the Advanced Institute of Management
Post-doctoral Research Fellow (Cardiff University, UK). Prior to beginning her aca-
demic career, she worked in the global logistics industry (including supply chain
management and maritime business) based in Japan and Singapore. Her research
interests include foreign direct investment, global value chains, and interactions
between strategies of multinational enterprises and government policies. She has
primarily researched internationalization processes of Japanese carmakers and the
changing competitive landscape of the automotive industry. She is particularly
interested in the role of international business in economic development. Her cur-
rent research focuses on the institutional analysis of technological change and con-
temporary issues in business and society, with particular attention to Asia.

Katrin Horn works as a brand analyst and consultant with a focus on semiotics. In
this role, she has worked with several FTSE 500 companies to help them understand
their environments and how they are perceived by consumers and to offer new per-
spectives for disruptive brand innovation. Her PhD explored experiential aspects of
different retail formats in Japan and the UK. She teaches at various higher education
institutions in Austria and Germany in the fields of marketing and business studies
and has been a senior lecturer for consumer behaviour in England for 10 years.

Sierk Horn is a professor of International Management at FH Vorarlberg, Austria.

Previously he was a professor of the economy of Japan at the Munich School of
Management, Ludwig-Maximilians-Universität, Germany. He holds a PhD in
Modern Languages and a Habilitation on Cross-Cultural Management from Freie
Universität, Berlin, Germany. Much of his work takes the perspective of resilience
of individuals and organizations and sits at the juncture of language and interna-
tional management. He is a regular commentator on how organizations create
knowledge in fragile environments.
xvi About the Editors, Contributors, Editorial Board and Reviewers

James Howard is a data scientist at Amazon Japan, whose career has spanned more
than 30 years in a variety of industries, including commercial and investment bank-
ing, insurance, technology, and e-commerce. He holds an undergraduate degree in
civil engineering from the Massachusetts Institute of Technology and an MBA from
Harvard Business School. James has helped numerous organizations leverage data
and people so that they can make better, more informed decisions. His current focus
is on finding ways to use artificial intelligence and machine learning techniques to
automate decision-making processes. He was a special guest professor at Meji
University from 2013 to 2016 and has presented papers on the impact of social net-
works on employee response to the 2006 bankruptcy of Lehman Brothers and a
macroeconomic model simulating the potential effects of the three arrows of
Abenomics on the Japanese economy.

Philippe Huysveld completed in 1995 the Master of Economics program of Kyoto

University (with a major in Business Administration), under a “Monbusho” scholar-
ship. He has a double Engineering and Business background acquired between
1985 and 1992 in Brussels. With over 25 years of Japan-related experience, he is a
senior executive with extensive marketing and business development experience in
both Japan and Europe. With expertise across many industries, he has sold parts, as
well as systems and finished products. Founder of GBMC in 2011, Philippe is now
a Europe-Japan business consultant, as well as a Japan expert (independent), regis-
tered as such at the EU-Japan Centre for Industrial Cooperation, for which he has
written various market reports and papers. In addition to consulting, in 2012–2013,
he has taught about “The History of the Japanese Economy” and about “Social
Structures of Japan” at the Cergy-Pontoise University (Japan-related master pro-
gram in Paris). As a cross-cultural trainer, he has also given seminars and confer-
ences about Japan at European economic agencies and business schools, such as the
Vesalius College in Brussels. Besides various articles and reports, he is also the
author of six books about Japan, available online and in bookshops.

Raja Karim is the managing director and founder of SAVVY Technology Solutions
Japan KK. He has spent the last 30 years in the insurance and IT industry, working
for top ten global insurance companies in the UK, Canada, Hong Kong, and Japan.
He graduated in Information Technology in 1987 from Teesside University UK and
started his IT career as a COBOL programmer. Raja migrated to Canada in 1993,
where he spent the next 8 years as a senior technical consultant. In 2001, he moved
to Tokyo, Japan, and worked at a senior management position, where he success-
fully delivered some of the most challenging IT projects of his career. Raja special-
izes in legacy modernization and digital transformation, and he is well known for
his expertise in the Japanese insurance sector. In 2018, Raja decided to start his own
consulting company to take on even bigger challenges that the financial sector is
facing with regard to digital transformation and IT modernization projects.

Kriti Khare has a master’s degree in Computing Science and a Master in Education,
specializing in technology in education from the University of Alberta. She is
About the Editors, Contributors, Editorial Board and Reviewers xvii

involved in data analytics and meaningful digital presentation of trends and patterns
obtained from university services at the Information Services and Technology
Department, University of Alberta, combing her knowledge of teaching and com-
puting. Her research interests include computing science education, inquiry-based
learning, use of technology in education, and learning analytics.

Kanji Kitamura is the vice president at a bank by profession and a part-time PhD
student at SOAS, University of London. He has 20-year experience in corporate
banking: first half gained with a Japanese megabank in Japan and the rest with
another Japanese megabank in the USA. His interests center on comparative studies
of Japan and Japanese-related areas, including corporate finance in a real-world
context, credit analysis primarily of MNCs, cross-cultural studies, international
business management, and translation studies. He is particularly interested in what
mitigates cross-national difficulties and what suits the respective societies, consid-
ering the effectiveness and ineffectiveness of specificities developed overseas when
they are imported (or translated) to the society. He prefers qualitative approaches to
uncover the unknown, while he has been involved in number-crunching profes-
sional duties. He holds an MBA in international business, an MA in translation
studies, and a BSc in electrical engineering. He is a proud Japanese and enjoys liv-
ing worldwide.

Genjiro Kosaka is an associate professor in the Faculty of Economics, Sophia

University, Japan, which he joined in 2012. He received a doctorate in commerce
from Hitotsubashi University in 2010. His research focuses on innovation manage-
ment, and he has published research papers in Japanese journals, such as
Organizational Science and Journal of Business Management. He has also pre-
sented papers to the Academy of Management and Strategic Management Society.
His paper “A Comparative Study on R&D Organizations in Specialized Manufacturer
and Generalized Manufacturer: A Case Analysis in the Vacuum Fluorescent Display
Industry” won the best paper award from the Academic Association for
Organizational Science in Japan in 2016. He serves as a board member of the
Academic Association for Organizational Science in Japan, editor of the Journal of
Business Management (Japan) and Entrepreneurial Studies (Japan), and reviewer of
the International Journal of Human Resource Management (UK).

Ricardo Martinez completed the MBA program of Kyoto University, Japan, in

2018, having earned a scholarship of the Japanese Ministry of Education, Culture,
Sports, Science and Technology (MEXT). He graduated as a systems engineer from
the Industrial University of Santander, Colombia, in 2012. His professional experi-
ence includes the development and commercialization of customized corporate
software for small and medium enterprises (SMEs). At Kyoto University, he com-
pleted his MBA graduation project with the title “Business Model Evolution of
Technology-Based SMEs,” reviewing Japanese as well as Canadian firms through
guided interviews and exploring the changes that the business models of these com-
panies had. Currently, he combines his professional experience and academic
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