Why JAPAN has so few Entrepreneurs? – How can new immigrants change that pattern?
Some of the world’s most recognized companies were born in japan, Toyota, sony, and Mitsubishi are just a few Japanese companies that are characterized by the quality and durability of their products, but if there is something that stands out in many Japanese companies is their longevity.
For example, Mitsubishi is 150 years old and it is said that there are more than 50 000 companies in the country that are more than 100 years old. Some are even more than 1 000 years old from this. One might think that the Japanese are constantly trying to create the next sony or that there is an environment that promotes entrepreneurship.
However, japan has very low entrepreneurship indicators even compared to high-income countries. According to the 2019 global entrepreneurship monitor in japan, the percentage of early-stage people, entrepreneurs was only 3.3 percent, ranking the country 45th among the 50 countries evaluated, and the percentage of Japanese who already owned a business for more than three months, was only 2.1 percent ranking 47th among the 50 countries, so the questions are:
why does japan have so few entrepreneurs if japan has no entrepreneurial culture? How did such large and well-known companies come into creation and how can new immigrants change that pattern? The decision to start a business is generally based on certain attitudes, such as the willingness to take risks, confidence in one’s abilities, and the ability to see new opportunities in japan.
It seems that these attitudes are held by a very small percentage of the population. First, the Japanese are long-term oriented, so the most common thing for the average Japanese is to get a job and work there for the rest of his or her life in japan.
It is believed that the best job is not the one that pays the best salary, the one that offers the most opportunities for growth, or the one that offers a good work to the quality of life ratio, but the most secure. In other words, most Japanese people want stability in their work life rather than challenges or personal growth, and therefore they tend to be less ambitious and more fearful when it comes to taking risks, and these are undoubtedly attitudes associated with entrepreneurship in japan, culturally,
one of the worst, feelings is to disappoint others, as they are more collective than individualistic and starting a new business has many risks and high probabilities of failure, which can mean disappointing someone leaving an outstanding debt or letting down a partner or family? So it is not difficult to deduce why in japan there are practically no entrepreneurs.
Despite being very well educated and having an excellent work ethic, the rational decision, therefore, is to avoid risks and find a job for life and if it is in a large company, so much the better in a documentary showing the working life of the Japanese one of the interviewees said that even quitting a job before the age of three years is frowned upon and could even be embarrassing in the.
They also talk about the long working hours about the almost obligatory social gatherings after leaving the office and explain why they usually take only one week of vacation a year, even though they are entitled to more time.
In short, the point is that it is a conservative society unchallenged by the status quo and not a risk taker. These attitudes are not necessarily bad, but when it comes to entrepreneurship, they are very important secondly, people in japan tend to think that starting a business requires a lot of special skills.
The already mentioned global entrepreneurship monitor study also looked at this particular point here, japan ranked last of the countries analyzed with the lowest percentage of the population at 17 percent, who believe they have the knowledge, skills, and experience to start a new business, unlike, for example, the countries evaluated in Latin America and the Caribbean,
where confidence and the ability to start a business is higher because in these countries there is a perception that if the entrepreneur does not have any skills, he or she may know someone who does this greater confidence makes the person more likely to start a business and in third place. Another important attitude for entrepreneurship is the ability to recognize good opportunities in this indicator.
Japan once again ranked last with only 10 believing that there are good opportunities to start a business. It may be that the market is very saturated and indeed there are no opportunities, but the study analyzed countries of all income levels from different continents and population sizes and in most, more than 40 percent in each country say that there are good opportunities in their area to start a business from which it can be assumed that it seems to be a question of entrepreneurial attitude and not because there are no business opportunities in japan.
On the other hand, Japanese people tend to have small social circles that are commonly limited to co-workers or school friends. In this sense, a smaller social circle means less social capital, which translates into greater difficulty in finding investment partners, suppliers’ first customers, and, in general, fewer people to collaborate with.
Additionally, the narrower a person’s social circle is the less likely they are to meet other entrepreneurs. Who can motivate or be a guide for beginners and again japan, ranked last in the study with the lowest percentage of the population who say they know someone who has started a business in the last two years now?
The other question is: how is it that japan has so many large and globally recognized companies if there has not been a favorable context for entrepreneurship before 1868 japan was a country close to the rest of the world rejecting any kind of foreign influence because it was considered as destabilizing the social order and Japanese customs, but this changed when the Meiji restoration took place with this new government economic modernization was sought.
The idea was to have a strong state with a centralized government and to protect national production to encourage industrialization. The state was in charge of acquiring technology and machinery from other countries and hired western experts in all fields to accelerate its industrialization process. It also sold industrial companies to the nobles at very low prices,
without the need for any business knowledge, and this is how a group of Japanese became tycoons constituting what was known as the zaibatsu huge industrial conglomerates that controlled various sectors of the Japanese economy. The aim was to develop industry and for this, the government offered incentives such as exclusive licenses and capital financing to these entrepreneurs.
For example, one of the zaibatsus was mitsubishi which, despite being 150 years old, still has 1274 companies in the most diverse segments in the mid-1940s anti-trust, laws were enacted to limit concentrations of economic power.
As a consequence, the zaibatsu was dissolved but took a similar form, which is the keiretsu which are still large conglomerates such as one called Mitsui, which is formed by sony, Toyota, and Daihatsu, so it was through privileges to the nobility that many of these large companies were created. Now japan is facing, on the one hand, a growing problem of zombie companies such as Toshiba and,
on the other hand, the stagnation of its economy for 30 years. Among the measures that have been taken to revive the economy is increasing levels of entrepreneurship under the Shinzo abe administration, a new category of visas for foreign entrepreneurs was created in 2015 and sought to facilitate the procedures for starting a business.
Although Japan is still relatively closed off to immigrants in recent years, the policies seem to be working because the number of foreign workers has been increasing since 2019. There were more than one million six hundred thousand foreign workers in japan or a 13.6 increase over 2018.
This doesn’t mean that all of these foreign people will start companies, but they don’t have that cultural and historical weight of risk aversion that the Japanese do so they are more likely to start a new company. What they will have to deal with is the language barrier and the bureaucracy of japan, because, despite being a developed country according to the world bank’s ranking that measures the ease of doing business,
japan ranks 106th out of 190 countries in the sub-index called ease of starting a business. The question is whether these new immigrants will be able to change the entrepreneurial spirit in japan, or will it be too late to change such a hierarchical and conservative culture?