Saturday, July 14, 2012

Fewer Startups in Japan: Lessons for all Nations

I'm here teaching in Tokyo for a week, as I have each July for the past decade.   Therefore, I thought it would be appropriate to offer a reflection related to Japanese business.  Adam Acar, Associate Professor of Communication at Kobe City University of Foreign Studies in Japan, published an interesting op-ed today in The Japan Times.  The article was titled, "Why Japan Hosts Fewer Startups."  He cites the fact that a study by the Global Entrepreneurship Monitor found that Japan had the lowest entrepreneurship activity of 37 countries studied.   Professor Acar offers several possible explanations for the low rate of startup activity in Japan:

1.  Japan is a collective society, with less emphasis on individual self-achievement.

2.  Japan is a "high power distance" society, meaning that it's tough for young entrepreneurs to deal directly with senior executives at various organizations that might provide financing, supply key inputs for their products, etc.    

3.   Many Japanese value job security a great deal, perhaps even more so than securing the highest compensation possible.  

4.  Many Japanese worry about disappointing others and worry that a failed startup would harm many peers and colleagues. 

5.  Japan's low rate of social network usage relative to many Western nations means that potential entrepreneurs have lower social capital to draw upon as they seek customers, partners, investors, suppliers, employees, and the like. 

One may or may not agree with each of these explanations, or characterizations of Japanese society.  However, I do think all countries and regions should consider these hypotheses as they think about how to stimulate entrepreneurial activity.  

1 comment:

city said...

thanks for sharing.