There is an inherent and long-standing culture within many Japanese companies that draws together employees and defines how they view their wider contribution to business and society. For Keio Business School’s Council host period, Mr. Takeshi Erikawa, Former Vice-Minister, Japanese Ministry of Health, Labour and Welfare, explains.
The relatively new concept of “Corporate Social Responsibility” requires that businesses today address consumer demands that go beyond a firm’s core business. Indeed, global consumers now insist that companies interact with society not only through their core businesses, but also through “non-core philanthropic activities.” How many Japanese executives intrinsically believe that business contributes, or should contribute, to society in both ways? Do they view commitment to their companies via sincere fulfillment of the core business without necessarily any requirement to participate in non-core activities?
Sanpo-yoshi: a Japanese example for mainstream western thinking?
A traditional Japanese way of thinking about profit called “Sanpo-yoshi,” which translates into English as “3-way satisfaction,” is a concept that provides an interesting contrast to mainstream economic theory that primarily uses a framework of two-way transaction: buyer vs. seller, supply vs. demand, etc.
In the Sanpo-yoshi view, the objective is to ensure that any business transaction generates a positive result for three parties: the buyer, the seller, and society as a whole. The motivation is based on a spirit of “sincerity and consideration” (in Japanese, Chujo) which itself has roots in the Confucian philosophical view that profit will naturally accrue to one who engages in socially righteous endeavors or behaviour. It is important to emphasize that this way of thinking produces concrete results in Japan in ways that may not be obvious to casual observation. For example, Japanese CEO compensation is significantly lower than in the U.S., demonstrating a sense of balance and fairness amongst all employees, regardless of their seniority.
But good can create not-so-good effects too
It is interesting to note that this mindset has also greatly constrained the development and enforcement of a robust patent system in Japan. In the U.S., new knowledge is considered the personal property of its creator, who may use it – or withhold it – as he or she wishes, with the purpose of a patent being to orient as much wealth to its inventor as possible. From the Japanese perspective, intellectual property is wisdom – which is a public treasure – and the value of a patent is not the enrichment of a single creator, but rather the diffusion of the information as widely and effectively as possible via patent publication, and for the benefit of industry and society overall.
Japan and the future
The major challenges now facing Japan include a declining and ageing population, deflation and slow economic growth, youth unemployment, and the need to ensure the sustainability of the social security system and healthy national finances. With the concept of Sanpo-yoshi in mind, companies can contribute to tackling these challenges in a number of ways, firstly by raising financial performance and contributing through taxes. Providing permanent employment for young workers, developing them as globally adept human resources, and improving labour practices to allow for childrearing also provide meaningful solutions to national challenges. Finally, pharmaceutical companies are directly concerned with employee healthcare and contribute to society not only by developing new drugs for the prevention and treatment of disease, but also by developing new ways of administering healthcare and creating environments that stimulate innovation; for example, the realization of regenerative medicine.
Japan currently aims to tackle the many challenges it faces through so-called Abenomics policies of fiscal stimulus, monetary easing, and structural reforms. These are particularly timely given Japan’s raising of its national tax on nearly all forms of consumption. It will be interesting to see if sanpo-yoshi will continue to influence the Japanese mindset as the rest of the developed world seems to further entrench itself in individualism.
Originally edited and compiled by prof. Edward Yagi and Tom Gamble from notes taken during the 2014 Tokyo Forum Health and Healthcare at the Crossroads of Business and Society.
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