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Corporate social responsibility?

June 26, 2007
By Ken Worsley


Corporate governance continues to be a hot-button issue in Japan, and it seems as though corporate (and government) scandals come in bunches. Although Doshisha University Graduate School of Business Professor Noriko Hama tends to be a punching bag for the right at times, her latest opinion piece, published in yesterday’s edition of the Japan Times, gets right to the point: Social responsibility: the buzz word nobody gets.

She touches on problems such as a hot spring bathhouse blowing up and killing three women last week, scandals surrounding nursing home operator Comsn and false labeling practices (sounds familiar?) at meat company Meat Hope, the lies told by English language school operator Nova, a cracked axle on a roller coaster leading to death, and of course: the mysterious disappearance of somewhere in the neighborhood of 50 million pension payments.

Hama finishes with this line:

Something is wrong. At a time when corporate social responsibility is so much the buzz word, nobody seems to have the faintest idea what social responsibility actually means anymore in this country.

The Yomiuri even got in on the act, sort of.

But nowhere in Hama’s editorial (which scratches the surface of the tip of the iceberg, so to say) do the consumers get taken to task. Don’t get me wrong - corporate criminals should be put in jail and professional negligence should be punished to the fullest extent of the law (we know it isn’t (and won’t be), so don’t worry!) But, consumers have a responsibility too. If they stand in line to go back to Fujiya, continue buying MegMilk (formerly Snow Brand), think Nippon Ham is worth trusting, sign up at Nova this week, or go to that amusement part in Osaka, it’s hard to imagine that corporate criminals will ever learn their lessons. Will consumers in Japan vote with their yen or support firms that actually display corporate social responsibility? Not if Japan is like anywhere else. And that’s why it’s just a “buzz word.”

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Comments

8 Responses to “Corporate social responsibility?”

  1. Joe on June 26th, 2007 3:42 pm

    The legal environment doesn’t help much, either. I think that Japan is one of the best counterarguments to “tort reform” as it’s discussed in the US. Expecting businesses to protect their customers solely out of feelings of social responsibility is simply daft, but apart from the rare government-led inquests against big businesses, that’s the only recourse available. Too expensive to sue, and judges barely compensate the plaintiffs even if they win.

    But then again, as a law person I’m probably just exhibiting the fact that “when all you have is a hammer everything looks like a nail” …

    On a different note, this is one of the best pieces on CSR I’ve read in a while.

  2. Ken Worsley on June 26th, 2007 5:51 pm

    Joe, thanks for the link…good to see you come up for some air…é ‘å¼µã£ã¦ã­ã€‚

    I think you raise a good point about the legal environment. The idea that “Japanese people don’t sue” is absurd given the number of lawsuits filed each year. Perhaps the perceived reluctance to seek legal redress is due to risk/reward factors more than some nebulous ‘cultural’ supposition.

  3. Marc on June 27th, 2007 3:01 am

    I hate to say ‘leave it to the market’ since I know that doesn’t always work, but in the case of Meat Hope, at least it forced them to stop. It’s too bad that 60 people had to be fired, but such a company cannot be allowed to continue.

    The government could have made a difference and looked like they were interested in protecting consumers, and Japan’s image, by stepping in and suhtting them down before Meat Hope pulled the punch on them.

  4. Joe on June 28th, 2007 2:02 pm

    Ken: You’re spot-on. There’s a good breakdown of this phenomenon in Ramseyer’s book Japanese Law: An Economic Approach (really good reading even for non-lawyers, although slightly dated now).

    Simply put, anyone can sue anyone in America for the cost of writing a complaint and a $100 filing fee. In Japan, your filing fee is a certain percentage of your claim, which both (a) deters people from suing and (b) deters people from claiming anything more than they absolutely expect to win, which is not much since nobody ever claims much. Not to mention that Japanese lawyers can’t work on contingency, so the plaintiff has to front their expenses unless they go pro se or find a very charitable fellow to represent them for free.

    The “cultural” argument was pretty well debunked by Ramseyer, who pulled statistics from the much more claimant-friendly automobile insurance system to show that Japanese people are plenty litigious once the barriers to suit are removed.

  5. Ken Worsley on June 28th, 2007 2:14 pm

    Joe, thanks for the recommendation. I’ll see if I can find it.
    Do you think there’s anything more recent as well?

  6. Joe on June 28th, 2007 2:50 pm

    Daiwa Bank comes to mind too… one of the biggest verdicts ever to come down in Japan. That came not long after the courts introduced a flat Â¥8,200 filing fee for shareholder derivative claims (i.e. shareholders suing directors on their corporation’s behalf). It’s hard to say how much influence the change in law had on the verdict, but I think one can be pretty sure that the shareholders would not be claiming billions of yen if they had to pay any percentage of their claim up front.

    Too bad consumers still have to pay higher filing fees… just goes to show who the Japanese system really protects. (Hint: count your paid-in capital)

  7. John S on July 5th, 2007 11:15 am

    I just don’t think customers have access to the kind of information they need, and they don’t seem willing to demand it. It’s pretty much true anywhere. I don’t see why the recent news items on product and food safety in China are surprising at all.

  8. Corporate Social Resonsibility Comes Back : Japan Economy News & Blog on December 2nd, 2007 11:19 pm

    […] June 26, I wrote: But nowhere in Hama’s editorial (which scratches the surface of the tip of the iceberg, so to […]

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