Japan has long been familiar with the idea of stakeholder capitalism. Businesses have been mindful of the importance of involving various partners and working for the sake of society since the Edo period (1603 to 1868) and the Meiji era (1868 to 1912). It all began with Omi shōnin traders, who sold mosquito nets, mattresses, drugs, textiles, fertilizers and other products throughout the region. Omi shōnin will deliver the items back to Omi, now Shiga Prefecture, and back late.
In order for merchants to be able to migrate efficiently through diverse regions and cultures, it was important for them to obtain the confidence of their customers. They were reluctant to revisit regions without the community’s welcome. The Societies then made investments in companies to share prosperity and wealth. This contributed not only to the benefit of the seller, but also to the happiness of the customers and the contribution to society. In reality, it was crucial for traders to concentrate on the longer term.
Quick forward into the 20th century. Although the Sanpō Yoshi philosophy has persisted through the decades, Japanese companies have followed a more modern concept of shareholder capitalism in an attempt to quickly catch up and restore the nation’s economy since World War II. Focus on shareholder capitalism has been increased as firms are gradually exposed to foreign competition.
Today, we see another welcome change from the pendulum to long-term, sustainable wealth development as we confront the impacts of globalization, the climate crisis and demographic changes. On the basis of sanpō yoshi, Japan is in a position to further evolve this theory. It’s not enough to imitate what succeeded in the past. We exist in the 21st century, the age of the “Fourth Industrial Revolution,” where technological innovation brings social problems into a global perspective and links them all at a rapid rate.
The exponential pace of transition also ensures that companies can no longer sit in their comfort zone. The essence of industry has changed, and past business practices have become fragile. It’s no longer about succeeding, but living—and surviving well. For example, the climate crisis may not have been at the top of the corporate focus list a decade ago, but it is today. The recognition that the owners of a business are global people leaves no alternative but to seek a change.
Innovation has been one of the main factors of success in today’s fast-paced world. The World Economic Forum’s Global Competitiveness Study 2019 reveals that Japan ranks sixth in 141 economies, but further work needs to be done, and the country’s problems are apparent. The country wants to work to boost the diversity of its population, to narrow its skills gap and to increase the contribution of women. To do so, it must fix the high degree of risk tolerance and rigid organizational culture.
In order to further accelerate the value of stakeholder capitalism, the 2020 Annual Meeting of the World Economic Forum, entitled ‘Stakeholders for a Cohesive and Productive Environment,’ will concentrate on the six imperatives of ecology, governance, culture, infrastructure, business and geopolitics. Members from the private and public sectors will explore ways to take a long-term approach to solving core problems in these fields, as well as how to develop to satisfy the demands of the Fourth Industrial Revolution while remaining on the agenda.
On the basis of the legacy of Sanpō Yoshi, Japan has the potential to become a pioneer in stakeholder capitalism in the Fourth Industrial Revolution.