Japan: Slowly Warming Up to MBAs

In Japan, it has never been easier to find an MBA program. Twenty years ago, only a few universities offered business administration courses, so most aspiring students headed to the U.S. to study. Even as business school degrees gained in popularity around the world, the number of domestic programs edged up only slowly. However, in the last five years the number of Japanese universities with business schools has more than doubled, to 55.

Several reasons account for the increased popularity of business schools in Japan. Government deregulation, for instance, made it easier for schools to offer MBA programs. Japanese schools also have become more flexible, making their programs more accessible to local students. For instance, many schools now offer part-time study for students unable or unwilling to take time out from their current jobs. "If I had had to quit my job to study, I might've not thought about taking an MBA course," says Midori Ibuka, 40, a manager at YKK, the world's biggest zipper maker. Between 2005 and 2007, Ibuka took a course at Waseda University's business school in Tokyo, going to classes from 7 p.m. to 10 p.m., five nights a week. Formerly an executive's secretary, Ibuka, who spent $30,000 in fees, has since been assigned to her current general manager position in YKK's communications division.

Seniority Trumps Education

Yet for all that, it's difficult to make the case that Japan Inc. embraces employees with MBAs. On the contrary, many big companies still prefer to hire grads fresh out of college and mold them into the type of managers they want, rather than hiring B-school grads. Meanwhile MBA holders sent to B-school by companies find it tough to put newfound skills into practice when they return to work.

Corporate Japan doesn't seem convinced of the merits of MBAs. Many companies still have a lifetime employment system with pay and promotions based on seniority. That means MBA holders can't expect rapid progression or improved compensation. Lion, a maker of household products, has sent two employees to Keio University's program every year since the late 1970s, including President Sadayoshi Fujishige, yet the company doesn't mark them out as special cases. "We don't give MBA holders any special treatment in terms of salary or promotion," says Fujishige.

Recent events may not help raise the profile of MBAs in Japan. With the current global recession blamed on the excesses of U.S.-style capitalism, Japan's MBA holders may be losing some of their luster as well. For one thing, many of the investment banks that hired MBAs are cutting back.

Meanwhile, the notion that MBAs can be bad for business, while not widespread, goes down well in Japan. Last fall, Takayuki Yasui, a columnist for the Asahi Shimbun daily, attributed some weakness of Detroit's auto industry to U.S. companies tendency to promote managers with MBAs, whereas more successful companies like Honda (HMC) for example, fill their management ranks with engineers. To illustrate the point, the paper said an unnamed U.S. Big Three executive had turned down a proposal from the president of a Japanese automaker to view a factory because he wouldn't understand it. "The American CEO has learned theory of management at business school, and he's more interested in making money than making cars," Yasui quoted the shocked Japanese auto chief as saying.

Signs of Increased Acceptance

Perhaps it's no surprise, then, that those returning to Japanese companies after receiving MBAs sometimes get frustrated and often quit companies for a new challenge. But rather than encourage companies to use B-school grads more effectively, many companies have instead decided to stop paying for employee MBA programs. At Keio University, the first Japanese university to offer an MBA program in 1978, 65% of business degree students were sent by their companies in the late 1980s, compared with 35% today. "Many Japanese companies can't make really good use of MBA holders when they come back [to work]," says Yoshito Hori, president of Globis, a Tokyo management school. Hori left trading company Sumitomo a few years after returning from Harvard.

Still, it's not all doom and gloom, Hori, whose school tops a ranking of student satisfaction, adds that the answer may lie in tailoring courses that bridge the gap between Japanese and global business practices. Hori says the school's approach borrows heavily from Harvard in its use of detailed case studies, often drawing on examples from successful Japanese companies. Globis also places importance on programs that foster the spiritual side of business leadership. For instance, there are classes in which would-be executives study the Analects of Confucius. "Successful corporate managers all have a personal magnetism and a rich sense of humanity," he says. "This kind of education is weak at the U.S. schools."

Meanwhile, Japanese companies have internationalized their production and sales. So employees will have no choice but to find ways of communicating techniques developed in Japan. Business schools can act as a useful tool in taking principles learned in Japanese factories and offices and finding ways to package them for a global audience.

And while Japan might not reward MBA students to the same extent as the U.S., that could change in time. One hopeful sign: Japan's best-known manufacturer, Toyota (TM)—a company not renowned for MBAs in the boardroom—will appoint a B-school grad as its next president in June when family scion Akio Toyoda, who holds an MBA from Babson College near Boston, succeeds Katsuaki Watanabe. "Compared to the U.S., MBAs are not prevalent in Japan's business circles," says Kyoichi Ikeo, dean of Graduate School of Business Administration at Keio University, which was the first Japanese university to offer an MBA in 1978. "We have to constantly send out the message that an MBA education and the research done at school are meaningful for the development of companies."

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