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Kikkoman: company, clan and community.

Kikkoman: Company, Clan and Community.

By W. Mark Fruin. (Cambridge: Harvard University Press, 1983. v 356 pp. $30.00.)

W. Mark Fruin's Kikkoman is a path-breaking accomplishment in Japanese business history. While many inadequately researched and overly generalized books by instant Japanologists try to cash in on the present interest in Japanese business, this thoroughly researched and meticulously written monograph serves as a breath of fresh air.

The Kikkoman Corporation is well known as the largest producer of soy sauce in the world. Not only is it the oldest enterprise among the largest industrial firms in Japan, but it is also one of the few traditional manufacturers to succeed worldwide. Because Kikkoman's uniqueness lies in its continuous control by the Mogi-Takanashi families from its establishment in 1861 to the present, this book traces the history of the entrepreneurial family as well as the development of the company. According to Fruin, Kikkoman originated as a loose collection of small family businesses located in the countryside near Tokyo. Although the Mogi-Takanashi families were joined by intermarriage and adoption, they independently operated their soy sauce factories. Nonfamily general managers took charge of the manufacturing process, while the owners only supervised the general managers from the front office. After the formation of a trade association in 1887, the owners gradually realized the diseconomies of scale resulting from scattered small-scale manufacturing facilities, and encouraged such cooperative actions as the establishment of a research and development laboratory and the joint investment in local banks and railroads.

In 1917 some of the association members of the Mogi-Takanashi families merged their factories and founded a joint stock company in which the owners became more responsive to the manufacturing management of the company. Fruin argues that as an earlier form of the primitive separation of ownership and management disappeared, these two functions were now centralized in the hands of the Mogi-Takanashi family executives. To realize economies of scale, the company attempted to consolidate and coordinate all phases of manufacturing and distribution through a managerial hierarchy. This sweeping reorganization provoked a series of labor strikes in the 1920s, after which Kikkoman advocated certain paternalistic personnel policies to ensure the loyalty of its workers. As the company pursued horizontal expansion in soy sauce manufacturing and the related diversification into other local businesses, the enterprise group controlled by the Mogi-Takanashi families grew into one of Japan's rural zaibatsu.

After World War II, however, it was impossible for Kikkoman to survive without changing its strategy and structure and reestablishing relationships with its enlightened workers. Younger generations of the Mogi-Takanashi families adopted such innovative strategies as direct marketing, diversification, and multinationalization. At the same time, in facing the formation of a company union, management took greater care to consider various interests of the employees. Kikkoman thus successfully developed into a giant managerial, multinational corporation, while the Mogi-Takanashi families still maintain control of the company.

The major strength of Fruin's approach is his extensive and careful use of Kikkoman archives. Only through the patient investigation of massive amounts of material in Kikkoman's main office did he achieve this high level of understanding of the company's business activities in the context of family structure, business ideology, labor movements, and industrial organization. With its detailed and exhaustive descriptions of the company, this work is simply the best history of a Japanese company written to date in English.

The author experiences some difficulty, however, in trying to generalize his cases in the overall perspective of Japanese business history. Some of Fruin's speculative conclusions are open to criticism by the growing body of secondary Japanese literature. For instance, one of his major arguments is that firms in the countryside such as Kikkoman generally played a critical role in Japan's industrial development. Certainly capital, derived from agricultural surpluses, and traditional business values, long established in rural areas, contributed much to early industrialization. But one should not jump to the conclusion that Japan's industrialization was rurally centered. To substantiate this thesis requires further examination of rural enterprises and their urban counterparts as well as clarification of the boundary between "rural' and "urban,' because many industrial firms apparently had urban origins, and many large enterprises developed their business activities in both rural and urban areas. Fruin seems to classify enterprises simply according to their factory location, but the usefulness of this method is dubious. Is it analytically meaningful to label Kikkoman a rural firm, when the company was situated in a small town only twenty miles from downtown Tokyo and relied heavily on the metropolitan population for its market? Surely Kikkoman would not have grown into one of the major soy sauce producers if it had sold its products only to rural local markets.

Other recent studies disagree with Fruin's contention that the effectiveness of cartels was a significant reason for the prevalence and persistence of family firms in prewar Japan. Few cartels actually survived as effective long-term control mechanisms. This was particularly true in traditional industries dominated by numerous family businesses, simply because the formation and maintenance of workable cartels was practically impossible. Although Fruin regards a soy sauce trade association controlled by the Mogi-Takanashi families in 1887 as one of the first active cartels in Japan, in reality it covered only a group of local producers and had no means to control the national or regional markets.

Fruin's Kikkoman will nevertheless provide indispensable reading for future historians who are seriously interested in Japanese business history.

It is not an easy book to read, for the detailed descriptions are often difficult to follow. But it is one worth thorough reading, for it provides a vivid understanding of how modern market and technological forces within a traditional enterprise accommodated themselves to, and then transformed, the long-established family and community organizations of Japan.
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Author:Udagawa, Masaru
Publication:Business History Review
Article Type:Book Review
Date:Mar 22, 1986
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