Zaibatsu Business Groups' Contribution to Japanese Industrial Development During the Meiji Period
Introduction
Zaibatsu was a common term in the 19th Century and it was used to describe banking and industrial combines under the control of large families in Japan (Fujita and Danker, n.d.). However, the term is no longer used today, the only exception being when the inhabitants discuss historical matters. There were four known Zaibatsu groupings in Japan before WWII, during the Meiji period. These are, Mitsui, Mitsubishi, Sumitomo, and Yasuda (Fujita and Danker, n. d.). Zaibatsu is believed to have developed during the Taisho period which ran from 1912 to 1926 (Morck and Nakamura, 2002). Zaibatsu can also be taken to be a political term because it came up during the Taisho period; a time when terms such as ‘state of wealth and monopoly capital’ were introduced in Japan (Morck and Nakamura, 2002, p. 4).
Role of Zaibatsu in Japanese Industrial Development during the Meiji Period
The Meiji period in Japan began in 1868 and ended in 1912 (Morck and Nakamura, 2002). During this period, Japan experienced remarkable growth and development in its industrial sector. Mitsui which has earlier been identified as a Zaibatsu group became a nationwide company during the late Meiji period. Among the areas that the Mitsui group was interested in were banking, manufacturing, mining, and trading; all of which played a major role in industrial development in Japan (Blackford, 2012, pg. 107). The Zaibatsu groupings led to the growth of new businesses and new companies in Japan. Japan experienced industrial growth in during the late Meiji period owing to enhanced economic activities being undertaken by business groupings such as Mitsui and Sumitomo (Zaibatsu groupings) (Blackford, 2012).
Zaibatsu groupings such as Mitsubishi which was one of the largest groupings in Japan grew to form extensive industries in the capital and labor sectors (Amatori and Colli, 2013). Such growth helped in the development of the industrial sector in Japan during the Meiji period. The Zaibatsu groupings also expanded in other sectors such as banking, financial services, and insurance (Murmann, 2003). The role played by Zaibatsu groupings in Japan’s industrial development was evident during the eve of WWII whereby ‘five major zaibatsu groupings including; Mitsui, Mitsubishi, Sumitomo, Yasuda and Nissan, accounted for one-third of the entire output of the Japanese manufacturing sector and more than ten percent of the total capital invested in the whole country’ (Amatori and Colli, 2013, p. 126). Due to their ownership and their organizational structures, Zaibatsu groupings in Japan were in a position to develop different businesses which in turn played a major role in industrial development. According to Amatori and Colli (2013), the zaibatsu groupings were efficient and the strategies they applied were suitable to Japan’s rapidly growing industrial economy (pg. 126).
While some authors such as Lazonick (1991) may argue that family businesses did not play any role in Japan’s industrial progress, others such as Church believed that family firms were a major source of strength for business in Japan (Wilson, 1995). Church explained that zaibatsu groupings dominated the industrial, commercial, and financial sectors in Japan, an act that saw Japan’s industrial sector grow to great heights (Wilson, 1995). Zaibatsu groupings in Japan during the Meiji period controlled the economy through the use of their resources and contacts, which in turn led to the development of the modernization policy. Japan experienced a remarkable transition during the Meiji period mostly in economic development which led to the current state of industrialization. The credit for this transition and industrial development has been given to the Zaibatsu groupings which were in existence during the Meiji period (Tang, 2006).
Conclusion
The industrial development of a given country is attributed to past activities that were carried out by individuals, private companies or government-affiliated firms. Japan is one of the countries whose current status in industrialization can be attributed to family businesses that existed during the Meiji period (1868-1912). These family-based firms were known as zaibatsu groupings and among them included; Mitsui, Mitsubishi, Sumitomo, Yasuda, and Nissan. These groupings played a major role in Japanese industrial development in that they relied on their resources and contacts to control the economy. Zaibatsu groupings were also the strength of business in Japan. These groupings had organizational and managerial structures that saw them strive well in business. We can then conclude that the Zaibatsu groupings were the pillars of industrial development in Japan during the Meiji period.
References
Amatori, F., and Colli, A. 2013. Business History: Complexities and Comparisons. London: Routledge
Blackford, M, G., 2012. The Rise of Modern Business: Great Britain, the United States, Germany, Japan, and China.North Carolina: UNC Press Books
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Tang, J, P., 2006. ‘Flat-footed Giants: Zaibatsu and Industrialization in Meiji Japan, 1868-1912.’ [Online] Available from HYPERLINK "http://www.ejs.ucdavis.edu/All-UC/conferences/2006-spring/Tang.pdf"http://www.ejs.ucdavis.edu/All-UC/conferences/2006-spring/Tang.pdf [Accessed 24 May 2017]
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