How Japan Can Use Its ‘Practical Wisdom’ to Promote Stakeholder Capitalism Bookmark has been added
The rise of stakeholder capitalism is one of the major trends that will likely characterize the post-COVID global economy. As the pandemic crisis has exacerbated socioeconomic disparities and racial tensions across the world, there are increasing pressures on companies to shift from the shareholder capitalist model that prioritizes corporate profits and shareholder returns to the stakeholder capitalist model that maximizes returns for employees, customers, the community, and the environment.
In response to the COVID crisis, the World Economic Forum started the “Great Reset” initiative to redesign the existing economic systems based on stakeholder principles. My colleagues and I at Deloitte joined this effort and published a report titled “Driving Growth Using ‘Practical Wisdom’: Japan’s Perspectives,” which summarizes views of Japanese leaders engaged with the WEF and puts forth recommendations on Japan’s own “Great Reset” measures.
At the heart of the recommendations is a concept of “practical wisdom.” In putting together the report, we interviewed Japanese leaders who are part of the Regional Action Group for Japan. Many interviewees shared a view that the country has traditionally practiced stakeholder capitalism. Specifically, having long championed altruistic values and the philosophy of “sanpo yoshi” (three-way satisfaction among sellers, buyers, and the society), Japanese businesses have a wealth of knowledge in practicing multi-stakeholder management styles that promote long-term value creation for employees, customers, and the community.
Against this backdrop, the report suggests that Japanese firms leverage such “practical wisdom” to promote stakeholder capitalism for the post-COVID world. For instance, it recommends that businesses adopt purpose-driven management centered on sustainability and environmental efforts.
Meanwhile, Japanese leaders did not reach a clear conclusion as to how to communicate Japan’s practical wisdom to the global audience. They expressed concerns that it could be difficult for foreigners to understand the cultural nuances of Japan’s stakeholder tradition. In the following piece, I explain how the so-called “Shibusawa Doctrine,” a business philosophy established by Eiichi Shibusawa, could help the country promote its practical wisdom. (Read the next piece)
Note: Deloitte Tohmatsu Group, in collaboration with the World Economic Forum, published a report on Japan’s vision for the Great Reset. The vision includes four pillars: resetting attitudes, resetting business culture, resetting the economy, and resetting the global collaboration framework. For more details, please visit here.