Transplanting corporate culture across international borders: Foreign direct investment and female employment in Japan

• Author: Yukiko Abe,Naomi Kodama,Beata S. Javorcik
• Date: 01 May 2018
• Published date: 01 May 2018
• DOI: http://doi.org/10.1111/twec.12612

ORIGINAL ARTICLE

Transplanting corporate culture across

international borders: Foreign direct investment

and female employment in Japan

Naomi Kodama

1,2

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Beata S. Javorcik

3,4

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Yukiko Abe

5

1

Hitotsubashi University, Tokyo, Japan

2

RIETI, Tokyo, Japan

3

Department of Economics, University of Oxford, Oxford, UK

4

CEPR, London, UK

5

Hokkaido University, Sapporo, Japan

1

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INTRODUCTION

In ancient times, foreign newcomers sometimes accepted the gender norms prevailing in their destina-

tion and sometimes replaced them with their own.

1

The same could be said about modern times: in the

1980s and early 1990s, it was thought that foreign pressure was one of the few effective forces for

advancing the women’s status in the Japanese society.

2

More recent commentaries point to foreign

direct investment (FDI) as a catalyst for change, suggesting that Japanese women are likely to have

more opportunities for professional advancement in foreign affiliates operating in Japan than in Japa-

nese firms.

3

This matters, because creating opportunities for professional advancement for disadvan-

taged groups, which before were not fully able to pursue their comparative advantage, improves the

allocation of talent and translates into a faster economic growth (Hsieh, Hurst, Jones, & Klenow, 2013).

The aim of this paper was to document one channel through which globalisation affects the gender

norms and labour allocation. More specifically, we examine the effect of foreign ownership on gender-

related employment outcomes and work practices in Japan. We compare female employment (at

various levels) in foreign affiliates and domestic firms operating in Japan. We also consider differences

in the self-reported work practices and some aspects of corporate culture, such as offering flexible

working arrangements, telecommuting, job sharing, childcare subsidies and the average share of vaca-

tion days used by employees, all of which are likely to make employment attractive to female workers.

1

Graves (1960) describes how different waves of migrants to Greece had a different effect on the societal gender norms. For

instance, he claims that the Ionians and Aeolians, the first two waves of patriarchal Hellenes to invade Greece, accepted the

matrilineal customs prevailing in Greece. Only the later arrival of Achaeans and Dorians succeeded in establishing patriar-

chal rule and patrilinear inheritance.

2

For example, when the Equal Employment Opportunity Act for men and women was passed in 1985, it was suggested that

international pressure, especially pressure stemming from the ratification of the UN Convention concerning the Elimination

of All Forms of Discrimination against Women, was the major force behind passing this law (Parkinson, 1989).

3

See, for example, The Economist Briefing “Japanese women and work”29 March 2014.

DOI: 10.1111/twec.12612

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©2018 John Wiley & Sons Ltd wileyonlinelibrary.com/journal/twec World Econ. 2018;41:1148–1165.

Japan is an interesting setting for our study for three reasons. First, gender inequality is greater

in Japan than in other developed countries, suggesting that there are ample opportunities for for-

eign affiliates to bring changes in this dimension. According to the World Economic Forum, Japan

ranked 111th among 144 countries in terms of the Gender Gap Index in 2016. Japan is also at the

bottom of the Glass Ceiling Index compiled by The Economist magazine, ranking 26th among 27

countries considered. While Nordic countries attain a score of 80%, the index value for Japan

reaches only 20%. Moreover, the gender wage gap is much larger in Japan than in other develo ped

countries (Blau, Ferber, & Winkler, 2014).

Second, most FDI inflows into Japan come from countries that are more gender-equal than

Japan is. This can be seen in Figure 1, which plots the Gender Gap Index against the number of

foreign affiliates operating in Japan, with the index value attained by Japan shown with the hori-

zontal line. Thus, it is likely that foreign investors bring gender norms that are different from the

existing norms in Japan.

4

Third, a lot of anecdotal evidence suggests that Japanese women are likely to have great er

career opportunities in foreign affiliates operating in Japan than in Japanese firms. For instance,

the female manager ratio in Texas Instruments Japan Ltd. was equal to 10% in 1995, and the

AU

BE

CA

CN(exc HK)

DK

FR

DE

IN

IT

KR

LU

NL

SG

ES

SE

CH

TH

UK US

.65 .7 .75 .8 .85

GG index (large value = small gap)

0 200 400 600 800

Number of forei

g

n affiliates

Gender Gap index & the no. of foreign affiliates

FIGURE 1 Gender Gap Index and the number of foreign affiliates

Note: The horizontal line depicts the value of the Gender Gap Index for Japan. The FDI data pertain to year 2011 and

come from the Survey of Foreign Firms in Japan by Ministry of Economy, Trade and Industry. The Gender Gap Index

is from World Economic Forum and pertains to 2012. [Colour figure can be viewed at wileyonlinelibrary.

com]

4

The data presented in Figure 1 come from an external source. Unfortunately, our data do not allow us to observe the

nationality of foreign owners.

KODAMA ET AL.

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