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Establishment
of New Japanese-style Corporate Governance
—Harmonizing Internal and External Governance—
(December 12, 2002)
Labor-Management Relations Committee |
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As
can be seen in the recent revision of the commercial code,
‘external’ corporate governance is gaining popularity
in Japan, accompanying trends for strengthening shareholder
rights, installing outside board members and auditors, and
establishing various committees. Traditionally, however, corporate
governance in Japan was based on an employee-oriented corporate
culture and close labor-management relations. In other words,
it was a system of ‘internal’ governance, and internal
controls functioned effectively in most cases. However, in
recent years, the characteristics and functions of such internal
corporate governance are gradually losing ground.
Today, the modalities of corporate governance and compliance
are being reexamined. As part of this trend, it is necessary
for Japanese-style corporate governance to overcome the problems
of both external and internal governance systems and harmonize
the two. The key to their integration lies in the regeneration
of the internal governance system. This requires employees
to become more aware of their initiatives and calls for the
establishment of corporate ethics. Efforts to enhance and
strengthen labor-management relations are also necessary.
The creation of a new Japanese-style system of corporate governance
that embraces both internal and external governance
systems is largely dependent on the vitalization of labor-management
dialogue. |
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