The Historical Development of Business Management in Japan

The first section, of the literature, focuses on the historical background which shows the interest Japan has towards Management Accounting, drawing backgrounds from some of the giant companies in the world; belonging in Japan. In this case, Toyota was used; where it has shown an immense growth from the 1950’s to the 2000’s resulting it to be one of the emerging international enterprises, and the literature dictates that Toyota owes its success, at least partly to the management practices which originated from Japan, one of these practices is called Target Practicing. It could be seen, that the terms ‘Japanese Management’ and ‘Japanese Management Accounting’. A history of Japanese Management Accounting, Hiroshi Okano and Tomo Suzuki, have been seen in the spotlight of many academic journals and magazines over the past couple of years. However, the problem in reviewing the research done on ‘Japanese Management Accounting’ - A history of Japanese Management Accounting, Hiroshi Okano and Tomo Suzuki, is that, only a few numbers of companies have been researched by the so-called researchers; additionally, these companies were high performing companies, not including the small and medium scaled organizations. Additionally, as more research was conducted it was revealed even more that ‘Japanese Management Accounting’ had origins that were connected to the west, this could take into the consideration on the formula for calculating the Target Sales Price.

Yukichi Fukuzawa published his article, ‘Gakumon no Susume’ which is still one of the most read articles and gives insight to modern book keeping. To him book kepping was ‘ technology for building the modern state’ and this method started spreading through many educational institutions in Japan. After this Scotsman Alexander Allan Shand published his book which served as the means to carry out the accounting practices in the Japanese National Bank. By the late 1800’s many government run enterprise were privatized, which lead to the birth of management accounting. Taylor introduced the ‘Principles of Scientific Management’ which was used as the method to remove those efforts which had no use. Many Japanese firms adopted the scientific management, but this was done so as to meet the needs of the Japanese market. The main aim for this was not to satisfy the economic requirements of the country but to also turn the company into a family as a whole.

At the time of World War II, Europe and America had the major influence on the various Rules of Cost Accounting which was issued under the order of the Planning Bureau of the Japanese Commission; this lead to combining the private and public sectors. As the war intensified, the guiding principles for Manufacturing Companies were amended, mainly to simplify the cost accounting system. As a result of the war; there was a high inflation and resources were scarce, leading to Japan to have a distrust on the monetary valuations which were used in the US to allocate the resources, Japan however had a trust on ‘Princilples of Real Matter’.

Japanese journals show that, Target Costing is not costing nor is it accounting, but it is a mutual communicative act that allows an efficient planning for profit. The literature reviews the factors which affect the Japanese Management Accounting which is the center of many management accounting practices. However, some key term indicators as ‘social’ and ‘culture’ gives the meaning that the management accounting practices in Japan push a variety of management activities all at the same time. This would end any research done on this topic, as it would be unmanageable for individual companies in other countries, if they use the management accounting practices from Japan word for word and it would lead to even more confusion to other researchers