It was an unfair contract for the Japanese partner, but Walt Disneys management needed some other source of income to make the firms financial numbers look good, and in turn, boost up its stock price on the market.
In contrast, Japanese believed that a firms objective is to maximize its corporate wealth. A firm has to treat its shareholders and other stakeholders, such as management, creditors, employees, the local community and the government, equally. This means that the companys social responsibilities go beyond earning profits to include the societys benefits. Therefore, a Japanese firm main goal was to earn as much as possible, and to retain enough corporate wealth for the benefit of all stakeholders. Management feels that they are responsible for the impact they might cause on the environment and society. In a sense, their business purpose is more on the lines with social welfare than acting with only their shareholders best interest.
With this belief, OL felt a great responsibility to benefit all parties affected by the construction of the amusement park. For instance, because the land was public property, OL felt that the land should be used for something that the public could enjoy. In addition, OLs executives were aware that the land was reclaimed from the sea, causing local fishermen to lose their jobs and income. They felt a social responsibility to help these people. During the negotiation, management did not decide on their own, but rather consulted the stakeholders before making any decisions. The interests of parent companies, shareholders, and even lenders were taken into consideration during the whole negotiation process.
c. Difference in principal-agent relationship
The principal-agent relationship in American companies is vastly different than one in Japanese firms. In Western/American firms, shareholders (principals) hire management (agents) to manage thei View More »