The venture landscape is beginning to change, in the U.S. and in other countries. “Women have been starting businesses at twice the rate of men over the past several years,” notes Robert Rosenberg, president of Insight, a leading telecommunications market research firm, in Small Business Telecom: Opportunities in the Women- and Minority-Owned Small Business Marketplace.
Similar to that of the U.S., the business environment in Japan over recent years has also been drastically changing due to the internationalization of Japan’s economy, an aging population, diversification of talent in corporate structure, diversification of lifestyles, and technological innovation. In this changing environment, women are starting to play a significant role as a critical knowledge-based workforce component in Japan, the world’s second largest economy in Gross Domestic Product (GDP) sales.
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This article investigates how the Japanese economic system, which is beginning to show signs of revitalization, is changing to favor the emergence of female entrepreneurship and also discusses the potential reasons for that trend. Given Japan’s important role in the global economy plus its traditional position in terms of not supporting women in entrepreneurship, these developments have implications far beyond Japan’s national borders.
Women Entrepreneurs in Japan
Japanese small and medium sized enterprises (SMEs) comprise more than 99 percent of the total number of Japanese enterprises. These one million-plus businesses employ 72.7 percent of workers, account for more than 50 percent of the total value, and almost 60 percent of the value added. Small and medium businesses are not only a crucial source of employment, but through the extensive subcontracting networks that form the basis of the Japanese and U.S. production systems, they are also essential participants in global business practices. In the world’s second largest economy, SMEs in Japan are suppliers to both global and domestic multinationals. These enterprises are a critical segment of both U.S. and Japanese innovation and economic systems. However, little is known about the relationship between institutional changes in SMEs and their use of information resources, a critical component of strategic advantage in business practice.
In contrasting women’s roles in business, we must consider that Japanese women have played a very traditional role in Japan’s post-World War II era. In the traditional household, men go to work and earn income to support their families, and women stay home and raise their children and care for elders. Even though women work after graduation from school, they are expected to leave school when they get married or give birth to children. If they should decide to re-enter the business world, they tend only to get clerical work featuring lower wages than men earn, regardless of the woman’s level of education.
For many years, this system in Japan isolated women from participating in society and prevented them from acquiring technical knowledge or social skills and from establishing a network of business colleagues. In the Gender Empowerment Measure Index, which evaluates whether or not women are able to participate actively in economic and political activities and take part in decision-making, Japan has been ranked 43rd among 80 countries evaluated. In contrast, the United States was ranked 12th, and Norway was ranked first in 2005.
Japan: Recent Changes Favor Women in Business
In recent years, however, the Japanese economic system has changed to favor women who take an active part in the business world, although the male-dominated traditional economic system persists. Japan’s birth rate reached a record low in 2004 of 1.29 children per woman. Japan faces a serious labor shortage in the coming years as its population ages.
Women are now recognized as a capable workforce to help reduce Japan’s labor shortage. The Ministry of Finance report, “Women Activities and Enterprise Operating Results,” recommends that firms increase productivity by encouraging women to participate in the firm’s activities. According to Hajime Hori, a senior official in the Japanese Economic Planning Ministry, the labor shortage runs through the entire Japanese economy, but is especially acute in the rapidly growing high-tech sector. The top five large companies, as defined by the number of employees that are proactively recruiting women, are IBM Japan, NEC, Fujitsu, Nippon Telegraph & Telephone, and Suntory. According to a plan posted on the Japanese Cabinet Office website, the government has also come up with measures for women to work full-time. The central government positions offer shorter hours for women who are raising children or are caring for family members. The government also urges companies to rehire women who left their jobs after giving birth. This type of government involvement in business practice is different in Japan, as in other parts of Asia. In this regard, the government in Japan does not get directly involved in business decisions, but does set up incentives and discussions with business leaders to define, encourage and achieve specific goals.
Female Entrepreneurship in Japan
The most remarkable support programs are provided nationwide for female entrepreneurship. Many local government offices and community organizations are providing female entrepreneurs with information and programs on how to start businesses. In 1999, the public sector Life Finance Corp. extended special loans exclusively to women with an annual interest rate of a low 1.5 percent. A survey in 2002 found that 3,277 cases, amounting to the equivalent of 17 million U.S. dollars, had been supported since the launch—up from 1,315 cases approved during the first year of the program.
The same survey showed that the most common sector in which women began new business was in services, such as small restaurants, take-out food stores, nursing, massage centers, relaxation clinics, and pet grooming. These jobs were once considered low-paying female labor. A similar program, called the Center for the Advancement of Working Women, was also launched in 2001 by Japan’s Health, Welfare and Labor Ministry to aid women entrepreneurs. Under current economic conditions, women now stand a better chance of advancing their careers as entrepreneurs, as opposed to being employed in large companies.
Potential of Japanese Women for Entrepreneurship
Driven by a desire for independence, flexibility, a need for fulfillment, and by a multitude of other reasons, Japanese women from 1997 to 2002 have started their own businesses at twice the rate of businesses initiated by Japanese men, according to the most recent data provided by the Japanese Ministry of Health, Labor and Welfare.
This article investigates the following three potential reasons to explain this trend.
- Japanese women have little obligation to give financial support to their families, and women have a subdued social expectation in the traditional Japanese economic system. This secondary societal position gives women an advantage in taking risks and taking on new challenges.
- Women are the majority portion of the consumers in Japan. Women can understand consumers’ needs and wants and get business ideas from their daily lives.
- Advances in technology, such as the pervasive use of Internet and mobile Internet services in Japan have also made it possible for Japanese women to manage both career and family.
In the following section, we discuss aspects of the above three causes of this new trend for women in Japan and provide examples and survey data.
1. Traditional Role Facilitates Emergence of Women in Business
Traditional Japanese low social expectations for women actually seem to encourage women to start their own businesses. They are able to tackle challenges without feeling pressure from the burdens that Japanese men typically bear with regard to social and financial obligations for their families. The stigma associated with a woman who chooses a career in the corporate business world over family does not exist for women entrepreneurs. Women have the freedom to start their own businesses without risking loss of income for their families.
Evidence suggests that Japanese women have more potential for becoming entrepreneurs than do men. For example, in 2004, the National Life Finance Corporation of Japan conducted an entrepreneurship survey titled “Wake Up Japan, Dream Gate Project” among all people who were considering starting their own business within one year. Figure 1 reveals respondents’ top five cited reasons that cause entrepreneurs in Japan to hesitate starting their own businesses. The fear of losing or decreasing income was cited by 26.8 percent of the respondents as the primary concern preventing them from becoming entrepreneurs. The obligation of supporting a family overwhelmed 16.5 percent of the respondents.
The survey indicated that the respondents felt a strong obligation to generate income and support families. However, it was also found that working for an organization secures sustainable income, while running one’s own business does not necessarily imply financial security. Since Japanese women have traditionally played the supporting roles in their families and society, rather than the primary role of securing income, Japanese women may be in a better position than men with regard to taking the risk of becoming entrepreneurs. Consequently, Japanese women increasingly see entrepreneurship as a viable option for themselves.
Figure 1: The 5 Reasons Potential Entrepreneurs
Hesitate to Start Their Own Businesses
2. Japanese Women: Ideal Consumers, Smart Entrepreneurs
It may seem odd that companies that produce and sell the goods and services in Japan are predominantly managed by men when it is Japanese women who understand what consumers want and who are able to find and take advantage of business opportunities. In Japan, 90 percent of the buyers of consumer goods and services are women. Young Japanese women, whose income is 100 percent disposable because they live at home and pay no rent, are Japan’s most conspicuous consumers. The post-school, pre-marriage set does so much shopping and traveling that no fewer than five magazines aimed at this crowd begin publication in Japan each year. After women marry, their spending ways continue since Japanese men hand over their entire salaries to their wives, who are charged with running the family budget.
The 2002 Female Entrepreneur Survey by the Japanese National Life Finance Corporation demonstrates the difference between Japanese men and women in their initial motivation to become entrepreneurs. The survey results show that more men than women derive motivation by utilizing specialized knowledge from work experience. Conversely, Figure 2 indicates that Japanese women are motivated because they may work without age limitations and because they want to utilize their ideas in business.
Figure 2: Results from the Female Entrepreneur Survey
For example, Yumiko Tange graduated from Kyoto University with a bachelor’s degree in computer engineering and started a computer school that teaches computer skills, develops software, and builds networks for other women. She realized that there is a market for such a school because she herself, as well as other housewives, had difficulty going back to work after childbirth despite her good education and her professional intentions. Ms. Tange now employs a cadre of housewives at her school who teach computer skills to other women who also want to find work. Furthermore, Ms. Tange now has a sense of fulfillment since she is doing what she wants to do. This is just one example suggesting that Japanese women entrepreneurs tend to be more interested in seeking fulfillment in life rather than in expanding their business and their profits.
3. Technological Development
Despite the Japanese Equal Employment Opportunity Law of 1986, businesses in Japan continue routinely to hire women for non-career tracks, to pressure them to quit once they are pregnant, and then to hire them back with no benefits after childbirth. Women who continue their career path are often criticized for having sacrificed family in order to pursue their own interests. With the exception of professions such as teaching, medicine, and pharmacology, very few professions in Japan allow women to combine a career and family. However, increasingly women are now allowed to integrate their careers with rearing families by working in information technology from their homes without being criticized by society at large. Consequently, small offices/home offices (SOHOs) are becoming very popular in Japan.
Small Offices/Home Offices (SOHOs)
According to a survey of 3,000 SOHO owners, the “Trend and Prospectus in SOHO,” Grex Corporation reports that 19 percent of respondents indicated that flexible time and space are the top priorities in work. (See Figure 3.) Twenty-five percent of respondents stated that they desired to contribute to society. Seventeen percent of respondents indicated that they want to spend sufficient time with their families. This result also indicates that the respondents choose SOHOs as their business style of choice because information technology-based businesses allow them to become working professionals as well as to satisfy such other desires as working with people that they know and like.
Figure 3: Motivation Among Japanese Women for Work
Yoko Aoki spent some time working as a magazine editor at a medium-sized publication company and then established her own Internet media web site (www.Cafeglobe.com). This web site delivers powerful topical content about women’s wants and needs including work, shopping, hobbies, and love. Extremely popular as one of the most complete, reliable, and trusted online resources available for Japanese women, this web site now attracts a great deal of attention from other media.
Practical Implications for Business and for Japanese Women
Japan’s important role in the global economy plus the country’s traditional position in terms of weak support of women entrepreneurs have implications far beyond Japan’s national borders. Women entrepreneurs who succeed in the current business environment provide examples for enhancing the opportunities for Japanese women in the future as well as for women around the globe who have great potential for transforming the global marketplace. In this regard, the potential role that women are playing in revitalizing the Japanese economy through their close ties to the marketplace is notable.
Finally, the implications created by successful women SOHO entrepreneurs for technology companies throughout the world are notable as well. Telecommunications and IT companies would do well to focus on the rapidly growing demographic of women who are capable of contributing to societies in need of specific technology-based business competencies.
Japanese women excel in entrepreneurship for three reasons. First, women’s traditional supporting roles in the family, while restrictive, have in many ways allowed them to take on risks and new challenges because they have more to gain than lose in terms of career opportunities in Japan. Second, as the “official” holder of the family purse strings, Japanese women can understand consumers’ needs and wants, and they are able to derive new business ideas from their experience as consumers. Finally, technological advances now allow women to utilize the Internet and their computer skills to manage both career and family.
Many very bright and capable Japanese women have not realized their career potential. Although the Japanese business environment has made profound changes in favor of women, improvements are still needed in the Japanese economic system. Further improvements such as government programs, changes in laws and regulations, advancements in technology, networks of support organizations, and the perspectives of the Japanese people themselves are all critical to encouraging the growth of female entrepreneurs in Japan.
 Ministry of Economics Trade and Industry, white paper on small and medium sized enterprises in Japan. Japan Small and Medium Business Research Institute, Tokyo, Japan, 2004.
 United Nations Human Development Report, “Gender Empowerment Index,” 2005. The rankings calculated women’s shares of earned income, the ratio of female professional and technical workers, the ratio of female administrators and managers, and the ratio of seats in the Japanese parliament held by women.
 Suvendrini Kakuchi, “Japan: More Women Achieve Equality in Male-dominated Businesses,” Inter Press Service English News Wire, October 31, 2003.
 Hajime Hori, “Women Activities and Enterprise Operating Results,” Japanese Economic Planning Ministry.
 Sally Soho, “Japan Discovers Women Power (Working Women),” Fortune, June 19, 1989.
 Japanese Cabinet Office, “Steps for Gender Equality.” http://www.gender.go.jp/english_contents/index.html.
 Japan Finance Corporation for Small Business, Quarterly Survey of Small Business Trends, Tokyo, Japan, 2000-2001 .
 Center for Advancement of Working Women. http://www.miraikan.go.jp/english/index.html. (no longer accessible).
 Takehiko Kanbayashi, “Women Work Way Up in Japan; Entrepreneurial Spirit Helps Lift Ailing Economy,” The Washington Times, July 26, 2002.
 “Wake Up Japan: Dream Gate Project 2004,” National Life Finance Corporation.
 Takehiko Kanbayashi, “Women Work Way Up in Japan: Entrepreneurial Spirit Helps Lift Ailing Economy,” The Washington Times, July 26, 2002.
 Japan SOHO Association, “Businesses With 10 or Fewer Employees Undertaking Business Activities Using Information Technology,” defined by Japan SOHO Association.