Asian Business & Management

There is widespread agreement that a two-pronged attack, embracing both micro- and macro-economic reform, (eg see Farrant and Markovic, 2003; Kashyap, 2002) is necessary to turn around the fortunes of the Japanese economy. This paper focuses on the former set of initiatives adopted by the authorities in Japan, concentrating on those banking sector reforms implemented since around the year 2000, when the reform programme appeared to enjoy renewed impetus. The paper begins by reviewing the main problems still besetting the Japanese banking industry and responsible for its continued fragility, as exemplified by low profitability, weak capitalization, poor asset quality and excessive credit and market (stock and bond) risk exposure. The main reform initiatives are then identified: the creation of a new financial architecture; the reform of safety net arrangements; the authorities’ attempts to speed up the banks’ resolution of their non-performing loan problems; the Bank of Japan's share-buying activities; the authorities’ quest for the right to engage in ‘pre-emptive’ capital injections; and recent improvements in corporate governance arrangements. The latter part of the paper is an assessment of these reform initiatives, from an efficiency/cost-effectiveness standpoint, and includes recommendations for further change.

As China seriously lacks trained and experienced personnel at its current stage of development, management consultancy may be adopted as an economical solution to improve efficiency and performance. However, as institutional theory suggests, it is likely that the adoption of management consultancy in China is driven more by mimetic isomorphism factors than by actual performance considerations. Using data from a survey of 219 listed Chinese firms, our results suggest that there are significant positive effects from mimetic isomorphism factors and adoption of management accounting and controls and information and communication technology. Our study provides strong evidence that the adoption of management consultancy has a positive effect on firm performance, yet we cannot conclude that management consultancy is adopted to improve firm performance. Moreover, state ownership held by state-owned enterprises (SOEs) has a significant and positive effect on management consultancy adoption, whereas state ownership held by government agencies does not. One interpretation is that firms controlled by SOEs have acquired increased autonomy and become more innovative.

In Japan, as in other countries of the world, structural change in recent decades has manifested itself by a significant increase in the share of services in total output. Using input–output tables for Japan, and by de-composing the growth rate over the years 1975–1995, we find that the level of final demand contributed more to output change during the 1975–1985 sub-period than during the following decade. Over the 1985–1995 period, an increase in intermediate requirements for inputs from the service industry is witness of the ‘tertiarization' of the Japanese economy. When breaking down the results by separate service industries, we find that technological change explains more than 10 per cent of the output growth for industries such as Commerce, Communication & Broadcasting, and Education & Health during the 1985–1995 sub-period. With the exception of Education & Health, these industries are also those most affected by liberalization and privatization waves in the 1970s and 1980s.

The internationalization speed of multinational enterprises (MNEs) can be measured in different ways and influenced by their extrinsic and intrinsic aspects. We analyze the influence of institutional distances and experiential knowledge on the internationalization speed of MNEs through subsidiaries. Based on a quantitative approach using data on 479 subsidiaries of Japanese MNEs, we highlight (i) the influence of institutional distance on internationalization speed, (ii) the moderation of experiential knowledge of the relationship between internationalization speed and institutional distance, and (iii) the positive effect on internationalization speed related to low international experience and high regulative and normative distances.

In China, following the growing number of scandals in recent decades, the statutory auditor's role and tasks have been questioned. This paper deals with the evolution of statutory audit in China, which aims to define high standards of auditing in order to protect the public interest. In this article, we discuss the current conditions for statutory audit in China to clarify who may be recognized as a qualified professional, specify the scope of relationships with clients and determine the manner in which professional discipline is maintained. Furthermore, we clarify the content of the statutory audit mission in China as defined by new standards of auditing. Where meaningful, we contrast the Chinese audit system with systems in industrialized countries, such as France and the United Kingdom, and note significant differences between China and those countries in a legal framework and professional standards. Although the context of the globalization of financial markets means ongoing reforms tend to bring statutory audit systems closer, specific features yet remain to be characterized.