Japan’s Business Groups

Business groups have been an important feature of Japan’s industrial organization since at least the beginning of the 20th century. As early as the 1870s there had already emerged the Yasuda banking complex, Mitsubishi shipping conglomerate and Mitsui trading company, all of which later became the cornerstones of the vast commercial empires known as the zaibatsu, precursors of the current-day financial keiretsu. Each zaibatsu consisted of disparate firms, including banks, trading companies and manufacturing concerns, much of whose stock reposed in a common holding company qua head-office, which was itself controlled by a wealthy family. In Japan’s First World War boom the zaibatsu expanded from their initial strongholds in mining, banking and the brokerage of foreign trade into new and diverse activities, including shipbuilding, iron and steel, and insurance. Nevertheless, in the 1920s and 1930s more than one half of the Japanese labour force continued to work in very small enterprises or were self-employed. Also, many of the large leading firms including cotton-spinning firms, remained outside the zaibatsu orbit and were diffusely held. The zaibatsu form of organization, in which a few families maintained concentrated ownership of diverse commercial holdings, was never the only viable way of financing and administering businesses in Japan.