Japanese businesses are unfairly criticized for using secrecy to hide unfair business practices. Many of these attacks are the result of anti-Japanese prejudice according to Joanna Banthink in Mid-Atlantic Journal of Business (1991). Banthink explains there are profound cultural differences between the United States and Japan. These differences affect business negotiations and that general ignorance of Japan, its culture, its business norms and its language leads to over-reliance on generalizations and stereotypes, and to misunderstandings and mistrust. Lack of understanding of Japanese business styles, norms, language, tradition and culture make difficult for any outsider to gather relevant information about Japanese companies (Banthink, 1991).
In Japan, the desire to ensure social harmony that has led to protection and cover up of unethical or unlawful business practices. Hiroki Kato and Joan Kato in Understanding and Working with the Japanese Business World (1992) explain that the individual is always subservient to the group. Personal choice, personal initiative and personal convenience are considered less important to Japanese than the interests of the group or the company. The authors suggest that if Japanese workers are reluctant to report wrongdoing, it is not difficult to imagine how carefully employees guard that company's trade secrets. This willingness and ability to keep secrets also complicates the process of gathering comprehensive information about Japanese businesses (Kato, Kato, 1992, 19).
An article in The Economist (2002) explains that Japanese companies raise funds primarily from banks and under a cross-shareholding system. Under this system of raising capital, banks play a key role in monitored the management and financial affairs of companies they invest in. Since these companies do not need to depend on direct financing from individual stockholders, there are few demands for disclosure from stockhold...