Japanese Firms and the Decline of the Japanese Expatriate

Conventional wisdom holds that Japanese firms use large numbers of expatriates and are reluctant to allow local nationals a significant role in subsidiary management. Japanese firms have been criticized for their unwillingness to capitalize on the internal diversity in their international managerial ranks. It has been suggested that a rice paper ceiling in Japanese firms restricts local managers from advancement opportunities and involvement in corporate-level decision making. The research reported in this paper directly challenges the notion that Japanese firms are unwilling to reduce their use of expatriates. Using a comprehensive database of Japanese subsidiaries, this paper shows that the number of Japanese expatriates is declining and has been for some time. One explanation for this decline is that Japanese firms have had no choice because of a limited supply of managers for expatriate positions. A second explanation is that Japanese firms are beginning to recognize the importance of empowering local management and are becoming more truly global in how they compete.