Young Japanese MBAs in U.S. Campus
Fewer and fewer executives head for Cambridge and Palo Alto.
On May 30th this year, Takeshi Niinami, CEO of Suntory made an opening remark at his online event of Harvard Business School in Tokyo. The remark left a bit unexpectedly resentful regret. “I am a CEO of consumer packaged good company. (My compensation)… is not as good as other panelists in private equity venture and consultancy.
It was unexpected one because I have known who Mr. Niinami has been since 1995. His three-month management class in Yotsuya, Tokyo was still in my memory. He came up in lecture room of Attackers School in Kojimachii where legendary management consultant, Ohmae Kenichi, organizes. I have heard in-house observations about his style at Mitsubishi Corporation in 2000's.
Despite rumors and stories behind his track record toward CEO, my impression on him is that he is an authentic leader. Young Japanese would-be executives look for authenticity as major leadership feature. They don’t like corruption, lies, and even bowing to say, “I am sorry” on TVs through public scrutiny.
Does a HBS event send Japanese executives to business schools in America?
AGOS, a Japanese prep school for MBA in Shibuya, Japan reports the number of admitted applicants in Tokyo. The survey has been regularly conducted at least three decades. The most up-to-date three-year statistics unveils the further drop from the previous survey. These are the numbers of MBA of the admitted ones for considering the two-year boot-camp with classmates in mind.
Among the admitted, the brave minds show the Japanese passports at inspection gate at U.S. airports. But the number of candidates who actually go to U.S. campus has been declined to 60 students or so in total. Especially, the evidence is going to show a huge dive in Harvard and Stanford.
At Cambridge, MA, American classmates can meet only two Japanese candidates at most this September. For 2020 and 2021, the numbers looked a litter better, 5 and 4 instead. In Palo Alto, the figures are even slightly lower to mark 2, 4, and 2 in three consecutive years.
What explains the consistently low attendance of the Japanese at MBA? There are three risks in their minds; reputation, the return of investment in compensation, and no sense of hourly pay for business practice in Tokyo.
First, young Tokyoites in their 20’s don’t want to run a reputation risk in corporate governance. Probably, they don’t understand MBA course of spiritual agenda such as “What is the leadership?” The Tokyo residents may ask, “Why do they offer such a course in America?” Isn’t it skill training?
Corporate governance has been a hot issue in Tokyo. Prime Minister Abe Shunzo launched stewardship code for listed firms in 2016. Yet Toshiba, a Japanese high-tech conglomerate was accused for the accounting fraud by proxy advisers in corporate board. They reported the fraud from 2007 to 2014 with cumulative $12bn, according to the Economist.
The Harvard fund, not business school, retreat from the 3% stake in Toshiba by selling all of ownership in March 2021.
It is an unnecessary burden for young Japanese as well as American candidates to go to a graduate school of business to learn what is good and what is bad in their prestigious institutions. Japanese listed firms rarely disclose malpractice of accounting for years in the stock exchange. Why do they want to “apologize” for what they will have known later to ruin the impeccable reputation before the angry public.
The second reason strengthens the pull-back from U.S. campuses even further. The return of investment after MBA doesn’t justify the ballooned expense for two-year intellectual exercises. When the Japanese MBAs come back from U.S. to Tokyo, they are pretty likely to find themselves in the position at loss. They look for the ranking of salary at 30’s in major business journal. Except for the best three from the top, the average salary of high compensations in Tokyo still falls short of $100,000. The foreign exchange rate for Japanese Yen stands at 135.
The third and final point for risk aversion lies in the nature of business hours in Tokyo. No one understands hourly pay in Tokyo if co-workers don’t obtain MBA in America. They don’t work on hours but a mix of emotions and relationship to a boss and others. Corporate culture comes first. It is possible to compute hourly pay in the Japanese compensation after tax but hourly disposable incomes come out so low that MBAs don’t even bother looking at their numbers, especially in comparison with those of their classmates in Boston and San Francisco.
All in all, it is somewhat likely that Japanese MBA apologize for unknown crime to hurt the reputation, record a huge loss in personal finance, and excessive work hours in Tokyo to damage brains and bodies. They may end up in hospital bed for years.
Unfortunately, I was almost close to one of the kinds 30 years ago. But at that time, I learned that America’s most advanced technology is management. I still believe in it today. But that was a long time ago.
Mr. Niinami ended the online event with his closing remark to both two panelists and the general audience, “Never repeat Enron”. The remark surely shocked two graduates from Boston. It was shocking to me, too. But it gets to the current affair of corporate governance. The general audience including most MBA applicants there learned from it how it is like Harvard Business School and a similar graduate school in Palo Alto. It is time to hold their decisions and stay home in Tokyo.