Entrepreneurs -- Dipping From the Well

By Shiho Futagami

The significance of female entrepreneurship in the Japanese economy

While the financial crisis is prompting Japanese companies to shed the traditional practices of lifetime employment and seniority-based wages, the majority of the victims of the cost-cutting ax remain part-time and temporary agency workers. As job security diminishes alternatives need to be found. One economic solution for reversing Japan’s financial challenges is female entrepreneurship. These independent businesswomen are emerging outside the traditional Japanese management but remain Japan’s greatest untapped human resource.

Japanese management is characterized by the traditional practices of lifetime employment, the seniority system, and the existence of enterprise unions. While lifetime employment is seen as the main characteristic this is primarily operational only within big Japanese companies. Additionally, the implied lifetime employment security is limited to the regular workforce which is protected by a buffer of non-regular workers who are mostly women. Employees of big Japanese companies, mainly male university graduates, are the ones who enjoy long-term employment. Under long-term stable employment practices, these employees are trained through in-company human resource development and reassignment or are transferred to affiliated companies.

Many Japanese companies started developing female workers, introducing the dualtrack system in the mid-1980s after the Equal Employment Opportunity Law took effect in 1986. Female managers are increasing, but the ratio of them still remains low – women represented only 5.74 percent of top executives in registered Japanese companies in 2007, according to the research by Teikoku Databank. Only three percent of Japanese companies have a woman on their boards.

Illustration: Female Entrepreneurship

Balancing work and family is also a serious problem for working women in Japan. The Law Concerning the Welfare of Workers Who Take Care of Children or Other Family Members Including Child Care and Family Care Leave came into effect in 1995. According to this law, workers are entitled to a one-year leave of absence from their company for child care. However returning to the workplace after a year of childcare leave is often very difficult for working women due to the negative, deeply rooted social attitudes towards working mothers and the lack of support systems, such as day care centers at the workplace. Many talented Japanese women are compelled to quit their jobs to stay with their families, and the female labor force ratio by age still develops in the ‘M’ curve, whereby women’s labor participation rate drops around the child-bearing age.

Today, Japanese women are pursuing higher education in greater numbers. Women who have completed graduate degrees abroad return to Japan frustrated by limited employment prospects. Some talented female workers start businesses to work at their discretion.

Due to the internet penetration and growth in Japan, women have been encouraged to start e-businesses. According to the survey by the Center for the Advancement of Working Women in 2006, 14.9 percent of female entrepreneurs founded their business in the information and communication industries. Digimom Workers is a good example. Founder and company president Teramoto utilized her talents in the field of IT. In the future there will be growing potential for female entrepreneurs in the welfare service (I.e. child care, nursing care), retail and special service in Japan, although there still remains some traditional Japanese barriers, such as banks’ reluctance to finance funds for women. Many agree Japan’s greatest untapped human resource is highly motivated women wanting to utilize their intellects and creative abilities and to be recognized for those reasons. JI

Prof. Dr. Shiho Futagami
Associate professor at International Graduate School of Social Sciences, Yokohama National University.