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Toshiba and Japan's corporate culture

Cass academics Professor Chris Rowley and Dr Pawel Bilinski comment on the resignation Toshiba's chief executive and president Hisao Tanaka and Japanese corporate culture

Toshiba's Chief Executive and president Hisao Tanaka has resigned after the company said it had overstated its profits for the past six years, with Vice-Chair Norio Sasaki also stepping down.

On Monday, an independent panel appointed by Toshiba said the firm had overstated its operating profit by a total of £780m, roughly triple an initial estimate by Toshiba. The findings mean Toshiba will have to restate its profits for 2008-14 which may affect results for the year ending March 2015.

Chris Rowley, Professor of Human Resource Management said, “What has happened at Toshiba follows the high profile resignations at Olympus in 2011 and at Toyota earlier this month, with their executive, Julie Hamp. Mr Tanaka told a media conference that the company would need to ‘build a new structure'’ to reform itself.

"It will be very interesting to see what that means in practice given the continuing traditional corporate culture and corporate governance regime prevalent and embedded in corporate Japan. One report said, ‘Within Toshiba, there was a corporate culture in which one could not go against the wishes of superiors.’ This is despite Prime Minister Abe’s desire for change and trying to regain global investors' confidence with better corporate governance and diversity as part of his ‘Womenomics’."

Dr Pawel Bilinski, Director of the Centre for Financial Analysis and Reporting Research (CeFARR), and Senior Lecturer in Accounting said, “The corporate culture in Japan has been subject to criticism in recent years. The $1.7 billion loss-hiding scheme at Japan’s Olympus Corporation prompted some changes, but culture is one of the most difficult things to change.

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