Is the Business World Finally Ready for the Wisdom of Shibusawa? – Harvard Business School Working Knowledge

Eiichi Shibusawa continues to gain influence in Japan—even though he died almost a century ago.
Japan’s government announced earlier this year that the 19th century business leader would be the face on 10,000 yen ($90) bank notes—the highest value denomination in Japan—starting in 2024. His life story is the subject of the year-long drama series this year on NHK (Japan Broadcasting Corp.), the country’s version of PBS or the BBC, this year.
Mentions of Shibusawa have sharply increased in Nikkei, Japan’s leading business newspaper, in recent years. And Japanese Prime Minister Fumio Kishida recently announced plans to launch an expert panel to discuss Japan’s new form of capitalism as his key policy platform, inviting a descendant of Shibusawa to serve as a core member.

Why is Shibusawa so popular now?
Clearly, he was a remarkable historical figure. He was born in 1840 in a feudal country that had largely cut itself off from the rest of the world for centuries. By the time he died in 1931, Japan was the only Asian country to become substantially industrialized. He witnessed this extraordinary transformation, beginning at age 13 when Commodore Perry of the US Navy turned up in Tokyo Bay demanding that Japan open itself to trade—on foreigner’s terms.
Shibusawa was more changemaker than observer. Inspired by the joint stock company model he saw on a visit to France in 1868, he created Japan’s first modern bank, Dai’ichi Bank (First National Bank). Its successor, Mizuho Bank, remains one of Japan’s largest banks.
Observers might consider Shibusawa as Japan’s Alexander Hamilton, whose similar pop culture revival culminated in a Broadway musical about his life. However, Shibusawa lived almost twice as long as Hamilton, and after working in the public sector he was able to contribute substantially to the private sector, too. He was involved with the launch of nearly 500 companies over his lifetime. The industries in which he invested became the core of the country’s economic development.
It is less Shibusawa’s track record as a serial entrepreneur than his views on the purpose of business that have attracted renewed interest. The Confucian philosophy of the old feudal regime considered profit and commerce as vulgar. In complete contrast, Shibusawa maintained that prosperity through business was virtuous. Even being a scholar of Confucianism himself, he insisted that it wasn’t necessary to sacrifice ethics in the pursuit of wealth but, rather, such principles were essential.
Shibusawa never used the Japanese word for capitalism when he talked about the business system he envisaged. Instead, he talked of gapponshugi. These Japanese words written in Chinese characters known as kanji have multiple meanings. The word gappon combines ga: “bringing together” and pon: “capital,” but the character for pon can refer not only to monetary but also human and social capital, implying that money, labor and talent can all come together to achieve a common goal for all.
Shibusawa wanted the companies he founded to prosper financially, yet he saw them as part of a broader process involving the development of Japan and its society as a whole. He envisaged an open system, quite unlike the family–owned zaibatsu or diversified conglomerates such as Mitsubishi and Mitsui, which also flourished during his lifetime.
Shibusawa’s gapponshugi sounds very much like today’s purpose-driven stakeholder capitalism 100 years before its time, but it proved hard to sustain. Shibusawa exercised his influence over his many companies personally or through intermediaries. He rarely held majority equity stakes. His ideas were hard to sustain once he had left the scene.
After Shibusawa’s death in 1931, the warfighting Japanese military regime was compelled to work closely with the big zaibatsu—large industrial conglomerates—rather than the gappon companies. Many of the companies founded by Shibusawa survived, but they lost any explicit commitment to gapponshugi.
The business system that emerged in Japan after World War II, influenced by the American occupation forces’ breakup of the zaibatsu, featured extensive cross-shareholdings, heavy bank influence, lifetime employment and close-coordination with public policy. Japan was praised globally as an “economic miracle.” Nonetheless, the post-war businesses were far from the more open system of broad societal responsibility that Shibusawa promoted.

It was not until the 2000s that a handful of Japanese business leaders rediscovered Shibusawa. Much had changed by then. The Japanese economy had been stagnant since the bursting of the economic bubble in late 1980s. Multiple corporate scandals took place. Corporate Japan embraced the language of environmental, social, and governance (ESG) investing, but its true view was debatably rhetorical given its generally poor environmental performances, the dearth of female managers, and much else.
The B Corp movement of the United States—whose businesses set out to balance profits and social purpose—gained little traction in Japan. By September 2021, there were 4,026 certified B Corps in 77 countries, but only seven in Japan. Yet despite not formally registering to pledges or drastically changing corporate structures, some Japanese business leaders attempted to reinfuse Shibusawa’s virtues in their businesses.
For some who wanted Japan’s businesses to serve a more proactive social and environment role and perhaps to recover some dynamism, Shibusawa offered a genuine Japanese voice—one that predates contemporary environmental, social, and corporate governance (ESG) thinking. In fact, we sought the perspectives of two such leaders:
Takashi Tsukamoto, former CEO of Mizuho Financial Group. Tsukamoto considers Shibusawa’s foundational thinking as having a long-term vision; essentially “aiming for the North Star.” He was working as CFO of Mizuho Financial Group as the 2008 financial crisis took hold, which prompted him to reassess the merits of financial capitalism and its emphasis on short-term gains over long-term goals. When we asked about how he went on to manage the different stakeholders of Mizuho later as the CEO, he asserted that in Shibusawa’s spirit he considered what was best for the society in the long run.
“Rather than focusing on resolving conflicts of interests amongst the stakeholders, the idea is to find the North Star, and to bring the stakeholders together to work towards it” he says.
Takeshi Niinami, CEO of Suntory Holdings and former CEO of Lawson. As CEO of the convenience store chain Lawson, Niinami spent his first four years implementing a financial turnaround. As he looked for inspiration for next steps, he thought about Shibusawa’s 1915 book, The Analects and the Abacus. Shibusawa’s writings encouraged him to think beyond investors. Niinami realized that inspiring pride in employees, their families, and society could fuel a company’s long-term growth and stability. He put his lessons into practice and poured effort into communicating Lawson’s purpose to employees through training programs.
When a massive earthquake and tsunami hit Japan in 2011, Niinami prioritized getting food and supplies to victims and emergency workers, even as his company faced a $100 million loss. As soon as 11 days after the disaster, he started reopening Lawson stores in the affected region to help regain normalcy and take steps toward rebuilding the economy.
“Because I had communicated Lawson’s purpose as a company to employees and other stakeholders, even with the financial loss and other burdens they understood and aligned with the mission,” Niinami says.
At a time of crisis, Shibusawa’s spirit came into full force and multiple stakeholders aligned to achieve the same goal for the public good.
Without a doubt, Shibusawa’s philosophies were ahead of his time. However, his ability to inspire such compassion even four generations later speaks to the power and timelessness of his message—one that will likely continue to shape CEOs for decades to come.
Geoffrey Jones is Isidor Straus Professor of Business History. He is the author of Profits and Sustainability: A History of Green Entrepreneurship and co-directs the Creating Emerging Markets project at the School. Rei Morimoto is a recent graduate of HBS (2021).
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