Corporate restructuring in Japan part I: Can M-form organization manage diverse businesess?

The purpose of this paper is to examine the recent organizational restructuring in Japan in the framework of organizational economics, assuming that the product/market portfolio of the firm is fixed. How does a firm set about organizing its internal divisions? I first summarize some stylized facts on corporate diversification strategy and multi-divisional (M-form) organization in large Japanese firms from different perspectives. I then analyse the problem of choosing an organizational form. In particular, I argue that, precisely because of its related diversification, the multi-business Japanese firm adopting the M-form finds it difficult to differentiate its diverse businesses internally.