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This chapter examines how international managerial careers and attitudes are changing in Japanese companies in two different industries: car manufacturing and banking. This assessment is based on a series of interviews with Japanese and British managers working in Japanese firms in the UK, and with head office managers of these multinational companies (MNCs). It seems that Japanese car firms were primarily using expatriate managers to apply their domestically developed recipes to foreign subsidiaries, and then to transmit new information about plant operations to Japan to improve them. They were not, however, encouraging them to develop novel kinds of capabilities in diverse environments that could lead to the adaptation of the basic business recipe. In the case of Japanese banking, the central position of the City and Long-term Credit banks in the domestic business system, together with their largely domestic client-driven internationalization in the 1970s and 1980s, limited their adaptation to, and learning from, foreign operations. The changed conditions of the 1990s have mostly resulted in a retreat to traditional customers and sources of competitive advantage, i.e., their knowledge of, and centrality to, the domestic business system, and so foreign subsidiaries are greatly subordinated to domestic decisions and routines.

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The expansion of Japanese FDI into the UK manufacturing sector during the 1980s and early 1990s gave rise to the debate on the Japanization of British industry. The paper argues that this debate was constructed from a Western perspective. It did not locate the strategies and structures of Japanese subsidiaries within the broader context of how Japanese multinational corporations were evolving in this period. The necessity to look at these issues from a more global perspective is reinforced by the changes which have occurred since the mid 1990s in the environment for Japanese multinationals. The global economy offers more choices to firms about their location as well as facing them with a more competitive environment. In the Japanese case, this is leading to a growing differentiation between standardized mass production (which can be located in Asia and Eastern Europe) and science–led sectors of industrial production (which necessitate location near to centres of research and development expertise in the USA and Europe). This means that Japanese firms are reconsidering the strategy and structure of their subsidiaries in the UK. Standardized mass production will only survive in the UK as long as costs can be pushed further down and productivity increased, both of which are difficult conditions to meet given possibilities elsewhere in the world for cheap mass production. The growing area of investment will be in science–based manufacturing, though here the UK will be competing against the USA and Germany for Japanese investment. Here, however, the organizational and management characteristics of Japanese subsidiaries will make the necessary connections with local managers and local networks of expertise difficult to achieve. Thus Japanese subsidiaries in the UK are in a period of prolonged uncertainty about their role in the future. These changes open up the necessity for a new agenda of research which goes beyond the Japanization approach and is concerned with the organization and management of Japanese multinationals in an era of global competition.