Vol.32-No.10 October 1,1993
It is feared that the declining rate of starting smaller-scale businesses in recent years will adversely affect economic development. In light of this fact, the Small and Medium Enterprise Agency (SMEA) has set forth measures to strengthen financial assistance for the establishment of smaller firms as well as small businesses' branching out into new fields.
In Japan, "small to medium-sized enterprises" are defined according to the range of capital and the number of employees, based on the definition stipulated under the Basic Law for Small- and Medium-sized Enterprises. Of smaller firms, those with fewer than 20 employees (those with fewer than five in commerce and services) are called "tiny businesses." In Japan smaller companies account for a little over 99 percent of the total number of establishments while their employees comprise a shade over 80 percent of the total work force. Furthermore, tiny firms account for about 77 percent of all establishments with their employees representing a little more than 31 percent of the total. Thus, smaller firms contribute to a great extent toward the nation's economic development and sustained vitality.
Compared with large companies, small firms are normally weak with regard to credit worthiness and procurement of funds. Financial constraints, therefore, make it difficult for them to introduce equipment for modernization and rationalization efforts. Moreover, financial aid alone does not produce adequate results, as smaller firms may be without professional knowledge and technology to select the proper equipment. To help small businesses, two programs are provided: one, a system for advancing funds to modernize equipment under which individual prefectural governments advance half of the needed funds on an interest-free basis to smaller firms, and the other, a system for leasing equipment where public corporations funded by local public organizations purchase equipment and lease them to smaller-scale busineses. Starting in fiscal 1993, SMEA inaugurated a loan program for newly-established small businesses, in addition to the above two systems, to assist smaller firms in their efforts to start new business.
The loan system for newly-established smaller firms is intended to advance up to 30 million yen to smaller-scale companies within three years of start-up who have 20 and fewer employees (five employees in commerce services). However, the new system sets strict leasing conditions under which firms within their first year of operation are required to undergo management guidance for about six months before they can apply for such financing. The reason is that newly-established firms often face fund-procurement problems due to their weak security and credit base. In addition, they can borrow only 15 million yen, half of the general quota for smaller firms.
The system for lending equipment to start-up firms allows those in their first three years of operation and with 20 and fewer employees (five and fewer employees in commerec and services) to lease equipment. The upper limit of the value of loaned equipment is 25 million yen for general equipment and 50 million yen for high-technology and information equipment. Additional conditions are given to firms in their first year of operation. They can lease general equipment valued at up to 1.25 million yen and lease high-technology and information equipment valued at up to 2.5 million yen.
Looking at how companies view the environment division in their organizations, 25.7 percent regarded it as an independent organ under the direct control of the president, 19 percent as part of the administration and management divisions and 5.6 percent as part of the planning division, thus acccounting for about 50 percent of those responding. This means that in many corporations the environment division is staff-based. On the other hand, 17 percent replied that the division functions in a manner similar to the manufacturing and sales divisions. In many companies, the environment division is part of the staff-based organization in the head office that coordinatrs in-house environmental measures. In addition, managing directors or above, including the president and the chairman, headed the environment division at over two-thirds of those firms responding.
Regarding the size of the division, it was staffed by three and fewer members at 33.5 percent of those surveyed and by 10 and fewer at 21.8 percent. Thus, 10 and fewer full-time staffers were in the division at a majority of the firms, indicating that it is not large within the organization.
Regarding the division's influence on in-house decision-making, only 36 percent replied that the environment division exerted some influence over long-term policy formation and overall corporate management. The division's influence was also small in such areas as decision-making on major plant and equipment investment (35.2%), development of and research into new products and new technologies (30.5%), compilaion of the annual budget (22.7%), production of new products (20.9%) and formulation of an annual production plan (10.1%).
previous page next page MENU Public Policy