The corporate governance by Muto Sanji Satisfying both the shareholders and the employees

Muto Sanji (武藤山治) (1867-1934) was one of the greatest Japanese business leaders in the early 20th century. He succeeded in managing the Kanegafuti Spinning Company (鐘淵紡績株式会社), which developed significantly under his prominent leadership. He was well-known for his paternalism in the company and distinguished for his dignified stance to the shareholders. This paper attempts to find how he could get the shareholders' support for his welfare works which cost much money.Muto knew that he must give the employees good working environments and conditions to induce them to work hard. He made all the possible improvements for the employees and he himself worked hard with them. On the other hand, he rejected any unreasonable request for dividend-increase and refused almost all the proposals from the shareholders to increase capital because they were often schemed just to get capital gain.The company grew better-off owing to his good management and came to able to pay a high dividend to the shareholders. Then Muto began to pay a higher dividend than those of other companies in return for the shareholders' cooperation for his policy to avoid unreasonable capital increase, and he could build the complete welfare facilities with their consents.This paper will give some hints to the Japanese managers struggling to create a new business model today.