Hot Topics: Talking about Toyota

The massive recalls of Toyota vehicles have put the Japanese auto giant in the glare of public scrutiny - a place it has rarely, if ever, had to stand. Rutgers Today spoke with business professor Wayne Eastman about what the crisis means for Toyota’s image, and its future. Eastman, vice chair of the Department of Supply Chain Management & Marketing Sciences at the Rutgers School of Business–Newark and New Brunswick, delved into a rarely-explored angle of the story: the cultural differences between American and Japanese corporations. Below are excerpts from the interview.

Rutgers Today: Besides the mechanical defects in the cars, Toyota is taking its share of criticism for not responding to earlier concerns by consumers and for not seeing the scope of the problem early on. Is their handling of the crisis related to their own distinctive corporate culture?

 

Eastman: Despite its vast presence in the United States, Toyota is a Japanese company that is operating in a culture very different from our litigious, media-driven culture. And though there is a lot that American companies can learn from the Japanese model, Toyota may have gotten itself tripped up in this case. They initially said the problem was with the floor mats, and then, of course, more information came out that showed the defects were also mechanical. One interpretation is that this is the way it actually happened within the company. But seen through another lens, they were not as forthcoming as they might have been. As a Japanese corporation, they simply don’t have the same concerns about getting flayed through a class action lawsuit and in the court of public opinion.  

Rutgers Today:  How is this different from American corporate culture?

Eastman: At American companies, partly through the experience of having their own significant quality problems that have led to recalls, there really is a premium on getting information out, and getting it accurate, for there’s an army of aggressive lawyers who are ready to sue corporations. In fact, this story illustrates an arguable advantage of the American culture of litigation, disclosure requirements and aggressive media. The American companies have gained some sense that you’d better come out with the story, and that you are in worse shape if you allow it to come out in slow drips and drabs, rather than taking your medicine, such as it is.  

Rutgers Today: Can Toyota recover?   

Eastman: I would first caution everyone about a rush to judgment against Toyota.  We understand that the problem of stuck accelerators is a serious, dramatic problem. But Toyota has many million of vehicles on the road. What is the safety record of those vehicles? My point is, ‘let’s be careful.’ Let’s also realize that the U.S. has become a very significant investor in GM and Chrysler, so when (Transportation Secretary) Ray LaHood says to ‘stop driving’ Toyotas, let’s watch carefully to make sure as a society we are not overreacting. In regards to Toyota’s skills and engineering culture, I would say it can recover, but with a reservation. I do think there is reason to doubt that Japanese, or for that matter other established auto companies, at least in the midrange, will be world leaders 10 or 20 years from now. I would be optimistic that Toyota would regain trust, but as far as the likelihood that we will be getting mid-priced vehicles from Japan as opposed to another low-cost producer in the future, I am not so sure.

–  John Chadwick