This study investigates performance differences among various types of investment entities in Japan’s asset management industry – specifically domestic financial institutions, foreign financial institutions and independent firms – focusing on the operational realities that remain largely underexplored in academic research.
The study employs a stochastic frontier analysis based on input distance functions to assess efficiency and economies of scale across different types of asset management companies.
Small, independent asset management firms not affiliated with financial institutions tend to exhibit higher efficiency and stronger economies of scale, whereas firms established by foreign financial institutions demonstrate relatively lower performance.
The findings challenge the dominance of subsidiaries of major domestic financial institutions in Japan's asset management industry by highlighting the competitive advantages of smaller, independent firms. They suggest a need for policy and strategic shifts to foster a more diverse and efficient asset management ecosystem.
By examining efficiency across different ownership structures, this study challenges the prevailing dominance of subsidiaries affiliated with major domestic financial groups in Japan. The results contribute to the literature on organizational efficiency in financial services and provide insights for aligning performance management practices with ownership structures, offering implications for both theory and managerial practice.
