In this paper, I argue that each welfare system of three East Asian countries, Japan, Korea, and Taiwan, has been developed a complementary relationship with its own distinct corporate governance. Japanese stakeholder capitalism created the finance-mediated welfare system. As a result, Japanese corporations and financial institutions has successfully developed mutual interests. On the other hand, while Chaebol-based rent-seeking capitalism in Korea gave priority to the protection of the economic interest of big corporations, Taiwanese familial capitalism has developed a more inclusive welfare system encompassing laborers in small- to middle-sized firms in order to motivate their enthusiasm for work. Theoretical implications of this study can be summarized as follows. First, welfare system cannot be explained solely by political variables; rather, the features of production regime can help understand better the diversity and the internal dynamics of welfare system. Second, capital does not always oppose the introduction of welfare system, nor does it avoid the burden of paying costs incurred by welfare programs. After taking the expected costs and benefits of welfare system into consideration, if capital believes that the benefits will be greater than or equal to the costs, it support or at least does not oppose welfare system. Last but not the least, the correspondence between production regime and welfare system is not determined automatically but mediated by the political force which has the ability to coordinate production regime and welfare system.

In this paper, I argue that each welfare system of three East Asian countries, Japan, Korea, and Taiwan, has been developed a complementary relationship with its own distinct corporate governance. Japanese stakeholder capitalism created the finance-mediated welfare system. As a result, Japanese corporations and financial institutions has successfully developed mutual interests. On the other hand, while Chaebol-based rent-seeking capitalism in Korea gave priority to the protection of the economic interest of big corporations, Taiwanese familial capitalism has developed a more inclusive welfare system encompassing laborers in small- to middle-sized firms in order to motivate their enthusiasm for work. Theoretical implications of this study can be summarized as follows. First, welfare system cannot be explained solely by political variables; rather, the features of production regime can help understand better the diversity and the internal dynamics of welfare system. Second, capital does not always oppose the introduction of welfare system, nor does it avoid the burden of paying costs incurred by welfare programs. After taking the expected costs and benefits of welfare system into consideration, if capital believes that the benefits will be greater than or equal to the costs, it support or at least does not oppose welfare system. Last but not the least, the correspondence between production regime and welfare system is not determined automatically but mediated by the political force which has the ability to coordinate production regime and welfare system.

welfare system, corporate governance, production regime, stakeholder capitalism, Chaebol-based rent-seeking capitalism, familial capitalism