Startup Ethics and the Philosophy of Kazuo Inamori — Philosophy: ‘Pursue Fair and Just Profits’

This time, Inamori* spoke about the above motto in Kyocera philosophy.

What Inamori said is quoted with “”.

“ In a free market, the price determined as the result of competition is the so-called ‘market price’—that is, the right and justified price. When you are running a small or micro business, it is almost impossible to be in a position where you are operating a business with a monopoly. In nearly every case, there is intense competition, and prices are set within that competitive environment. For small and micro enterprises competing in a truly free market, it is virtually impossible to earn unjust or excessive profits.

Even if there happens to be a business opportunity that allows for extraordinary gains, competitors will inevitably appear quickly, and the prices will drop. Since prices are determined within the framework of free competition, there is no such thing as a business that blindly makes huge profits. In other words, only reasonable and fair profits—those aligned with sound logic—can be earned. What this means is that corporate profits are the result of patiently and steadily accumulating these fair profits through continuous effort. The money earned from small-scale, day-to-day transactions, steadily piled up over time—that is what constitutes true and respectable profit. “

What is being emphasized here is a philosophy of accumulating fair and reasonable profits. I believe there are three key points to this principle:

Let me explain them one by one.

1. Assume the existence of a free market

“ When prices are set through intense competition, it means there is little room to add enough margin to make the business highly profitable. Of course, there are exceptions—such as monopolistic enterprises or businesses that receive protection from the government—where special profits may be attainable. ”

→ What this means is that when prices are determined in the midst of intense competition, there is simply no room to add excessive profits. Of course, there are exceptions—such as monopolistic companies or certain industries that benefit from government protection—where extraordinary profits may be attainable.

For instance, major U.S. tech giants known as GAFAM (Google, Apple, Facebook, Amazon, Microsoft) operate under a logic that deviates from pure market competition. These corporations have created mechanisms that secure monopolistic profit structures by enclosing their own markets in various ways. Their ties with government agencies are also close, making it difficult to argue that they are competing on a truly level playing field.

Nevertheless, society often hails these monopoly-based business models as symbols of success. However, Inamori points to the inherent risks lurking beneath these kinds of short-term success stories.

2. Pursue profits that are morally and economically correct

“ We live in a world where business practices driven by speculation, injustice, and the pursuit of windfall profits are often accepted. However, Kyocera’s management philosophy is to operate businesses with fairness and integrity, to pursue just and proper profits, and to contribute to society. ”

→ In today’s tech-driven world, going public and securing one’s own financial gain has become a celebrated path for entrepreneurs—a modern-day success story. It is said that when Inamori founded KDDI, he did not take a single share of stock for himself. Even if a company eventually succeeds in going public after countless struggles, that success is never the result of one person alone. It comes from the collective efforts and cooperation of many people.

Therefore, in addition to maintaining humility, we must continually ask ourselves: What constitutes a just and rightful profit?

3. Diligently build up profits over time

“ Building up our company’s profits means working steadily and diligently, accumulating them little by little over time. It is not money made by chasing quick riches through speculative bubbles, flipping real estate, or engaging in unethical practices. The money earned through modest, honest transactions—bit by bit—is indeed a respectable , justifiable and rightful profit. ” 

→ This attitude resonates with the worldview of Eastern thought, particularly with the principles of Sanmei-gaku (Chinese metaphysical philosophy). In Sanmei-gaku, the accumulation of wealth is understood to have two essential dimensions:
1) Saving (accumulation):

  Gradually saving and building wealth through steady effort

2) Investing (dynamism):

  Strategically investing accumulated resources to grow them significantly when the time is right

One without the other cannot lead to sustainable prosperity. The “accumulated profits” Inamori speaks of correspond precisely to “Saving”, while reinvesting them purposefully—such as founding KDDI—is a manifestation of “Investing”.

Summary

To pursue fair and just profits, one must:

It is easy to speak of such values, but living them out in everyday practice is far more challenging. I also would like to continue learning and growing through experience, step by step, as I walk this path in life.

* Mr. Kazuo Inamori, the founder of Kyocera, KDDI (one of the top tele communication companies in Japan) and the top of revitalization project of JAL. As a well-known Japanese entrepreneur, he has been sharing his experiences and management know-how with managements of small to middle companies in Japan.

Further queries or doubts, please email to ytomizuka@abrilsjp.com

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