Creating Entrepreneurs—Progress and Opportunity in Japan

Abstract

Well over a decade of economic reforms in Japan has led to a sustained rise in entrepreneurial activity and the formation of high-tech ventures. This transformation offers an example of how shifts in incentives can substantially alter seemingly ingrained business structures, often misunderstood as “cultural” patterns of behavior, and stimulate new sources of innovation. These reforms address such factors as the risks and rewards for entrepreneurs, the transition to commercialization, company formation, company growth, regulation, and financing. Invention disclosures and venture business formation at universities both increased by ten-fold over the seven years between 1996 and 2003, achieving levels comparable to the United States on a per-capita basis, and Japan9s exchanges continue to be receptive to venture offerings. International investors have been minor participants in this rise, but this article argues that there are unique opportunities for such investors in the context of Japan9s investment environment.