Revisiting the Roots of Japan's Economic Stagnation: The role of the Japanese corporation

Abstract

For a long period in the 20th century, the development of the Japanese corporation appeared congruent with the development of the Japanese economy. The growth-maximising behaviour of the Japanese corporation and the preference for internal growth over acquisitions (see Odagiri, 1992) appeared to suit the long-term ambitions of Japan. Now, that formerly clear connection between the ambitions of corporate Japan and the Japanese public interest is no longer so clear. Increasingly, the global ambitions of the corporation appear as an impediment to Japan's economic development. By favouring the development of large-scale transnational corporations, Japanese industrial policy-making appears to have contained a fundamental flaw. Japan is now dominated by large-scale organisations with global ambitions, controlled by corporate elites. It is unlikely that their strategic decisions will correspond with the wider public interest, which raises the possibility that Japan is now afflicted with 'strategic failure'. Other examples from around the world suggest that Japan is not unique in this respect. Alternative ways forward are suggested.