Reviewed by: Choose and Focus: Japanese Business Strategies for the 21st Century Edward J. Lincoln (bio) Choose and Focus: Japanese Business Strategies for the 21st Century. By Ulrike Schaede. Cornell University Press, Ithaca, 2008. ix, 291 pages. $29.95. The economic malaise of the 1990s triggered a process of reform in both the rules of the game for the economy and the behavior of corporations. Enough time has now passed that scholars can begin to assess what has happened and how it affects economic behavior. Ulrike Schaede's book is the latest entry in this analytical effort. She argues that 1998 (a year of serious recession during which the financial system came close to collapse) was a critical point of inflection, after which change has accelerated. Choosing to center the analysis on the behavior of corporations, she concludes that today they behave quite differently than in the postwar system that existed up to the 1990s. At the heart of that difference has been a move of corporations (especially manufacturing firms) away from broad diversification to a "choose and focus" strategy, exiting peripheral products and concentrating on areas of core competency. Beginning with the old system, she argues that corporate structure (characterized by an emphasis on diversification and market share) was a rational response to economic conditions at the time. Although she concentrates on corporate behavior, the elements of the system she describes take the reader through a variety of familiar pieces of the economic system: the main bank system, curbs on price competition (but extensive nonprice competition), extensive (and tight) subcontracting relationships, and job security. Given the centrality of the diversification strategy versus choose and focus, she follows with a chapter on the theoretical advantages and disadvantages of each alternative and how changing broader economic circumstances can alter the trade-off. The bulk of the book then takes the reader through each aspect of the system. Individual chapters cover corporate relationships (keiretsu, cross-shareholding, and the main bank system), corporate ownership, subcontracting, price competition, lifetime employment, and the rise of venture capital. Each of these chapters argues that earlier postwar rules and behavior patterns have shifted decisively. Cross-shareholdings have diminished, the role of the main bank has changed, shareholders are much more activist in pressing management for better performance, subcontracting has changed, price competition is far more explicit and extensive, lifetime employment is changing (and the percentage of workers with little job security has gone up), and venture capital is expanding. Buttressing the argument in each of [End Page 102] these areas, Schaede provides a discussion of the underlying changes in laws and regulations that have taken place. The main legal changes are summarized in two useful tables, one presenting what she believes to be the most important legal changes (pp. 34–35) and the other specifically on the changes affecting venture capital markets (pp. 207–9). Following this thorough discussion of the changes, Schaede provides some real life stories to round out this picture, tracing the evolution of four companies: Softbank, Kakaku.com, Astellas (a pharmaceutical firm formed by the merger of Yamanouchi and Fujisawa), and SBI E*Trade Securities. In addition, anecdotes about specific companies, particularly Matsushita (now renamed Panasonic) and Takeda Pharmaceuticals, are sprinkled through other parts of the book. Finally, the book concludes by arguing that a "new Japan" has emerged out of all these important, irreversible changes. This new Japan demonstrated its newfound strength by emerging from the malaise of the 1990s with a long 50-month expansionary period beginning in 2002. As she puts it, "the strategic inflection point has brought new creativity, innovation, and dynamism that will allow Japan's successful companies to compete globally in the 21st century" (p. 258). Having said that, Schaede is very careful in the conclusion and elsewhere to discount the idea that the Japanese model is converging on the American one—Japan remains distinctive but changed (with, for example, lifetime employment altered but not gone). Despite the focus on the behavior of corporations rather than the economic system writ large, this book is somewhat similar to the one published by Steven Vogel two years earlier.1 He, too, provides lists of the legal changes occurring and...