Corporate Reforms

Abstract

Apart from the well-known explanations of Japan’s economic success offered by mainstream economists (sound fiscal, monetary and taxation policies) and by developmental state theorists (state intervention in the economy), many analysts also regard the particular organizational and governance features of the Japanese corporation, the J-firm, as important determinants of economic success. Japan, however, has a bifurcated industrial structure and there are considerable organizational differences between the two types of firm. The first category is composed of a small number of large, modern corporations, many of which are interlinked into keiretsu groupings that are held together by cross-ownership of shares and by links to a main bank. The second category is made up of a large number of unaffiliated small- and medium-sized enterprises. The focus in this chapter will be on the former, which have driven Japan’s export success and international competitiveness. Because the keiretsu structure is specific to Japan, these are conveniently labelled ‘J-firms’, and there is an extensive literature on the main characteristics of the J-firm and its differences from western or American firms or ‘A-firms’.