Changing Japanese Capitalism

Economic crisis tends to spur change in the 'rules of the game' - the 'institutions' - that govern the economic activity of firms and employees. But after more than a decade of economic pain following the burst of the Japanese Bubble Economy of the 1980s, the core institutions of Japanese capitalism have changed little. In this systematic and holistic assessment of continuity and change in the central components of Japanese capitalism, Michael A. Witt links this slow institutional change to a confluence of two factors: high levels of societal co-ordination in the Japanese political economy, and low levels of deviant behaviour at the level of individuals, firms, and organizations. He identifies social networks permeating Japanese business as a key enabler of societal co-ordination and an obstacle to deviancy, and sheds light on a pervasive but previously under-explored type of business networks, intra-industry loops. Includes a foreword by Gordon Redding.

An important contribution to the debate about how much Japan has changed since 1990, with a foreword from Gordon Redding, Director of the Euro-Asia and Comparative Research Centre, INSEAD
Provides a clear understanding of social networking activities within Japanese industries
Arguments are backed with cross-sectional data from 20 countries

Reviews & endorsements

“Witt’s focus on intra-industry loops is welcome because, while they are common to many sectors of the economy, they have thus far eluded systematic study. His book explores the composition and the functioning of these loops and demonstrates that the government plays a leading role in founding and fostering these networks in burgeoning industries through the creation of public research and development consortia. He further finds that networking intensity varies according to the demand of member firms for coordination, and that social networks and social capital may represent an obstacle to institutional adjustment. These networks, he suggests, discourage institutional innovation by stabilizing extant ones and contribute to slower institutional adjustment by facilitating coordination. Witt expands upon this thesis by claiming that Japan’s institutional adjustment has been retarded by a combination of coordinated, time-intensive adjustment processes paired with relatively limited adjustment pressure at the microeconomic level. Finally, he stresses the lingering perception that micro-level action that deviates from social norms is regarded as illegitimate behavior. Interestingly, this has been underscored by recent news reports on Japanese whistle-blowers, who are typically ostracized in spite of their defense of public safety, sanitation, or finances (New York Times, June 7, 2008).”
-Jeffrey W. Alexander, University of Wisconsin-Parkside, The Journal of Asian Studies

“Michael Witt has made here an excellent contribution to our understanding of Japanese capitalism, by focussing on societal coordination and institutional adjustment. Witt's initiative is to draw attention to what he has defined as 'intra-industry loops', a phenomenon taken for granted in Japan as natural or commonplace. Thanks to Witt's assessment, we can begin to see reasons for Japan's slow pace of change, and also how its economic circumstances are related to critical issues of institutional reform and capitalist diversity.”
Professor Harukiyo Hasegawa, Doshisha Business School, Kyoto

“While the distinctiveness of Japanese social networks in business is well documented, this book offers new insights into the processes at work in networking, focusing specifically on the importance of intra-industry loops….The book is crisply written, well organized and informative and wouldappeal to a wide range of readers. Other than the obvious group of specialists in Japanese business, this list would include those interested in social networks, particularly from a comparative perspective, and MBA students….this book offers us new evidence and intelligent analysis on Japan’s slow rate of institutional change and the role that social networks play in deferring that process.”
Jane Nolan, University of Cambridge

"A well-researched, systematic exposition."
Asian Business & Management Michael Lynskey, Komazawa University

See more reviews