Whither the Japanese Model?: Institutional Change and Emergence of Many Japans

Abstract

Amidst a prolonged recession and financial crisis during the past ten years, Japans capitalism has

undergone change. In what direction is it moving? Is Japan converging on the US model? Or will it

maintain distinctive national characteristics? This paper argues that no single clear pattern has

emerged with regard to the future of the Japanese model. Rather, Japanese firms have responded to the

challenges differently over the past years. Four systems of governance have emerged. First, the

traditional Japanese type of corporate governance, a relationship-based, insider-oriented form,

remains in place. Second, very few are adopting a US-style, market-oriented corporate governance.

Meanwhile, two emergent hybrid forms mix market/outsider-oriented elements with relational/

insider-oriented characteristics. This means that Japan is demonstrating an increasing diversity of

mechanisms of governance that prefigure many Japans.