Over the past decade, ¡°corporate governance¡± has come to replace ¡°industrial policy¡± and ¡°Japanese-style management¡± as the key factor to explain Japanese business performance.
From the 1960s through the early 1990s, many observers focused on the close and cooperative relationship between Japan¡¯s economic ministries -- especially the Ministry of Finance and the Ministry of International Trade and Industry -- and the companies under their ¡°jurisdiction¡± to explain Japan¡¯s economic success. As a student at the Harvard Business School in the 1970s, I remember taking the required first-year MBA course on BGIE (Business, Government, and the International Economy), where nearly half of the country cases focused on the success produced by Japan¡¯s industrial policy.
Those who felt uncomfortable giving government so much credit for Japan¡¯s economic success emphasized what they viewed to be the strengths of Japanese-style management, which included long-term employment, promotion and wages based on seniority, enterprise unions, low labor mobility, patient capital and ¡°keiretsu¡± ties centered on main banks.
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