Japan as Number Two: Competitive Problems and the Future of Alliance Capitalism after the Burst of the Bubble Boom

Abstract

The Japanese onslaught in export markets in the 1970s and 1980s evoked an enormous interest from academics of all kinds, who attempted to locate the causes of Japanese supremacy in production management, supplier relations and employment practices as well as in its forms of corporate control. Recently, the predictions of Japan as Number One have turned out to be wrong, and the United States has emerged as a pre-eminent competitor, not only in computers and multimedia, but also in traditional industries, such as autos. This article confronts the `Japan as Number One' literature with current dilemmas in the Japanese economy in general, and in autos and software in particular. Toyota's recent departure from important principles in its famous production system are also analysed. Further, this article deals with how employment practices in large companies are affected by the protracted recession. In the conclusion it is stressed that, although under severe pressure, Japan is not simply converging with Western `normalcy'. Its `alliance capitalism' is eroded but not eliminated and future studies of Japan must grasp its contradictions and contrasts in a very different way from the studies of the previous decade.