Intorduce the current and previous business system in Japan

Essay by stella2004cn March 2005

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Rules and Business System in Japan


Japan has become well known in the world for its business system. Some Western businesses have tried to imitate parts of the Japanese business system. As with other countries, the business system of the Japanese model is also influenced by formal and informal rules. This essay will describe the formal and informal rules which control the Japanese business system, and briefly comment on the interrelationship between the two types of rules. In particular, it will examine the idea that formal rules follow clearly stated government laws, and so on, while informal rules come from socio-cultural practices.


Government often plays a part in formulating rules for business. Dunning (1997) points out that "the optimal role of government in the organization of economic activity has long been a subject of intense-and sometimes passionate-controversy" (p. 32). Over a long period, the Japanese government's role in the business system has been to enact formal rules which completely determine the activities of corporations in the economic field.

(What do they do? What happens if the firm does not obey them?) These formal rules have enabled the Japanese government to intervene in business since the beginning of Japanese industrialization. "East Asian states are directly involved in the economy and have a significant influence on private decision" (Chiu & Liu 1998, p. 137). Japan as a case in point, provides a good example of such government involvement. The development of the Japanese business system has experienced a long history of government influence. (But is this relevant to a discussion of formal rules?)

The Japanese government first began to interfere with the business system in 1868 when Japan's modernization under the leadership of the Meiji government started. "The Meiji government took a strong leadership role in consolidating the working...