The 1990s: A Radically Different Environment

The 1990s proved to be a period of change and uncertainty for the Japanese economy and its players. Low growth rates, rising unemployment and a growing number of bankruptcies characterized a prolonged period of structural change that after the turn of the millennium was still ongoing. During this period no element of the Japanese economic system remained unquestioned, and many of the distinct features of Japanese political economy, industrial organization and company management that were once regarded as cornerstones of Japan’s success became the target of reinterpretation. For example, close ties between companies that had once been mainly interpreted as enhancing communication and collaboration were suddenly blamed for serious flaws in corporate financing and governance. Similarly, collaboration between business and government was reinterpreted as blocking structural change and necessary deregulation, and the once-hailed human resources management system was recognized as a threat to creativity and cost competitiveness. In addition, consumers who were once praised for their fast acceptance of new products, appreciation of good services and preference for quality over price were described as having redefined their priorities by having become more price-conscious.