The Fall of 'Companyism' in Japanese Corporate System


This paper examines the effects of structural changes in financial system on corporate system, particularly finance and employment in Japan, and discusses the underlying problems and the future directions. Japanese corporate system can be characterized to be cooperative long-term relationships with factor suppliers in the absence of strong control by shareholders, so called 'companyism.' Companyism of large firms has worked well in the most of the post-war period. Since substantial economic growth can no longer be expected in Japan, long-term relationships with factor suppliers have been undergoing changes. Japanese firms have found it impossible to maintain existing employment relations. It has been getting harder for the firms to avoid drastic reduction of employees.

Keywords: Corporate finance; Financial systems; Labor relations; Japanese firms.

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