Can Japan Compete?

Can Japan Compete?

Can Japan Compete?

Can Japan Compete?

Synopsis

World-renowned competition strategist Porter and his colleagues explain why American assumptions about Japan have proved inaccurate, what this nation must do to come back, and what its journey can tell us about how to succeed in the global economy.

Excerpt

Americans have been fascinated with Japan for decades. After all, Japan's post-war miracle created the first real economic competition for the United States in almost a century. As the world's second largest economy and the United States' second largest trading partner, Japan's impact on the United States is self-evident. Japan is also a significant influence on economic growth and policy making in Asia and abroad, thus affecting US relationships with other countries.

In the 1970s and 1980s, Japan became recognized as the world's most competitive nation. Study of its success produced two primary explanations: One was its distinctive form of bureaucratic capitalism, in which government played an activist role in directing the economy. The other explanation was a distinctive approach to management pioneered by Japanese companies, involving now famous practices such as total quality, continuous improvement, and just in time. Interestingly, Americans did much of the research that formed world opinion in both areas. By the late 1980s, the seeming invincibility of Japan reached a pinnacle and US popular opinion turned negative. A string of books portrayed Japan as a threat to Western capitalism. The challenge posed by Japan was made greater by the fact that many other nations embraced some or all of the Japanese government model.

The Japanese policy model had a significant effect on American policy thinking. Elements of the model began to be emulated even during more laissez-faire Republican administrations. For example, the National Cooperative Research Act was enacted in 1984 in response to Japan's celebrated government-sponsored cooperative research projects. To counter Japan's VLSI project and the Japanese ascendancy in the semiconductor industry, Sematech was established in 1987. This $1.6 billion consortium -- pooling companies to jointly develop semiconductor production technology -- included an unprecedented $800 million in funding from the Federal government. Furthermore, legislation to create an American Department of Trade and Industry (nicknamed DITI) was introduced in response to Japan's Ministry of International Trade and Industry (MITI).

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