It has been said, not least by the Japanese themselves, that Japan has changed only twice over the past 150 years: once in the Meiji Restoration of 1868, which marked the downfall of the Tokugawa shogunate after some 265 years of continuous rule, and again in 1945, when Japan had lost the Pacific War.

This is, of course, a vast overstatement. Nothing, and certainly no social system, ever stands still, and Japan is no exception. However, in the context of developments in the Japanese business system over the past fifteen years, it contains a kernel of truth. A comprehensive review of the available empirical evidence, presented later in this book, suggests that the core structure of the Japanese business system today is not much different from that in 1990. Viewed from the perspective of the business system as a whole, institutional change in Japan seems to be proceeding at a relatively slow rate.

This would not be remarkable had this slow rate of change not occurred in the face of extended economic crisis, which should have been conducive to institutional change (Katznelson 2003; Krasner 1976; North 1990; Oliver 1992). With the burst of the bubble economy of the 1980s, real economic growth in Japan slowed from an average 4.1 percent in the 1980s to 1.5 percent in the 1990s (OECD 2004).