The main argument of this book is that the coordinated nature of the Japanese business system renders it relatively slow to adjust when faced with high-velocity changes impinging on economic activity. Making this argument requires, first of all, demonstration that institutional adjustment in the Japanese business system has indeed been relatively slow.

I tackle this challenge by exploring the extent to which the Japanese business system has undergone structural changes over the past fifteen years. This period is particularly suitable for this kind of evaluation because all else equal, one would expect the incidence of institutional change to be inversely related with system performance: the lower the performance of the system, the greater the probability of change. The extant institutional structure may not be the result of conscious institutional design (Thelen 2004), but its preservation is contingent on the consent or at least acquiescence of those governed by it. For business systems, the perhaps central variable mediating consent and acquiescence is economic performance. Low performance undermines the legitimacy of the system, increases the incentives for institutional change if higher output is attainable under a different institutional configuration, and weakens the relative economic power of those with a vested interest in the status quo (cf. North 1990; Oliver 1992). As institutions and the interests of those they govern diverge, actors become increasingly likely to spring into action and seek institutional change (North 1990; Seo and Creed 2002).