The end of the model

Not long ago Japan was seen as offering both the fully industrialized and the newly industrializing world a viable model for organizing work. Following the OECD's two reports on Japan's industrial relations in the 1970s, Dore's comparative study praising the running of Japanese factories compared with the way the British managed theirs (1973), and Vogel's popular volume drawing attention to Japan's across-the-board success (1979), a series of volumes applauding Japanese management practices appeared at the beginning of the 1980s. “Japanese-style management” became a key referent in a new literature on corporate culture in the 1980s. Japan seemed to be going from strength to strength as its economy entered what have become known as the bubble years in the late 1980s.

By 2003, however, the awe engendered by Japanese employment practices had given way to skepticism. The bubble years were followed by recession. The management of many firms seemed to be buffeted not only by forces attributed to globalization, but also by unforeseen changes within Japanese society, especially in terms of the labor supply it had previously taken for granted. Unemployment more than doubled in just over a decade, and the growth rate fell from over 5 percent into negative territory. While only one firm on the upper stock market had gone bankrupt in 1985 and none had done so in 1989, twenty-nine did so in 2002.