Reflections in a Distant Mirror: Japanese Corporate Governance Through American Eyes

For the last ten years, Japanese corporate governance has served as a distant mirror in whose reflection American academics could better see the attributes of their own system. As scholars came to recognize that the institutional characteristics of the American and Japanese systems were politically and historically contingent, other countries’ approaches became serious objects of study, rather than just way stations on the road to convergence. One learned about one’s own system from the choices made by others. The goal of this paper is to return the favor done for the United States by the Japanese governance system, by holding up an American mirror in whose reflection Japanese scholars may find insights into their own system. Part I provides a brief description of Japanese corporate governance as presented in the academic literature, highlighting how each attribute of its structure is said to interact in support of commitment and stability. Part II then depicts the American system, highlighting, in contrast, its distinctive elements of adaptive efficiency. Part III catalogues the challenges changing economic conditions pose for the Japanese system, and frames the questions an American mirror reveals about the Japanese system’s adaptive mechanisms. Part IV concludes with brief comments on the role of external monitoring as a mechanism of adaptive efficiency in a system of complementary attributes