Book Review: Can Japan Compete?

Can Japan Compete?
Michael E. Porter, Hirotaka Takeuchi, and Mariko Sakakibara

By Daniel Gabai

Can Japan Compete?, by Harvard Business School Professor Michael Porter and his colleagues, Hirotaka Takeuchi and Mariko Sakakibara, seeks to explain the reasons for the market failure that Japan experienced in the mid-1990s.  The book analyzes Japan’s economic system from the end of World War 2 until the present.  It attempts to explain how the Japanese model – an economic system that was historically more egalitarian and more efficient than the capitalism of the West – did not actually achieve success through its practices of total quality, continuous improvement, and “just-in-time” inventory.  Rather, these practices, coupled with Japan’s “government-as-active-economic-director”, were responsible for many Japanese companies reaching a point of zero-sum-competition, where no participants were able to achieve profitability.

Can Japan Compete? shows how the Japanese government has had a surprisingly small role in many of its nation’s most internationally competitive industries: cars, video recorders, robotics, cameras, and video games.  Conversely, the book shows how there was extensive government intervention in the uncompetitive industries of chemicals, software, aircraft, and financial services.

Porter and company attempt to illustrate how the United States learned the wrong lessons from Japan about government policy.  Through its thorough review of the Japanese economic system the book offers a word of caution to American corporations, so they perhaps can avoid a similar fate of economic decline.  Can Japan Compete? concludes with Japan’s attempts to fix its economic mistakes, and thus ensure a successful position in future economic markets.

Can Japan Compete? is a well argued and successful plea to businessmen everywhere not to make the same managerial and structural mistakes that were made by Japanese businessmen.  Additionally, it proves to be a thought provoking and enjoyable history of the world’s second largest economy.

You can order this book on line right now.

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