Japan’s Ambivalent Pursuit of Shareholder Capitalism

Could international financial capital impose shareholder sovereignty on Japan, the ultimate bastion of stakeholder capitalism? As the Japanese economy descended from boom to bust in the early 1990s, government and industry leaders called for a decisive move toward US-style shareholder capitalism, and increasing foreign share ownership exerted strong pressure to adapt corporate governance practices to Anglo-American norms. In practice, however, the government gave firms more options for restructuring but did not make them more beholden to shareholders. Firms on their part favored superficial adjustments to prop up share prices rather than fundamental changes, because they sought to preserve the strengths of their traditional business models. This article explains how marketplace developments, domestic political dynamics, and corporate strategies combined to produce the distinctive pattern of Japanese corporate governance reforms since the 1990s. It concludes with an assessment of the consequences of these reforms for managers, workers, shareholders, and the general public.