Can Japan Compete?

Michael E. Porter, Hirotaka Takeuchi, Mariko Sakakibara, Can Japan Compete?, London: MacMillan Press Ltd., 2000. 208 pp.

Japan can compete if it chooses to compete by moving "beyond just quality competition to competing on strategy and innovation", according to Porter et al. (p. 189). What is, of course, implicit in this statement is that change is needed in Japan, and it will not take place automatically. The authors in essence argue that Japanese companies should learn to develop distinctive strategies, and if mindsets change toward a new approach to competition, Japan has the capacity to move rapidly again.

To be able to outline the key parameters of a 'new Japanese model', which is considered inevitable to revitalize the Japanese economy, the authors start with an analysis of Japan's postwar economic development in Chapter 1. Their central argument is that, in contrast to what is often assumed, Japan's problems are rooted in microeconomics, in "how the nation competes industry by industry" (p. 2). The emphasis on industries and firms in explaining competitiveness, when considered together with the provocative title Can Japan Compete?, invites a discussion of the national competitiveness debate. It is useful here to remember that the debate had largely intensified following the publication of Krugman's (1994a) article "Competitiveness: A Dangerous Obsession"1. Krugman had severely criticized the proponents of national competitiveness by stating that competitiveness is only meaningful at the firm and industry level, and when applied to a nation, competitiveness is nothing more than 'a fancy way of saying productivity'. Although the title Can Japan Compete? seems to suggest otherwise, Porter et al.'s approach is, in fact, in the same line as Porter's 1990 book The Competitive Advantage of Nations, where he argued that we must abandon the whole notion of a 'competitive nation' since no nation is competitive in everything. Nations, instead, are relatively more competitive in certain groups of industries but not in all. Then, to understand the competitive structure and potential of a nation in full, one should focus on industries and firms and the characteristics of the micro-economic business environment, which shapes the context that allows firms to gain and sustain competitive advantage.

After identifying Japan's problem essentially as a micro-economic one, Chapter 1 introduces the basic rationales regarding...