A number of the critical environmental factors that have favored Japanese industries during the postwar period have shifted over the past decade and a half. Other nations are seeking to build industrial and technological strength by utilizing approaches similar to Japan's, with some measure of success. Japanese government and industry continue to make adjustments aimed at increasing national capabilities to produce fundamental innovations and establishing new mechanisms for tapping foreign capabilities.


The foundation for Japan's assimilation of technologies from abroad for rapid industrialization was clearly present in 1853, when the West's challenge to the isolation policy of the Tokugawa shogunate appeared in the form of Commodore Perry's ''black ships." Decentralized political power and economic competition between feudal domains led to the emergence of a large class of skilled crafts workers dispersed throughout the country and receptive to applying new innovations. 1 Further, Japan had developed a complex commercial economy prior to industrialization, including a national distribution system for marketing a wide variety of goods between numerous urban centers. 2 The national security crisis brought on by the black ships helped consolidate support for the importation of foreign technologies and industrialization to meet the Western challenge. 3

Under the government of the Meiji Restoration, established in 1868, regional programs to import and assimilate foreign know-how were enhanced by national-level initiatives to promote the development of modern industries central to arms making and military capability through government investment and ownership. 4 Foreign experts were typically hired during the start-up phase and then dismissed when the necessary expertise had been absorbed by the Japanese. From the early 1880s, these companies were sold to entrepreneurs, with several developing into zaibatsu (industrial-financial groups), which played an important role in Japan's industrial and technological development. In addition to its direct role in launching enterprises, the central government established engineering faculties in the new imperial universities and other educational institutions to train engineers in the new techniques.

Japan's industrial and technological development accelerated through the early twentieth century. Extensive importation of foreign technologies continued, with important transfers occurring through the formation of joint ventures and other direct investments by foreign multinational corporations such as Western Electric, General Electric, and Ford Motor Company. 5 At the same time, the Japanese industrial sector was growing and evolving rapidly, with the spread of modern management and the emergence of large-scale corporations. 6 The zaibatsu, such as Mitsui and Mitsubishi, developed from an initial focus on nonmanufacturing industries into highly diversified conglomerates. Non-zaibatsu manufacturers, such as Hitachi, Takeda Chemical Industries, Kikkoman, and Ajinomoto, grew up in urban and rural areas. Partly


Tessa Morris-Suzuki, The Technological Transformation of Japan: From the Seventeenth to the Twenty-First Century (Cambridge, U.K.: Cambridge University Press, 1994), p. 54.


W. Mark Fruin, The Japanese Enterprise System: Competitive Strategies and Cooperative Structures (Oxford, U.K.: Clarendon Press Oxford, 1992), p. 65.


Richard J. Samuels, Rich Nation, Strong Army: National Security and the Technological Transformation of Japan (Ithaca, N.Y.: Cornell University Press, 1994), Chapter 2.


Morris-Suzuki, op. cit., pp. 62-66, and Samuels, op. cit., Chapter 3.


Mark Mason, American Multinationals in Japan: The Political Economy of Japanese Capital Controls, 1899-1980 (Cambridge, Mass.: Harvard University Press, 1992), Chapter 1.


Fruin, op. cit., pp. 76-77.

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