collapse of the bubble. These corporations suffered losses because of participation in arbitrage and high-risk investments (do Rosario, 1993). The securities markets in Japan collapsed in the wake of the deflation of the bubble (Rowley, 1992). The bubble was finally punctured when the Finance Ministry of the Japanese central government and Bank of Japan Governor Yasushi Mieno refused to prop-up the over-inflated asset prices any longer (Chandler, 1993).
Many of Japan's major companies were ill-prepared to recover following the collapse of the bubble economy. A major part of the problem was the structure and orientation of the Japanese economy. A complicating problem was the Japanese system of management (especially human resource management) that has served the nation so well prior to the development of the bubble economy.
Japan's Economic Structure and Orientationy
The Japanese economy functions differently to a significant extent from most of the developed Western economies. Such differences are most apparent in relation to supply, demand, market structure, and governmental regulation of and participation in the economy (Turner, 1994; Ito, 1993).
Demand may be considered in several contexts. In this discussion, demand is addressed primarily with respect to consumption. From 1969 through 1979, the average rate of growth attained by the Japanese economy was five-percent. Since the end of 1979, however, the Japanese economy has not attained a five-percent rate of growth for any full calendar year. In some years, Japan recorded no growth or negative growth (World Bank, 2005).
The Japanese economy is not as heavily consumption-oriented as is the American economy. Rather, the Japanese economy is oriented toward the export of a high proportion of the goods produced in that country (Ito, 1993).
Private consumption accounts for approximately 51 percent of Japan's gross domestic product (GDP), compared to about...