ABSTRACT
The management system adopted by large Japanese companies after the war rests on two pillars: a labour–management compromise and a financial agreement that created a stable corporate governance system. The compatibility that was achieved between the needs, desires, values and expectations of employees and management created the conditions for the creation of competitive advantages in a number of industries until the 1970s (Abegglen 1976). Afterwards, when growth naturally slowed down, pressure started to develop between the business environment and the management practices and Japan entered a period that Hasegawa (1996) described as one of ‘contrived’ compatibility. From that time on companies were obliged to adjust the management system to keep as much of the compatibility as they could within the changing business environment. However, it has become increasingly difficult over time and the business system seems to have reached its limits.
