Merger activity: solutions to Japan’s economic downturn?

Economic downturn in Japan has brought about an urgent need for Japanese companies to restructure. Throughout the postwar period of economic growth corporate Japan has been dominated by organizational structures based on relational ties, which have protected implicit contracts with employees and acted as a barrier to takeovers. The current disintegration of traditional business networks has brought about restructuring through merger activity, often with foreign firms, resulting in more market‐oriented corporate control structures. The success of these mergers will depend on incorporating market considerations, while retaining the advantages of alliance structures.