Despite American success in previous historical eras at imitating the technology and organizational structure of industrial rivals in other nations, there is mounting evidence that its capacity to absorb and adapt rivals' advantages to its own purposes has diminished in recent years. While these concerns are voiced with regard to a number of nations, the recent success of Japanese firms has been noteworthy and deserves special attention.

One reason Americans have been such poor imitators is that, until very recently, they were not even aware that there was much in Japanese industry that was worth imitating. Japanese economic competitiveness was, for a long time, dismissed as simply reflecting lower labor costs, which were regarded as decisive in certain industries. Later, Japanese success was dismissed as ephemeral, reflecting the ease of rapid growth on the part of a “mere imitator” following the innovative leads of other nations, particularly those of the United States.

More recently, as competition has become more heated and as certain American industries suffered heavily from Japanese imports, the successes of Japanese firms have been attributed to policies of “industrial targeting” orchestrated by the Ministry of International Trade and Industry (MITI), usually said to involve extensive government subsidies and coordination of import policies that unfairly tilted what should have been a “level playing field.”

We do not wish to deny that there may have been some truth in each of these beliefs at one point in time. However, an unfortunate consequence of such beliefs has been that they have delayed efforts to monitor and study the performance of the Japanese manufacturing sector with any care.