The nature of the Japanese firm as a nexus of employment and financial contracts: An overview

Abstract

This article examines the nature of the Japanese firm as a nexus of employment and financial contracts and argues that it is structured somewhat differently from what the widely received agency model of the firm envisions. It summarizes the essential argument in the form of three duality principles. The first and second duality principles are concerned with the idiosyncratic and symmetric pattern of employment and financial contracts of the Japanese firm. The third duality principle posits that management decision of the Japanese firm is placed under dual control by financial interests and employees' interests.

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