From the Preface
“I am honored that there is sufficient interest in my work in Japan to justify a Japanese translation of Dynamic Capabilities and Strategic Management. Although there are important differences between the business contexts in Japan and the United States, Japanese firms must function in the same turbulent environments as firms in the United States or Europe. The dynamic capabilities framework is not tied to a specific set of operational or institutional circumstances. Instead, it is designed to help top management analyze, respond, and even shape these environments in order to build sustainable competitive advantage. For this reason, the logic of dynamic capabilities should apply as much in Japan as elsewhere.
“I write after what has been a difficult time for the world economy as a whole, but especially for Japan, which experienced the compound tragedy of a major earthquake, a devastating tsunami, and a nuclear accident. These events led to a loss of life and dislocation, but, at the same time, they offer hope for renewal.
“One of the tasks of renewal that Japan faces as it moves forward is to rethink the regulations and norms for corporate governance. The Fukushima Daiichi nuclear disaster may have resulted in part from a failure in enterprise risk management, which is one aspect of governance. Problems at companies such as Kyushu Electric, Olympus, and Daio Paper reflect lapses in other dimensions of governance that were brought to light by the subprime mortgage crisis in the United States and Europe and by a string of U.S. accounting scandals such as Enron, WorldCom at the turn of the century.
“The stakes in any reform effort are much more than just monetary. Bad theory produces bad policy; and bad, poorly informed policies can weaken an economy.
“This preface expands on the brief discussion of corporate governance in Chapter 1. I begin by contrasting three conceptions of the business enterprise, particularly as they concern its governance. The first two are the agency and contracting perspectives. These dominate most discussion of the governance of corporate activities (see Shleifer and Vishny, 1997, for a review). The third perspective is that of capabilities, which includes dynamic capabilities.
“The differences between these paradigms have important public policy ramifications. As discussed in the later sections of the preface, juxtaposing them can help illuminate the appropriate degree of regulation and oversight that should be imposed on managers and directors. Insights from all three can also inform corporations as they reconsider their own governance structures…”