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"The Japanese firm is often regarded as a community of the employer and the employees, who are its constituents or stakeholders. However, a community is, generally speaking, a social organization that is not so dynamic in its economic performance. Why and how does the Japanese firm have both a community-like nature and a highly competitive nature at the same time? That is the main question I try to answer in this paper. There are opposing views on this point. Some attribute the high efficiency and competitiveness of the Japanese firm to the hard work of employees under the strong control of management, while others emphasize the role of long-term employment and common interests. After examining these alternatives, I propose a different approach. The Japanese firm, I argue, operates like a community, affording its employees job security and welfare, but the market forces it to be more and more efficient and competitive. Under the current market labour market structure, workers who enjoy employment security in their firm cannot but make efforts to sustain their company in market competition. What drives the Japanese firm, then, is not management power nor a coalition of workers and shareholders, but the process of capital accumulation by the company itself, which is necesary for inter-firm competition in the market. So-called Japanese employment practices are now undergoing considerable change, and the future of the firm-community is uncertain."