Japan represents a quintessential "network society" -- permeated by dense webs of formal and informal relationships across all areas of daily life, from the political to the economic. Yet as industrial activity continues to languish along many indicators in the 1990s, what was once considered a source of competitive strength is now viewed as an underlying weakness. Critics of "crony capitalism" in Japan (and the rest of Asia) charge that mutual backscratching has replaced the kind of hard-nosed business decisions needed to make economically efficient decisions about how to allocate capital, weed out poorly performing companies, and shift resources into more productive uses. Based on the forthcoming volume, "The Organization of Japanese Business Networks" (Cambridge University Press), this presentation evaluates these criticisms theoretically and empirically. It also considers efforts now underway in Japan in the area of keiretsu reform. Michael L. Gerlach received his Ph.D. in organizational behavior from Yale University and is currently associate professor at UC Berkeley's business school. His research is focused on cross-national studies of business organizations; entry strategies in foreign markets; strategic alliances, joint ventures, and new organizational forms; interfirm relationships and corporate strategies in Japanese business; business and public policies concerning international competitiveness; the comparative analysis of the institutions of modern market economies as they reflect social and cultural contexts.