The Japanese economic crisis of the late 1990s has demonstrated the inefficiency of macroeconomic measures applied to improve the situation. It has also proved that the microeconomic conditions are very important as well, and they determine private sector's competitiveness. Having studied various hypotheses of the Japan's slump the author focuses on the institutional theory which appears the most convincing. Thus, the specific features of the Japanese economy have been indicated. They include mechanisms of administrative guidance (amakudari) - on the part of the government; employee capitalism and cross-shareholding - on the part of business community; and the convoy system and keeping shares by banks - on their part. The author analyses these phenomena and their role in the decrease of competitiveness in this country.