In 2000-2009, Japan recorded one of the lowest rates of entrepreneurial activity amongst the world’s leading nations. Entrepreneurs face many difficulties when starting their own ventures. Some of these difficulties include receiving loans from banks, the pressures of deflation, weak domestic demand, and tough competition within the country.

In Japan, personal guarantees are required for small business loans. There is a high rate of suicide among Japanese men who fail to repay personal guarantees. The reasons for these suicides are the shame when the business fails and the need to use life insurance funds to pay off debts so that the banks will not harass friends and relatives who have given their guarantees for the loans/debts. This shows their cultural desire to “save face.”

Most Japanese entrepreneurs are of the post-war era. The newer generation has not yet fully adapted to the idea of entrepreneurship. Another problem that stunts the growth of entrepreneurs is the lack of knowledge. Many Japanese entrepreneurs do not have the knowledge, training or motivation to start their own businesses. Classes are being started where those interested in entrepreneurial activity may enroll. These classes have given rise to the idea of what is known as “weekend entrepreneurship,” when people with regular, salaried jobs use their talents and hobbies for profitable ventures on weekends.

Due to the economic downturn that started in the 1990s, the Japanese government, as one of the key mechanisms to improve the economic condition, has promoted entrepreneurship. However, the lifetime employment and seniority-based wage system are major factors impeding Japan from becoming a truly entrepreneurial society. Though several policies have been implemented to promote entrepreneurship, very little change has occurred.