In recent years, Japan's stock market has witnessed a significant reversal of fortune, overturning a prolonged period of stagnation and underperformance. The catalyst for this transformation is attributed to the embrace of a "halfway-pendulum" approach to stakeholder capitalism. This method has helped Japan effectively manage the balance between shareholder interests and the broader concerns of other stakeholders, such as employees, customers, and the community at large.

Historically, Japanese companies were renowned for prioritizing stakeholder welfare over shareholder returns. This approach fostered long-term stability and robust, community-focused business practices. However, it also contributed to financial inefficiencies and a lack of urgency in improving shareholder value, leading to decades of poor performance in Japan’s stock market.

Recognizing the need for a shift, Japanese policymakers and corporate leaders began reconsidering their strategies around 2019, inspired by the evolving global discourse on stakeholder capitalism. The halfway-pendulum approach was born from this strategic pivot—a methodology that neither swung entirely towards shareholder primacy nor stayed firmly rooted in traditional stakeholder-centric practices. Instead, it positioned itself dynamically at an equilibrium point, ensuring a balance that was responsive to market demands and stakeholder needs.

Under this framework, Japanese corporations started to adopt best practices in corporate governance, bolstering transparency and accountability to attract both domestic and international investors. This was accompanied by strategic initiatives aimed at improving operational efficiencies and embracing sustainable practices, which aligned with global investor demands for ESG (Environmental, Social, and Governance) criteria.

An example of this balance can be seen in the reforms undertaken by many leading firms. These changes included reducing cross-shareholding—which was historically used to cement business alliances at the expense of shareholder wealth—and enhancing dividend policies to return more profit to investors. Moreover, human capital strategies were reformed, ensuring that workforce welfare did not deteriorate amid the push for increased shareholder returns.

Anchored by these shifts, Japan's stock market embarked on a remarkable recovery journey. The Nikkei 225, Japan’s leading stock index, began consistently charting upwards, drawing attention from global investors who had long written off the region as a low-growth market. Analysts have attributed this newfound dynamism to the increased clarity in corporate policies and the strategic positioning Japan has taken in global markets, acting as an attractive hub for technology and sustainability investments.

Moreover, the cultural shift within Japanese corporate boardrooms has fostered an environment that values innovation and agility. Companies began prioritizing digital transformation and customer-centric models, ensuring they stayed competitive in a