In this paper, I apply the theory of property rights, developed by A. A. Alchian and H. Demsetz, to the problem of economic organization, and show both efficiency and weakness of the Japanese business organization. The paper is organized into three parts. The first part briefly discusses the theory of property rights and applies it to the organizational issues relevant to firms. The second part analyzes economic organization in Japan, Germany, and The U. S. based on the theory of property rights and discusses both efficiency and weakness of the Japanese business organization in comparative perspective. The third part presents empirical data for verifying the consequences of the analysis.
