A short explanation is that they set it up once after WW2 by copying from the US and Europe, but since then the countries they copied from got wise to the IP theft and copycat manufacturing and blocked the transfer of later tech and processes. So Japan is forced to keep up the old thing because it's the only way the know how to run. They couldn't modernise from within. The Japanese economy has many traits of a cargo cult. Their culture around office work, the suits, the drinking, the smoking, the "entertaining your clients with prostitutes", the over hours doing "dara-dara" (grunting and head-scratching in front of an open Excel sheet) just for show, etc. is all straight from the Mad Men era as well.