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The tragedy of the English-teaching company Nova is a gripping and revealing one. That students should have their fees returned and teachers and staff be given their salaries should go without saying. That the company had serious management and leadership problems should be equally obvious. Still, the Nova episode is reason to consider several aspects of Japanese society that shaped the rise and fall of one of Japan’s best-known companies.

Before the revelations of so many problems, Nova seemed a clear example of the best side of Japanese economics. The company started with little more than rent for “ekimae” (station-front) office space and a cute pink bunny icon for advertising. That a multibillion yen business could still be built from the ground up seemed to show that Japan’s system was not too rigid to allow innovation. Yet, the sad ending shows that the system is not so lax that improprieties can continue forever.

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