Abstract: This paper examines the relationship between unions and the economic performance of firms in the Japanese manufacturing sector. Although the effects of trade unions on the enterprise has been the subject of substantial research over the past decade, this research has focused almost exclusively on Western systems of industrial relations and union organization. In this study, Japanese enterprise unions were found to be associated with significantly lower levels of profit, lower productivity and higher levels of capital intensity. These results challenge the commonly held views of a subservient and dependent union movement in Japan.