Japans technology support system has played a crucial role in developing firms technological capability and stimulating their innovation. How has it been done, and why is it effective? The research findings presented here show that what has worked best in Japan is inter-firm cooperative learning, which requires the support of public technology institutions to promote cooperation, disseminate technology, and facilitate innovation. Among the many books published about Japanese technology policies and corporate management, this is the first to show definitively that cooperative learning is important in a wide spectrum of firms, whether or not they are keiretsu-affiliated. With a caveat on the limitations of the Japanese system from an institutional perspective, the countrys techno-governance structure is revealed to be more effective in assembly-oriented industries than in those that are basic-science oriented and employ rapidly changing technology.