Digitalization is not only a technological matter. Institutional change is required to increase its benefits and mitigate its destructive effects. These are key findings of a new research article by DIJ economist Sébastien Lechevalier and Saori Shibata (University of Sheffield). Their open access article “Hampered digitalization: Institutional failure and new instability in Japan” (The Japanese Political Economy, online first) examines how business, labor, and the state have adapted to digitalization, highlighting the critical role of national institutions in shaping how societies experience this global shift. Drawing on regulation theory and considering the case of Japan, the article analyzes the interplay between competition, wage-labor relations, and the state. It argues that Japan’s response to digitalization has reinforced neoliberal restructuring without establishing a new mode of regulation. Consequently, instead of reconciling the competing interests of labor, capital, and the state, current institutional adjustments to digitalization in Japan have generated further instabilities, hindering the realization of any growth potential.