Worn out and resigned to its dwindling status, Japan Inc. is said to be quietly shuffling off the world stage. But don't tell that to Kenji Hasegawa, who is ready to conquer the global auto market with his nifty innovation, a bolt that doesn't need a nut. Or Chiaki Hayashi, who makes millions teaching big-name companies to be creative again.

As different as they seem - Hasegawa runs auto-parts supplier Lock'n Bolt Corp. and Hayashi is a rare woman to help found a Tokyo startup - both highlight the potential of innovation and entrepreneurship in a nation that is often typecast as facing an unrelenting decline.

Of the decline, there is plenty of evidence.

Long in the doldrums after its 1980s bubble economy burst, Japan has been eclipsed by China as the world's second-biggest economy. Many of its consumer technology companies have been overtaken by South Korean competitors and are racking up huge losses. The number of young Japanese choosing to study abroad has dropped. And while Facebook lured hundreds of millions of members worldwide, management at Japanese social network Mixi never looked to grow overseas.

The naysayers claim Japan is stagnating, only looking inward and squandering advantages such as its well-educated workforce, low crime rate and a rich history of technological prowess. But even while acknowledging big challenges that include its swollen national debt and rapidly greying population, Japan Inc.'s boosters say it can still rekindle the sparks of ingenuity that in the past delivered network-connecting mobile phones years before the arrival of smartphones, and made "instant noodles" part of the global diet for the last four decades.

First though, Japan must recognize that what ails it is at least partly in the mind.