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Hit by the effects of deflation, Japanese business environment is witnessing now severe changes. In response to these changes, Japanese enterprises have to reconsider the basis of their managerial practices. The present research highlights these practices by emphasizing the SME sector, which represents 99.2% of all Japanese enterprises, employs 64.8% of the nation's workforce, and achieves 55% of the total added value. From this perspective, attempts are made throughout this study to shed light on key features of the required modifications in regional SMEs. These modifications are required in the network structure profile, inter-firm relationship character, and the form of system flexibility. In addition to revealing the desired modifications in SMEs, this study is also concerned in indicating the mechanism of executing these modifications empirically.