Trust in Japanese Interfirm Relations: Institutional Sanctions Matter

Trust is a critical component of interfirm relations, and scholars have pointed to Japan as an environment where trusting relationships flourish. In looking for environmental characteristics important for enabling and sustaining trust in Japan, we propose that a critical role is played by a combination of institutional and societal sanctions. Examination of Japanese subcontracting practices allows an elaboration of these sanctions and their interplay. We recommend further focus on sanctions in exploring interfirm trust issues.