As U.S. companies battle to gain access to Japan’s markets, two questions arise again and again: Do Japan’s keiretsu—long-lived, intimate relationships among suppliers and customers—unfairly block Americans from the Japanese market? And if so, will Japan change to rectify the situation? But these questions ignore a fundamental fact: keiretsu are evidence of Japan’s basic nature, and Japanese capitalism differs greatly from typical business practice in the West. Western business executives are familiar with cartels as informal—and usually illegal—agreements among companies to control prices and curb competition among themselves. In Japan, cartels are a way of life and keiretsu a structural vehicle that ensures their continued success.
A version of this article appeared in the July–August 1992 issue of Harvard Business Review.
