The next supporting national institution to be examined is the employment and industrial relations systems of Britain and Japan. It is argued in this chapter that (i) there is a close parallel between customer—supplier relations and employment relations in each country (a point noted by Dore (1983, p. 472) and Aoki (1988)); (ii) the similarities are due to logical links underlying parallel historical developments in the employment and subcontracting systems; and, more specifically, (iii) the functional flexibility and stability of the workforce at both supplier and customer companies in Japan have enabled the development of ‘competence trust’ and ‘goodwill trust’ which are indispensable in OCR-type customer—supplier relations.

Analogy between employment relations and supplier relations

At the risk of oversimplification, this section presents a stylised characterisation of the parallel between ‘organisation-oriented’ employment relations and OCR-type customer—supplier relations in Japan. In doing so, the contemporary Japanese situation is contrasted implicitly with a combination of ‘market-oriented’ employment relations and ACR-type customer—supplier relations which are the norm in Britain.

Community and association

The Japanese enterprise is ideally a community whose members, both workers and managers, work towards a shared goal to make it prosper. Factors promoting a sense of community include the stability of the membership due to the practice of lifetime employment and internal promotion, the company assuming the responsibility for providing welfare for its employees, and the enterprise union which reinforces the idea that workers' primary affiliation is with the firm rather than with their occupational group.