Proficiency and Real Options : Role of Trust in Japanese Corporate Culture

Japanese firms prioritize trust and harmony, fostering long-term relationships to enhance productivity. This paper explores the role of “trust” and “skill formation” in Japanese corporate culture through real options theory. Skilled investment, which builds unique employee capabilities, is examined under uncertainty, emphasizing the importance of timing. We explain the surge in skilled investments during Japan’s 1980s bubble economy and rise in informal employment thereafter. By highlighting trust and long-term employment as central to Japanese productivity, we provide insights into the interplay of uncertainty, investment decisions and corporate growth strategies.