Japanese industrial firms have developed a system of subcontracting with suppliers that has played a major role in their world-wide success. This book explores the historical evolution of subcontracting in Japan and analyses it in current practice. It develops a theory of 'strategic dualism' that after nearly six decades of evolution is a new mode of contractual relations, based on principles of problem-solving collaborative manufacturing. This new form of contractual relations is supported by a range of institutional arrangements that drive prime contractors and subcontractors towards continuous improvement in product quality and cost reduction. It argues that this system is possible in a range of cultures different from Japan.