This thesis utilises the economic sociology concept of embeddedness as the theoretical underpinning to provide an alternative perspective to traditional explanations of economic growth. In general, the advantages of social embeddedness have been the main focus in the literature on the topic. The main purpose of this study is to explore, with special reference to Japan, how embedded relationships could both enable and hinder growth. The study examines the operation of embedded ties in four key areas: inter-firm interaction with an emphasis on the auto-industry; embedded relationships within the financial sector; networks in the internationalisation of firms and embeddedness between government and business, including a case study of the construction industry. It finds that while embedded ties have several advantageous facets, they also have the potential to be an impediment to growth, flexibility and adaptability to change. Network ties can expand and become so rigidly structured, especially in a Confucian society like Japan, as to become obstacles particularly in the face of changing economic circumstances. They can atrophy. This finding led to the development of the concluding notion of "atrophied embeddedness".