It was pride. Kalinske also wanted to manufacture hardware in the US to cut down on costs and to ensure that inventory got onto store shelves as fast as possible, and SOJ said that they were the only ones who made hardware. The only reason SOA got to make games is because they focused on the genres that the Japanese know nothing about (American sports) or the ones that didn't interest them.
It was quite literally a case of cutting off the nose to spite the face.
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