This view is somewhat biased by what games are small enough to bring over to NA/EU conventions to sell and pitch, and the lower price range of games publishers are willing to take a chance on. This in turn created some expectation that "good Japanese games are small" and became self-reinforcing in terms of what NA/EU publishers were willing to pick up.

Yes, some designers like Pawn and Seiji Kanai keep working mostly in that small-box style (not unlike lots of NA/EU designers), but e.g. Hisashi Hayashi's or Yasushi Kuroda's games weren't small "because of Japan", they were small because they didn't have money to make big ones!