V. Exploring New Systems for Innovation

• FUJIMOTO Takahiro, FF
• NOBEOKA Kentaro, FF
• OKUNO Masahiro, FF
• TAKIZAWA Hirokazu, F

In recent years, the impact of product and process architecture (basic design concepts) on industrial competitiveness and business strategy has become a focus of increasing interest. In order to incorporate the architecture concept in analyses of industrial competitiveness, it is essential to measure the modularity or integrality of architecture; as yet, however, there is neither an adequate method of measurement nor a firm theoretical foundation.

With this in mind, the research team aims to develop a theoretical formula for evaluating product architecture. In connection with this effort, it will
(1) characterize product architecture, production process, and corporate organization in terms of the design of coordinating mechanisms, and analyze the interdependence among these elements; and
(2) using selected products, devise a measuring system for product architecture and test it in a pilot study.

Analysis will focus on theoretical research, while incorporating knowledge drawn from existing surveys, field studies, empirical analysis, and so forth, where necessary.

• CHUMA Hiroyuki, FF

This survey and study will analyze the causes of the rapid decline in the international competitiveness of Japan's semiconductor industry since the 1990s from the perspective of economics. Methodologically, the emphasis will be on interview surveys of Japanese and foreign manufacturers of semiconductors, equipment, and materials.

From a technological standpoint, the semiconductor industry has grown increasingly complex, as seen in the dramatic rise in the level of automation accompanying the rapid technological innovation predicted by Moore's Law, as well as the problem of mutual interference between processes. Moreover, such complexity is exacerbated by increasing market complexity caused by the diversification and heightened sophistication of consumer preferences - a result of both increasing affluence and the globalization of markets attending the rapid development of transport and communication systems. Faced with such complexity, Japan's semiconductor industry has revealed various organizational limitations and has seen its strength decline in many areas - not only research and development but also design, production technology, and manufacturing. Furthermore, the same trend is becoming apparent even in the areas of management and sales.

This survey and study will elucidate the factors and systems underlying these organizational limitations and explore possible solutions.

• KODAMA Toshihiro, SF

Although recent developments suggest a trend toward the return of manufacturing facilities to Japan, such manufacturing requires an industrial structure that can generate high value-added products on a continuing basis in order to overcome the tendency toward hollowing out of industry and to revitalize the Japanese economy over the medium and long term.

In the region called TAMA (Technology Advanced Metropolitan Area), located in the western part of the Tokyo metropolitan area, there are a lot of product-developing small and medium-sized enterprises (SMEs), as well as R&D facilities of large corporations and universities of science and engineering. The TAMA Association, established to take advantage of such industrial concentration, is performing the most advanced activity among the projects being carried out under the "Industrial Cluster Project" promoted by METI, with activities designed to promote a wide range of university-industry partnerships and to support new businesses.

By shedding light on the industrial cluster formation and innovation mechanisms underlying TAMA, the project aims to make positive suggestions for the formation of industrial clusters in other regions of Japan.

• KODAMA Fumio, FF
• TAMADA Schumpeter, FF
• GOTO Akira, FF

Current policy studies do not include sufficient quantitative scientific analysis of the scientific and technological systems for generating technological innovation and new industries. This is one reason why it is difficult to formulate a comprehensive and strategic policy for industrial technology. This study will carry out a quantitative analysis by using Japanese patent and other data in order to achieve an overall understanding of the knowledge interface linking science, technology, and industry.

In this way, the study is expected to deepen understanding of the relationships between research at universities and public research facilities, innovation in industry, and the systems (including government policy) designed to promote them. It will also suggest directions for the formulation of industrial-technology policy in Japan.

• MOTOHASHI Kazuyuki, FF

As competition in research and development heats up internationally, Japan's major corporations, once characterized as deliberately self-contained, have been actively collaborating with various outside entities (forming external partnerships), including other companies, universities, and public research facilities.

This project will carry out a quantitative analysis of the relationship between the creation of such external partnerships in corporate R&D and performance, using micro data from RIETI's Survey of External Partnerships for Research and Development. It will also carry out a comparative analysis using data from China, which has been pursuing reform of its innovation systems based on external partnerships.

• YASUDA Takehiko, FF
• TACHIBANAKI Toshiaki, FF

In many industrialized countries, scholars have been reappraising the role of small and medium enterprises (SMEs) and start-ups as engines of economic revitalization since the 1980s. In other advanced countries, numerous analyses have been carried out using data from individual companies to assess the contribution of small businesses to economic revitalization, and these studies have had a major impact on policymaking. In Japan, however, there have been very few such analyses.

Accordingly, this project will use micro data from questionnaire surveys conducted by the Small and Medium Enterprise Agency to carry out an analytical study addressing such policy-related issues as the decisive factors affecting start-up rates, characteristics of SMEs that contribute the most to employment, and the factors behind SMEs

• Andrei HAGIU, F

China has experienced a considerable influx of knowledge and technology as a result of direct investment from other countries, but until very recently most of the value added was extracted by foreign investors. Recent signs, however, point toward a reversal of this trend and the evolution of the Chinese economy from a mere imitator and importer to a creator and exporter in several key high-technology sectors. The most important such sign is the emergence of several highly successful Chinese companies that are competitive not only domestically but also internationally: Lenovo (personal computers), Huawei (communications and digital equipment), Red Flag (software), the Beijing Genomics Institute (biotechnology).

Economists and industry analysts are remarkably divided in their opinions regarding the significance of these developments. Skeptics point to the inadequacy of China's economic institutions. In particular, a well-functioning legal system that protects intellectual property rights (still not in place in China despite the country's accession to the WTO) is essential to successfully encourage innovative activities in the aforementioned sectors. Optimists, on the other hand, point to the strong and clear commitment of the Chinese government to develop internationally competitive high-technology industries at all costs illustrated, for example, by its focus last year on the country's successful space program.

Consequently, there are two key questions the project will seek to answer. The first is whether the signs of climbing the technology ladder are a reliable indicator of a general trend or mere exceptions. The second is what the implications are for the competitiveness of Japan's counterparts, in particular in industries that comprise the digital economy? Are there win-win possibilities to be exploited or not? In other words, is China a complement or a pure competitor to Japan in these sectors?

• Andrei HAGIU, F

This project is a study of high-technology industries organized around platforms that allow consumers to buy, access, or use a wide variety of products.

Such platforms and the markets in which they function are referred to as multisided markets. One example of such a market is found in the video game industry, where the game console is the hardware-software platform that must appeal to the producers of game software as well as to the consumers who play them. In this market, most of the game software is provided by third-party or independent producers. For the platform to succeed, it must be priced so as to attract both consumers and game manufacturers.

This type of industrial organization has become particularly important in the industries that constitute the core of the "new economy," namely, computers, consumer electronics, and communications equipment, including cell phones. The research will focus on analyses using case studies and economic models. In terms of empirical analysis, it will carry out case studies and model-based analyses that can aid in understanding the unintuitive business aspects of software platforms. With regard to policy, it will again perform model-based analyses and conduct a survey of actual and possible policies directed at these industries.

One major goal of the project will be to provide information that may be useful in the drafting of industrial policy aimed at improving the profitability and international competitiveness of Japan's household appliance industry, an undertaking currently under way at the Ministry of Economy, Trade and Industry.

• TOYA Riina, Research Associate

The 1990s, commonly referred to as Japan's "lost decade," can also be regarded as a period of transition in Japan's domestic consumer industries, as suggested by American Journalist Douglas McGray's much-discussed 2002 article "Japan's Gross National Cool" in the journal Foreign Policy. As manufacturing industries, which had based their strength on Japan's technological edge, found their prices undercut by goods from the rapidly developing countries of East Asia, the spotlight quickly shifted to the economic potential of such content-oriented industries as manga and video games, as well as goods with a special emphasis on design. Even so, there has been little research into the systems by which such "soft power" is reproduced.

This study will analyze the process of building brand value through the strategic use of globally effective design and technology, and examine the creative organizations charged with this function, focusing on the world's largest and oldest in-house design office, the Advertising Division of Shiseido, which is ranked fourth in the global cosmetics industry in terms of sales.

• SANBONMATSU Susumu, SF
• HISATAKE Masato, SF

In hopes of offering a new perspective for the formulation of innovation strategies, managerial and organizational strategies, and human-resource development policies that take advantage of the organizational capability of Japanese firms, this project will conduct a study based on the evolving relationship among production, knowledge, and information technology in an increasingly knowledge-based economy and grounded in the experience of Japanese business since the 1990s.

Specifically, the study will attempt the following:
(1) With respect to innovation, formulate a concept of "organizational innovative capability," and with respect to organizational change and human-resource development, formulate a concept of "organizational management and operational capability"; and
(2) focusing on the electric industry, the sector most affected by the shift to a knowledge-based economy, test the validity of these concepts using an overall framework that incorporates these capabilities to analyze companies selected for case studies.