Innovation and Organizational/Management Reform

Author Name SANBONMATSU Susumu  (Senior Fellow)
Creation Date/NO. March 2005 05-J-003
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As Japanese firms faced the growth of the knowledge-based economy, this study began with the fundamental intent of providing them with a frame of reference for formulating strategies for innovation as well as organizational and management reform, along with pointers for human resources development. To this end, the analysis targets the electrical machinery industry. This industry was selected as typical, because it has been sharply affected by economic globalization, digitization of basic technology, and the shift of telecommunications technology to the Internet since the latter half of the 1990s. In order to consistently analyze the complex innovation activities and organizational and management reforms occurring in companies within the electrical machinery industry, the first step was to develop concepts for two key organizational capabilities: 1) organizational innovation and 2) organizational management and operation. Next, these two capability concepts were fitted into a general framework drawn up to position them within the broad overall processes for each corporate activity. Based on this general framework, case studies of three leading companies in the electrical machinery industry were conducted.

The results use the general framework to broadly explain that the complex innovation activities and organizational and management reforms undertaken at these three firms since the second half of the 1990s fell within the scope of the two capability concepts, providing evidence for the validity of those concepts. This study constitutes a first step toward further serious research in this field, and the author will be delighted if it provides reference material for future studies in related areas.

One point that became clear in the process of conducting the study was that if Japanese companies are to continuously build their capabilities in organizational innovation and organizational management, they need to make their own efforts to develop people who can innovate and lead. The government's FY 2005 tax reforms to promote investment in human resource development are a step in the right direction.