A Note on Comparative Advantage of Architectures

Author Name FUJIMOTO Takahiro  (Faculty Fellow)
Creation Date/NO. March 2005 05-J-013
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In the so-called "architecture theory," an anticipated proposition is that many Japanese companies, which have built up organizational ability in "integration-based manufacturing" during the postwar period, excel at manufacturing products featuring "integral architecture," and therefore such products account for a substantial portion of Japan's net exports. This paper examines the logic of the design process that lies behind this proposition. Specifically, by translating the problem of design into a simplified process of "solving simultaneous equations," thought experiments are conducted to analyze why Japanese companies are highly likely to develop greater (Ricardian) comparative advantage in the "cost of design" with respect to integral products under the supposition that Japanese companies are generally more efficient than their foreign counterparts in finding solutions through trial and error. The paper also points to the possibility that Japanese companies may not have comparative advantage with respect to products featuring highly complicated integral architecture, for which not only trial-and-error processes but also systematic knowledge are required.