Network Broadening and Reinforcing for Facilitating Innovation: Value creation networks in the Japanese music industry

Author Name INOUE Tatsuhiko  (Faculty Fellow, RIETI) /NAGAYAMA Susumu  (Research Assistant, RIETI)
Creation Date/NO. November 2012 12-J-035
Research Project Research on the Interactions Between the Business Strategies of Excellent Small and Medium Enterprises (SMEs) and their External Environment
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This study shows empirical research regarding the value creation network as it relates to facilitating product innovation. What kind of influence does "network broadening" with new players or "network reinforcing" with existing players have on value creation and innovation generation? Furthermore, what kind of environmental change causes network reinforcing and network broadening? This paper attempts a network analysis of the Japanese music industry; a case considered to be at the forefront even in the contents industry, which has been receiving attention in recent years from movements such as the Cool Japan policy. We gave particular attention to the value creation network consisting of multiple players, each of whom possesses varying business models. Due to the differences in the method of revenue generation, it is predicted that, given the environmental uncertainty, relationship building would vary. The result shows that because of factors such as the differences in business models between music production related factors and the investment related factors in shared copyright, there are contrasting relationship building patterns in a context of environmental uncertainty. In addition, the study indicates that product innovation is stimulated through network broadening by the production related factors and that value creation is prompted by network reinforcing of investment related factors.