Innovation | Papers

Leveraging Japan's "old economy"

Those predicting Japan’s decline overlook one of its greatest resources: its large, established firms and the model that produced them. With the tribulations of Panasonic, Sony, and others in the headlines, this claim may seem to be dubious and to run counter to the many efforts underway to increase the role of start-up firms and the system that created them. However, almost any country can produce start-ups. Japan lags behind many of its regional competitors at doing so and will continue to do so for years. But, few of Japan’s rivals can leverage the creative power of entrepreneurial firms with the stock of established companies and stable institutions that Japan has developed over the last several decades. The Open Innovation paradigm, popularized by Henry Chesbrough in his book of the same name, suggests how to leverage Japan’s “old economy” with the “new economy” it hopes to create.

Based on my paper, "Capturing Japan’s strengths through open innovation [Open Innovation de Nihon no tsuyomi o ikasu]”, Hitotsubashi Business Review, 2012, 60(2): 42-55. View and download

Using open innovation to leverage Japan’s strengths [Open Innovation de Nihon no tsuyomi o ikasu]

Japan’s challenges are well-known. The so-called “Lost Decade”, demographic imbalances and the rise of new competitors have lead many to write-off Japan. The triple disasters of 3/11 merely served to extenuate many people’s negative predictions for Japan’s future. This article will argue that—while Japan’s challenges are real and severe—such gloom is not necessarily warranted. In doing so, it will build on existing arguments that Japan must become more entrepreneurial. However, it will deviate from the common narrative by stressing that some of the very institutional and business factors blamed for Japan’s current difficulties can, in fact, be become sources of competitive advantage for Japan and Japanese companies if transformed by a shift to more open innovation. It does so in several steps. First, it briefly review several key challenges facing Japan. Second, it suggests that potential strengths are hidden among these challenges. Third, it suggests how open innovation can help leverage these strengths. I close by offering an example of how this might come about—the clean energy industry in the post 3/11 world.

Originally published in Japanese. English translation included. View and download

Technological overlap, technological capabilities, and resource recombination in technological acquisitions

The performance of technological acquisitions depends on the overlap between the knowledge bases of the target and acquiring firms. We argue this overlap is best viewed as two distinct constructs: target overlap, the proportion of the target’s knowledge the acquirer possesses, and acquirer overlap, the proportion of the acquirer’s knowledge duplicated by the target. Doing so simultaneously incorporates three drivers of value creation: acquirer’s absorptive capacity, knowledge redundancy, and organizational disruption due to conflict between the firms’ knowledge workers. Target and acquirer overlap have different, inter-related, effects on value created or lost from the target’s and acquirer’s technological capabilities. We also find that the low innovation quantity in acquisitions with low target overlap conceals an offsetting increase in the novelty and quality of innovations generated.

Sears J, Hoetker G. 2014. Technological overlap, technological capabilities, and resource recombination in technological acquisitions. Strategic Management Journal 35(1): 48-67
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