Japan | 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

Same rules, different games: Variation in the outcomes of "Japanese-style" supply relationships

This paper debunks the myth of a monolithic model of “Japanese-style” supply relationships and illustrates how idiosyncratic elements of an industry’s environment interact with a country’s institutional environment.Our understanding of Japanese supply relationships comes primarily from studying the automobile industry. This paper identifies three elements of the automobile industry that, although generally assumed to be widespread, are largely absent in the notebook computer industry, leading to a different pattern of supply relationships: a sizable pool of external suppliers; the feasibility of shukko and cross-shareholding to strengthen supply relationships; and the adequacy of these means to manage external supply relationships. This finding debunks the myth of a monolithic model of “Japanese-style” supply relationships and illustrates the importance of idiosyncratic elements of an industry’s environment on its supply relationships. View and download

The unreluctant litigant? An empirical analysis of Japan’s turn to litigation

This paper analyzes the rapid increase in civil litigation in Japan during the 1990s in light of existing theories of Japanese litigiousness. Using a unique set of prefecture-level data, it demonstrates that the 1990s increase in litigation is best attributed to two factors: the expansion in institutional capacity for litigation traced to procedural reforms and an expansion in the bar, and structural changes in the Japanese economy related to the postbubble slowdown in growth. The paper contributes to three literatures. First, it builds on earlier institutionally oriented research on civil litigation in Japan by John Haley and Mark Ramseyer by providing new data and detail about the institutional barriers to litigation. Second, it contributes to the literature on the relationship between economic change and litigation more generally. Finally, it contributes to the empirical and comparative literature on litigation rates by providing evidence about the determinants of litigation in one country. View and download

Liberalization and litigation: Evidence from Japan

This Essay examines the under-studied relationship between liberalization and litigation. Liberalization should lead to expanded civil litigation for four reasons: (1) new market entrants are less subject to informal sanctions and may have a greater propensity to go to court; (2) privatization transfers resources away from the state, expanding the number of transactions subject to civil law regimes; (3) liberalization reduces the government’s ability to resolve disputes outside the courts; and (4) liberalization leads to economic development, which is generally litigation-enhancing. We test these propositions using a unique dataset of prefecture-level civil litigation data in Japan during the 1990s. Using panel data, we find a small but significant effect of foreign firms on litigation.

Ginsburg, T., Hoetker, G., "Liberalization and litigation: Evidence from Japan", Washington University Global Studies Law Review, Vol. 8, 2009, pp. 303-315
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