A critical examination off the Japanese system of innovation reveals a number of interrelated factors that have inhibited competitiveness. There are three key issues that emerge:
1) Difficulties in standard based markets
The Japanese traditionally targeted mature industries where overall industry standards had already been defined by their early developers. Japanese manufactures were thus able to operate with the existing industry standard as a given. Then they were free to engineer multiple products within the single standard, with inremental improvements in product appearence, function, quality, and providing range of features.
2) Fit of technology with domestic market
Japanese firms have succeeded when able to use the domestic Japanese market as a springboard to international competitiveness. Products like Sony's Walkman were tested-and then went on to global standards.
3) Applicability of the Japanese "lean" production model
The Japanese lean production system was an outgrowth of longstanding constraints on energy and space. A manufacturing system with all redundancies removed was best achieved by Keiretsu-style ofr organization. Economics of speed organize production encouraging a modular firm structure in which relatively small start up firms, focusing on a limited set of core competencies, are invovled in constantly shifting alliances and collaborations. This, the classics Silicon Valley firm structures has been outstanding in providing success in standards-based markets.
Development is about finding place in the global economy, not about convergence or the suppression of difference. Japan have experienced profound difficulties in developing top levels of competitiveness in the other's area of greatest strength This is an expression of those aspects of each country's political economy most deeply rooted in cultural and historical factors that defy easy transfer, and impart a set of strengths and weakness to national production capacity that can be changed or copied only with the greatest difficulty.
