Going Soft: How the Rise of Software-Based Innovation Led to the Decline of Japan's IT Industry and the Resurgence of Silicon Valley

Abstract

This paper documents a shift in the nature of innovation in the information technology (IT)industry

WHY HAVE R&D-INTENSIVE INDUSTRIES IN JAPAN EXPERIENCED A RECENT DECLINE IN PERFORMANCE? EVIDENCE FROM PANEL DATA OF LISTED FIRMS IN JAPANESE R&D-INTENSIVE INDUSTRIES

“…Branstetter and Nakamura (2003) note that the Japanese firms embedded in US technology networks enjoy a relatively higher level of R&D productivity. 20 Arora et al (2013) find that Japanese IT firms had weaker innovation performance in the 1990s than those in the United States because of a limited supply of human resources with software knowledge and skills. 21 New management techniques and management practices are also thought to be important complementarity factors of R&D capital (Dudley, Moenius 2007).…”

Global value chains and the lost competitiveness of the Japanese watch industry: an applied business history of Seiko since 1990

“…According to Ozawa (2007), the flying-geese theory explains the gradual transfer of production to neighbouring East Asian nations, a move that forced Japan to innovate permanently and reposition constantly in more value-added products. Several scholars have also stressed the difficulties that firms confront in shifting product architectures from the integral model to modularization (Gawer and Cusumano 2002;Fujimoto 2004) and new innovation strategies in the American IT industry (Arora, Branstetter, and Drev 2013).…”

Comment on “Determinants of International Research Collaboration: Evidence from International Co‐Inventions in Asia and Major OECD Countries”

“…Arora et al . () show that in fact, software patents account for only 6% of overall Japanese patents, but 24% of Japanese patents issued in the USA, which is higher than the 17% share prevailing among American firms. This is to say that Japanese managers seem to understand their problem and use international collaboration to compensate.…”

“…Specifically, Arora et al . () demonstrate that software patents have become an increasingly prominent component of patenting overall and that this sector is associated with some distinctive patterns.…”