Abstract
This paper focuses on how “Japanese technology” was formed in the Japanese machine tool industry, and presents how Japanese machine tool builders competed in R&D and the innovation process in the domestic and international markets. During the competition for the innovation of computerised numerically-controlled (CNC) tools, drastic changes occurred in the ranking of individual firms. Prior to the transformation, the traditional “Big 5” companies occupied the largest market share. After the innovation, however, the “Big 3” firms which had not been big in size at their origins increased their market share. This paper explains how this change stemmed from different attitudes towards R&D and innovation.
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Notes
Among them, two were with US firms, and two were with French and one with German firms. The FDI was strictly regulated by the government at that time.
One example is Toyota’s grinding machine which was licensed by the French firm Cazeuneuve S.A. Similar examples are found in other industries. The nylon fishing net of Toray Industries which introduced the patent of Dupont was said to have been of better quality than Dupont’s original.
This attitude of Western firms at that time contrasts greatly with that of current Japanese firms, which are reluctant to offer technology, since they are afraid of the so-called “boomerang effect”.
These days, inventions or innovations are carried out mainly by firms with abundant R&D investment. They still depend on personal factors such as skills and experience. See Jewkes, Sawers, and Stillerman (1969).
Saxonhouse (1986) correctly recognises this upheaval of rank order, but does not offer a reason for its occurrence.
As shown in Table 3, in 1970, machine tool builders such as Hitachi Precision Works, Okuma, Toyota Machine Works and Washino Machine engaged in producing NC devices by themselves. In 1990, only Okuma produced its own NC devices. All other companies retreated from this market and have been making their purchases from electronics firms such as Fanuc. For further details, see Table 5.
Table 5. Alliances in 1996 There was another reason why the US machine tool industry lagged behind Japanese firms. M&A has been popular in the US. The machine tool industry was a good target for M&A for other firms outside this industry. This hindered the long-term strategy for machine tool builders to develop NC machine tools.
According to an empirical study by Tsuji, Miyahara and Ishakawa (1999), the growth of the machine tool industry since 1970 can be mainly explained by exports. Prior to 1976, the demand for NC machine tools was promoted by domestic investment; after 1976 it was automobile production that most influenced the demand for NC machine tools.
See Komiya et al. (1988). The Korean government, however, has a different strategy; namely, it prohibits the imports of certain types of machine tools in order to protect its own industry. This prevents, however, the users of machine tools such as automobile assemblers from gaining access to better foreign machine tools.
Japanese machine tools in the beginning failed to obtain a good reputation from their users. S. Honda, the founder of Honda, was among those who insisted on spending funds to subsidise imports of foreign machine tools. The production of prototypes and their demonstration through the use of public subsidies offered a good opportunity to display their capability.
See Sawai (1990) for more details.
Kagami (1997) discusses the role of kosetsushi in more detail.
In the East Asian economies, it is said that research institutions of the government are separated from private factories. Engineers with American PhDs in engineering are reluctant to collaborate with workers at the job-shops.
Odagiri and Goto (1993) label this characteristic as R&D-production-sales linkages.
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Acknowledgements
The author is indebted to Prof. H. Patrick (Columbia University), Y. Ito (Tokyo Institute of Technology), Mr. M. Ishikawa, and participants of conferences held at Nang Yan University, Singapore, and American University in Puebla, Mexico who kindly provided helpful comments and suggestions for the earlier version of the paper. Special thanks are also due to Mr. M. Yamamoto of JMTBA for his kind assistance in providing data and references. The financial support received from the Grant-in-aid for Scientific Research from the Ministry of Education, Science, Sport and Culture is also gratefully acknowledged.
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Tsuji, M. Technological innovation and the formation of Japanese technology: the case of the machine tool industry. AI & Soc 17, 291–306 (2003). https://doi.org/10.1007/s00146-003-0283-9
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DOI: https://doi.org/10.1007/s00146-003-0283-9