Competitive Advantage of Nations: Creating and Sustaining Superior Performance by Michael E. Porter

Author:Michael E. Porter [Porter, Michael E.]
Language: eng
Format: azw3
Publisher: Free Press
Published: 2011-05-30T16:00:00+00:00

Audio equipment

25

Musical instruments

4

Automobiles

9

Personal computers

16

Cameras

15

Semiconductors

34

Car audio

12

Sewing machines

20

Carbon fibers

7

Shipbuilding**

33

Construction equipment

15*

Steel***

5

Copiers

14

Synthetic fibers

8

Facsimile machines

10

Television sets

15

Lift trucks

8

Truck and bus tires

5

Machine tools

112

Trucks

11

Mainframe computers

6

Typewriters

14

Microwave equipment

5

Videocassette recorders

10

SOURCES: Field interviews; Nippon Kōgyō Shinbun, Nippon Kōgyō Nenkan, 1987; Yano Research, Market Share Jiten, 1987; researchers’ estimates.

* The number of firms varies by product area. The smallest number, ten, produced bulldozers. Fifteen firms produce shovel trucks, truck cranes, and asphalt paving equipment. There are twenty companies in hydraulic excavators, a product area where Japan is particularly strong.

** Six firms had annual production in excess of 10,000 tons.

*** Number of integrated companies.

A number of important other benefits flow from the presence of a number of fierce Japanese domestic rivals. One is that any basic factor advantages such as low labor cost or cheap steel are nullified, forcing Japanese companies toward automation, higher technology, and new products to outdo other Japanese competitors. Japanese companies trade up from basic factor advantages to more sustainable sources of competitive advantage. Another benefit of domestic rivalry is the stimulation of supporting industries as well as competition in recruiting and human resource development.

While domestic rivalry is intense in virtually every industry in which Japan is internationally successful, however, it is all but absent in large sectors of the economy. In fields such as construction, agriculture, food, paper, commodity chemicals, and fibers, there are cartels and other restrictions on competition, some sanctioned by government. Almost none of these (and other similar) industries have ever achieved international success. Yet the existence of restraints on domestic competition in such industries has misled many outside observers into thinking that all Japanese industries are cartelized. The absence of effective competition in large sectors of the economy is a danger signal and represents a serious challenge to continued Japanese economic advancement, as I will discuss further below.

New business formation in Japan is dynamic, largely taking place through internal diversification by established companies. Because of a desire to redeploy workers, diversification is usually highly related and rarely through acquisition. The result is a continuous widening and deepening of clusters.

The climate for forming entirely new companies in Japan is favorable and improving, though it is not yet at the level of the United States. Most of the best educated and most skilled Japanese still want to join larger companies that have the highest status. Spin-offs from university research are comparatively rare, as are managers leaving large companies to set up their own. Venture capital for independent start-ups is relatively scarce, and the “venture capital” subsidiaries of Japanese financial services firms are risk averse, reluctant to invest in unproven new companies. They are more accurately seen as financiers of smaller but established companies.

Yet many new companies are being founded in Japan, especially in services. The willingness of individuals to take risk appears greater in Japan than in Switzerland or Germany. In addition, larger companies are creating highly autonomous subsidiaries in some emerging industries such as software. Ventures are also sometimes spun out of large companies. FANUC was once a unit within Fujitsu. Japan, as a result, is

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.