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Competition and Collaboration between Japanese and Taiwanese Firms in Optical Disk Industries
Abstract
Historically, Japanese firms have been leading the optical disk industry in technological development and market development; however, Taiwanese and Korean firms are quickly catching up and have surpassed Japanese firms in terms of production volume. This paper focuses on the optical disk industry in Taiwan and analyzes the factors that have enabled Taiwanese firms to quickly catch up to Japanese firms. Our analysis show that cooperation with Japanese firms and international specialization have been the prerequisites of business activities in Taiwanese firms. This suggests that symbiotic relationships as well as competitive rivalries exist between firms in developed countries and those in developing countries that are quickly catching up.
... Examining the major studies that have cited The Innovator's Dilemma, we can see that Christensen's study has influenced a broad range of research, from strategy to 1 It is a theory describing the situation in which established industrial firms that have operated their businesses by listening to their established customers lose out to new firms that have developed and adopted technological innovations, which the established firms initially considered to be unattractive. However, some studies state that established firms as well as new firms can coexist (Shintaku, Nakagawa, Ogawa, & Yoshimoto, 2014). In addition, for the definition and types of innovation, see Akiike and Iwao (2013), Akiike (2014), and others. ...
The Innovator's Dilemma (Christensen, 1997) has been cited in many studies since Christensen published it in 1997. Some of these studies have advocated that concepts such as “dynamic capability,” “ambidexterity,” and “market orientation” can be used to overcome the environmental changes caused by the innovator's dilemma. However, these studies are categorized into two general types that are not logical refutations: (a) those which merely suggest the concept without suggesting an opposing example, and (b) those which do not demonstrate that a trajectory disruption has occurred even when suggesting an example. We must demonstrate that a trajectory disruption has occurred and then suggest a case in which the environmental changes were mitigated to suggest an example of overcoming the innovator's dilemma. However, arguments exist that doubt Christensen's concept of trajectory disruption, indicating that the arguments are not facile.
In solar cell manufacturing from the late 2000s to the early 2010s, the turnover for top manufacturers implied that it was only a matter of years before they went out of business. In general, many tend to believe that top manufacturers went bankrupt because of the bubble and burst caused by policies intended to promote and control the PV industry in various countries; however, considering that solar cells can be sold in any country worldwide and the global market for solar cells continues to expand, the ups and downs of solar cell manufacturers cannot be explained by the bubbles and bursts of individual countries alone. In fact, (i) while the turn-key solutions of Western manufacturing companies facilitated market entry, in China, people witnessed successful companies and imitated them to start their own businesses. Many of these companies launched and entered the market one after another in a short time span, thereby causing companies in other countries to go bankrupt due to low prices. However, (ii) even these Chinese firms have been experiencing a decline in capacity utilization amid a chronic oversupply caused by vigorous entrepreneurship, and top manufacturers have collapsed due to minor setbacks that later proved catastrophic.
The word “Galapagos” has garnered attention in Japan as an explanation for the loss of global competitiveness by the Japanese economy and Japanese companies, even while the Japanese companies are competitive domestically. The term has particularly been used with mobile phones in Japan, which are known as “Galapagos ke-tai.” An analysis of newspaper articles showed that discussions on Galapagos mobile phones were primarily about technology, technology standards, and features. However, smartphones that looked like Galapagos ke-tai came to be called “Garaho” later, and the term Galapagos then took on the meaning of appearance.
International standardization has become a strategic tool for global firms since new industrial policies emerged in developed countries in the 1980s, which allow firms to easily form a consortium to set industry-wide standards. This standardization has created many consensus standards that change the distribution of added value internationally, and has induced transformation in the international division of labor among the developed and developing countries. Platform business is most eminent in the resulting business ecosystem. It harnesses consensus standards to earn global competitive advantages, based on two practices: adjusting the scope of their knowledge and selecting new business partners who adopt the standards.
The purpose of this paper is to provide a review of modularization by Japanese firms on the basis of the analytical framework of product architecture. Japanese firms try to create system control modules, and attempt the rationalization of the design. However, they always design systems using the basic concept of integral type architecture. Modularization by Japanese firms is not a random design. It is the result of a design strategy that simultaneously achieves the optimization and rationalization of the product design. This paper reviews the product modularization processes of Japanese firms based on the analytical framework of product architecture theory. Basically, Japanese manufacturing firms have created system control modules to achieve rational product designs. However, conceptually, the system was always designed as an integral type. We conclude that, to Japanese firms, modularization is not a random choice of design but is the result of design strategies to simultaneously meet the optimization and rationalization of the product design.
Competitive advantage of Japanese firms and of catch-up countries' firms has been discussed through the case study on optical storage products. The dynamic change of product architecture from integral to modular mode has brought out the latent potential of catch-up countries. The more modular the architecture is, the larger the market shares of catch-up countries' firms and the smaller the market share of Japanese firms are. The analysis shows that the competitive advantage/disadvantage of the catch-up countries' firms depends not on the direct labor cost but on the overhead cost, in which the patent royalty accounts for the most portions. Based on the contrastive position in the product architecture and in the patent royalty, authors propose that Japan and the catch-up countries promote the architecture-based global alliance for symbiotic co-prosperity, in which the power of integral architecture and of modular architecture are combined into one joint venture company.
This study explores how firms respond to changes in product or process architecture. Product or process architecture is the design rules of a system which can be described as the pattern of interrelations between components. Firms must prepare adequate knowledge in a specific architectural condition, so changes of architecture cause serious managerial problems for firms, called modularity traps (or integrity traps). A case study of the optical storage media industry gives some hints for overcoming such traps. First, firms have to alter their strategies and business domains when architectural conditions are changing. That is, in a modularity condition firms have to specialize, and in an integrity condition firms have to coordinate some activities. Second, and more importantly, firms have to retain their component and system knowledge, in order to maintain competitiveness both in specialized activities and in integrated activities.
From the perspective of product architecture, we attempt to explore the reasons why the Chinese motorcycle companies are stuck in the imitation of focal models of foreign makers, on the other hand expanding their production volume to the No.1 position in the world. We propose that the architectural transformation of the original focal models to quasi-open ones mainly through horizontal coordination among local suppliers is the possible mechanism, which blocks the assemblers' paths of accumulating product development capability. This happens at the stage of structural form duplication, which weakens their incentives to progress further and reverse engineering stage.
Location of new products, 191. — The maturing product, 196. — The standardized product, 202.
With the publication of his best-selling books "Competitive Strategy (1980) and "Competitive Advantage (1985), Michael E. Porter of the Harvard Business School established himself as the world's leading authority on competitive advantage. Now, at a time when economic performance rather than military might will be the index of national strength, Porter builds on the seminal ideas of his earlier works to explore what makes a nation's firms and industries competitive in global markets and propels a whole nation's economy. In so doing, he presents a brilliant new paradigm which, in addition to its practical applications, may well supplant the 200-year-old concept of "comparative advantage" in economic analysis of international competitiveness. To write this important new work, Porter and his associates conducted in-country research in ten leading nations, closely studying the patterns of industry success as well as the company strategies and national policies that achieved it. The nations are Britain, Denmark, Germany, Italy, Japan, Korea, Singapore, Sweden, Switzerland, and the United States. The three leading industrial powers are included, as well as other nations intentionally varied in size, government policy toward industry, social philosophy, and geography. Porter's research identifies the fundamental determinants of national competitive advantage in an industry, and how they work together as a system. He explains the important phenomenon of "clustering," in which related groups of successful firms and industries emerge in one nation to gain leading positions in the world market. Among the over 100 industries examined are the German chemical and printing industries, Swisstextile equipment and pharmaceuticals, Swedish mining equipment and truck manufacturing, Italian fabric and home appliances, and American computer software and movies. Building on his theory of national advantage in industries and clusters, Porter identifies the stages of competitive development through which entire national economies advance and decline. Porter's finding are rich in implications for both firms and governments. He describes how a company can tap and extend its nation's advantages in international competition. He provides a blueprint for government policy to enhance national competitive advantage and also outlines the agendas in the years ahead for the nations studied. This is a work which will become the standard for all further discussions of global competition and the sources of the new wealth of nations.
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