Chapter 45. Japan's National Innovation System

Chihiro Watanabe[132] and Kayano Fukuda[133]


Japan's high-technology miracle as an industrial society up until the end of the 1980s prompts the postulate that co-evolutionary dynamism between innovation and institutional systems is decisive for an innovation-driven economy and that Japan indigenously incorporates a sophisticated capacity in such dynamism. Japanese industry's R&Dintensity (R&Dexpenditure per GDP) ranks second after Sweden in 30 OECDcountries, while its government ratio of R&Dto industry R&Dis the lowest. This demonstrates Japan's sophisticated capacity to induce vigorous R&Dfrom its industry.

However, Japan's contrasting economic stagnation in an information society, resulting in a "lost decade" in the 1990s, prompts Another postulate—namely, that such stagnation can be attributed to a system conflict between a new paradigm in an information society and the traditional business model molded by organizational inertia, and further that an innovation-driven economy may stagnate if institutional systems cannot adapt to innovations.

Although Japan's dynamism fell by the wayside in the 1990s, resulting in a lost decade, it re-emerged in the early 2000s. This is attributable to the co-evolution between indigenous strength developed in an industrial society and the effects of cumulative learning from competitors in an information society. This is based on the hybrid management of technology fusing the East (indigenous strength) ...

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