com8 techno-economic systems institutional innovation (1
TRANSCRIPT
1
Chihiro Watanabe
23rd JyvaskylaSummer School
7-9 Aug.. 2013, University of Jyvaskyla, Jyvaskyla
COM8Techno-economic SystemsInstitutional Innovation
(1)
Professor, Department of Industrial Management, Tokyo Seitoku UniversityProfessor Emeritus, Tokyo Institute of Technology
Visiting Professor, National University of SingaporeVisiting Professor, University of Jyvaskyla, Finland
Research Scholar, International Institute for Applied Systems Analysis (IIASA)
COM8 (1)
1. 7 Aug (W) AM2. PM
3. 8 Aug (T) AM4. PM
5. 9 Aug (F) AM6. PM
Technological innovation, growth, diffusion and consumptionProductivity, technological progress, competitiveness
Diffusion of technology, Effects of learningTechnology spillover, Rate of return to R&D investment
Basic concept of institutional innovationNew Stream for institutional innovation
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COM8: Techno-economic Systems, Institutional Innovation
Chihiro Watanabe ([email protected])
AM: 10-12 am PM: 13-15pm
Identity: SEARCH Systems approach, Empirical approach, Analytical approach, challenge to Rationale, Comprehensive approach, with Historical perspective
Chihiro WATANABE
Professor Watanabe joined Japan’s Ministry of International Trade andIndustry (MITI) in 1968 and spent most of his career there, chiefly working inthe fields of energy and environmental policies, industrial policy, and industrialtechnology policy. He is former Deputy Director-General of TechnologyDevelopment of the Ministry. His career includes overseas work experience inIndonesia (Second Secretary of the Japanese Embassy: 1973-1976), Australia(Chief Representative of the Sydney Office of NEDO: 1984-1987) and Austria(IIASA: 1994- ).
Professor Watanabe Joined Tokyo Institute of Technology in 1995 and workedas a Professor at Department of Industrial Engineering and Management of theGraduate School of Decision Science and Technology of the Institute. He isformer Vice-Dean of the Graduate School and also a Councilor (member of thecouncil) of the Institute.
3
Chihiro Watanabe graduated from Tokyo University with a bachelor's degree inengineering (urban planning) in 1968 and received his Ph. D. (arts and science)in1992, also from Tokyo University.
He was a leader of Japan’s Ministry of Education, Culture, Sport, Scienceand Technology’s (MEXT) 21st Century Center of Excellence (COE)Project: Science of Institutional Management of Technology (SIMOT) in 2004,and was Director of the Research Center for the Science of InstitutionalManagement of Technology, the research center for the project. He wasranked the world top researcher in the technology management field atIEEE IEEM (Dec. 2009, Hong Kong)…………………………………………………………...
His research fields are technology innovation management, techno-economics, technology innovation, and technology policy. His researchinterest covers institutional innovation, energy and resource productivity,hybrid management of technology, and optimization of R&D investment.Professor Watanabe has published 150 refereed papers in the above fields.
He is currently a Professor Emeritus of Tokyo Institute of Technology, andProfessor of the Department of Industrial Management of Tokyo SeitokuUniversity. He is also Visiting Professor of D-ETM, NUS, Visiting Professorof University of Jyvaskyla, Finland, and also Guest Scholar of theInternational Institute for Applied Systems Analysis (IIASA).
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International
NationalIndustry
SectorFirm
TechnologyInteraction
1 A Comparison of Competitive Economic Growth between Finland and Singapore
2.Technology Diffusion and Spillover through foreign direct investment (FDI) in Singapore3. Co-evolutionary Dynamism for Sustainable Innovation: Green Growth Policy
Creates New Development Economics
4. Strategic Opportunities for the Oil and Gas Industries in India5. Analysis of the Tablet PC Industry & Market
6. Comparison of Technology Diffusion for Auto Manufacturing Industries
7. Rate of Return to R&D Investment Comparison between Huawei and Alcatel-Lucent8. Strategies Adopted by Apple and Samsung toward Smart Phone Innovation
9.. Diffusion of Two Co-Existing Innovation: Cellular Phone vs Smart Phone10. Co-evolution Dynamism of Mobile Phone in Emerging and Developed Markets11. Analysis of PV Technology Industry, Solar Technology Development in China
International
National
Industry
Sector
Firm
Technology
Growth
Diffusion/spilloverCo-evolution
SpilloverLearning
Diffusion
Rate of return to R&D
Diffusion/learning
DiffusionCo-evolutionDiffusion/Learning
Primal analytical dimension
Term Paper submit to [email protected] by 31 Aug. 2013
Industry
6
Examples
6
1. Technological Innovation, Growth, Diffusion andConsumption
1.1 Innovation, Growth, Diffusion and Consumption: 12 Key Features in Firm’s Technopreneurial Strategy
(1) Bi-polarization of Growth Trajectory
(2) Resilience against Beyond Anticipation
(3) Consequence of Dramatic Advancement Beyond Anticipation
(4) Innovation – Consumption Co-emergence
(5) Commodification of Experiences
1.2 Innovation and Growth: Techno Economic Approach1.2.1 Production function1.2.2 Growth rate1.2.3 Elasticity1.2.4 Cobb-Douglas type production function1.2.5 Profit maximum condition1.2.6 Implications of firms’ profit maximum behavior1.2.7 Elasticity of substitution
2. Productivity, Competitiveness
3. Knowledge stock4. Diffusion5. Learning6. Spillover7. Rate of Return to R&D
7
1.1 Innovation Growth, Diffusion and Consumption- New Normal in Global System
I. Bipolarization of Growth Trajectory
-1.00
4.00
9.00
14.00
-1.00
4.00
9.00
14.00-1.00
4.00
9.00
14.00-6.00
-1.00
4.00
9.00
14.00-1.00
4.00
9.00
14.00-1.00
4.00
9.00
14.00-1.00
4.00
9.00
14.00JapanU
KC
anadaU
SAN
orway
Netherland
Switzerland
Denm
arkFinlandSingaporeSw
eden
1996-2000
2001-2005
2006-2010
1961-1970
1971-1980
1981-1990
1991-1995
Singapore USA Japan China
Russia
Brazil
IndiaC
hina
IT advanced economies IT growing economies
Real GDPincrease rate(% p.a.)1. Bi-polarization of Growth Engine
-1.00
4.00
9.00
14.00
-1.00
4.00
9.00
14.00
-1.00
4.00
9.00
14.00
4.2
9.34.7
10.1
9.13.3
7.8
8.6
5.8
4.8
6.6
3.3
2.5
4.4
2.4
0.7
4.5
4.6
1.4
0.9
1.2
0.4
6.3
9.4
12.3
8.6
9.8
11.2
8Switzerland in 1961-1980 was estimated by the average of neighboring countries.
-2.00
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
Real GDP Increase Rate in 2006-2010
Japan
UK
Canada
USA
Norw
ay
Netherland
Switzerland
Denm
ark
Finland
Singapore
Sweden
1.62
6.62
0.96 -0.072.17 1.41 0.82 0.74 1.23 0.54 0.35
Contrary to IT growing economies, GDP increase in IT advanced economies has lost except Singapore.
(% p.a.)
9
TDK ▲2.5
NEC ▲100
Sharp ▲390
Sony ▲520
Panasonic ▲770
Nissan 340
Toyota 280
Canon 250
Honda 210
Hitachi 200
Komatsu 160
Mitsubishi 110
Toshiba 65
Fujitsu 43
IT driven business environment change
1.Digitalization of manufacturing process
No more Japan’s indigenous knowhow
Unable to disseminateNo substantial differences in quality
2. Advancement of Internet beyond anticipation
No time differences in information dissemination（Global simultaneous start-up）
Reverse in asymetory of information between S/D
3. Rapid networking speed
Integration of multifunction faster than anticipation
Stagnation in Condenser
Mobile
TV
TV
TV
Shift to social infrastructure business
Focus on automotive equipments
Cost reduction, increase in competitive products
Advantage in knowhowIn assembling
Providing HV technology to China
Reorganization of electronic machinery industry
As a consequence of efficiency oriented BM (business model)1. Misunderstand new stream2. Non adaptive to env. change3. Cling to traditional BM 4. Delay in structural change New business model balancing efficiency and resilience
Net income (2011/4-12/3) \ billion
2. Bi-polarization of Technopreneurial Trajectoryin Japan’s High-tech Firms
770 billion \= 12 billion S$
II. Resilience against Beyond Anticipation- Review
10
President Soeharto in the early 1970s enlightened
Indonesia harus menjadi suatu bangsa yang tangguh
Indonesia should be a resilient nation
An ability (of a nation) tomaintain original state inlong term, and wheneverchange happens, the nationwill be able to recover thesituation to the original state
1973-1976 Japanese Embassy in Jakarta
1. President Soeharto’s Postulate
11
1.2 Technology Substitution for Constrained Factor(1) Technology Substitute for Energy
Fig. 1. Trends in Technology Substitution for Production Factors in Japan’s Manufacturing (1955-1997)
Inducingfurther
innovation
-1.5
-1
-0.5
0
0.5
1
1.5
1955 57 59 61 63 1965 67 69 71 73 1975 77 79 81 83 1985 87 89 91 93 1995
Subs
titut
eC
ompl
emen
t
Alle
n Pa
rtia
l Ela
stic
ity o
f Sub
stitu
tion 1st energy crisis
in 1973
97
Technology－Energy
Substitution
Technology－Labor
Technology－Capital
Inducingfurther
innovation
-1.5
-1
-0.5
0
0.5
1
1.5
1955 57 59 61 63 1965 67 69 71 73 1975 77 79 81 83 1985 87 89 91 93 1995
Subs
titut
eC
ompl
emen
t
Alle
n Pa
rtia
l Ela
stic
ity o
f Sub
stitu
tion 1st energy crisis
in 1973
9797
Technology－Energy
Substitution
Technology－Labor
Technology－Capital
Production
Energy consumption
1994
1983
1955
1973
Production
Energy consumption
1994
1983
1955
1973
Production
Energy consumption
1994
1983
1955
Production
Energy consumption
1994
1983
1955
1973
Inducingfurther
innovation
-1.5
-1
-0.5
0
0.5
1
1.5
1955 57 59 61 63 1965 67 69 71 73 1975 77 79 81 83 1985 87 89 91 93 1995
Subs
titut
eC
ompl
emen
t
Alle
n Pa
rtia
l Ela
stic
ity o
f Sub
stitu
tion 1st energy crisis
in 1973
9797
Technology－Energy
Substitution
Technology－Labor
Technology－Capital
Inducingfurther
innovation
-1.5
-1
-0.5
0
0.5
1
1.5
1955 57 59 61 63 1965 67 69 71 73 1975 77 79 81 83 1985 87 89 91 93 1995
Subs
titut
eC
ompl
emen
t
Alle
n Pa
rtia
l Ela
stic
ity o
f Sub
stitu
tion 1st energy crisis
in 1973
9797
Technology－Energy
Substitution
Technology－Labor
Technology－Capital
Production
Energy consumption
1994
1983
1955
1973
Production
Energy consumption
1994
1983
1955
1973
Production
Energy consumption
1994
1983
1955
Production
Energy consumption
1994
1983
1955
1973
1st energy crisisin 1973
Inducingfurther
innovation
-1.5
-1
-0.5
0
0.5
1
1.5
1955 57 59 61 63 1965 67 69 71 73 1975 77 79 81 83 1985 87 89 91 93 1995
Subs
titut
eC
ompl
emen
t
Alle
n Pa
rtia
l Ela
stic
ity o
f Sub
stitu
tion 1st energy crisis
in 1973
97
Technology－Energy
Substitution
Technology－Labor
Technology－Capital
Inducingfurther
innovation
-1.5
-1
-0.5
0
0.5
1
1.5
1955 57 59 61 63 1965 67 69 71 73 1975 77 79 81 83 1985 87 89 91 93 1995
Subs
titut
eC
ompl
emen
t
Alle
n Pa
rtia
l Ela
stic
ity o
f Sub
stitu
tion 1st energy crisis
in 1973
9797
Technology－Energy
Substitution
Technology－Labor
Technology－Capital
Production
Energy consumption
1994
1983
1955
1973
Production
Energy consumption
1994
1983
1955
1973
Production
Energy consumption
1994
1983
1955
Production
Energy consumption
1994
1983
1955
1973
Inducingfurther
innovation
-1.5
-1
-0.5
0
0.5
1
1.5
1955 57 59 61 63 1965 67 69 71 73 1975 77 79 81 83 1985 87 89 91 93 1995
Subs
titut
eC
ompl
emen
t
Alle
n Pa
rtia
l Ela
stic
ity o
f Sub
stitu
tion 1st energy crisis
in 1973
9797
Technology－Energy
Substitution
Technology－Labor
Technology－Capital
Inducingfurther
innovation
-1.5
-1
-0.5
0
0.5
1
1.5
1955 57 59 61 63 1965 67 69 71 73 1975 77 79 81 83 1985 87 89 91 93 1995
Subs
titut
eC
ompl
emen
t
Alle
n Pa
rtia
l Ela
stic
ity o
f Sub
stitu
tion 1st energy crisis
in 1973
9797
Technology－Energy
Substitution
Technology－Labor
Technology－Capital
Production
Energy consumption
1994
1983
1955
1973
Production
Energy consumption
1994
1983
1955
1973
Production
Energy consumption
1994
1983
1955
Production
Energy consumption
1994
1983
1955
1973
1st energy crisisin 1973
1st energy crisis in 1973
Technology- Labor
co‐evolutionary dynamism between innovation and institutional systems
2. Japan’s Conspicuous Resiliency in the 1970s- Transform Crises into a Springboard for Innovation: Technology Substitution
Technology - Energy
Technology - Capital
Oil
pric
es (U
S$/B
)
12
Technology -Labor
40
50
60
70
80
90
100
110
120
0.1
0.5
0.9
~~
2.0
1.8
RussiaIndia
China
USAJapan
GermanyKorea
1950 1960 1973 1979 1990 2004
1955 1960 1965 1970 1973 1979 1985 1990 19971965 1970 1973 1979 1985 1991
CementIron/steelPaper/pulpManufac.Chemical
Unit energyconsumption
Energy consumption/GDP (2004)
Alle
n Pa
rtia
l Ela
stic
ity o
f Sub
stitu
tion
SSuubstituS
Substitute
Complement
(i) Dramatic Decrease in Marginal Productivity of Technology TFP: Total Factor Productivity
Inst
itutio
nal e
last
icity
(ii) Consequent Decrease in Innovation
USA System match
Fig. 2-2. Marginal Productivity of Manufact. Technology(1975-1999) - Index: 1990 =1.
V = F (L, K, T)
L: labor, K: capital, T: technology stock
V/
MP
T ( ∂
∂T)
0.65
0.75
0.85
0.95
1.05
1.15
1.25
1.35
1.45
1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999
USA
Japan0.65
0.75
0.85
0.95
1.05
1.15
1.25
1.35
1.45
1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999
1990
MPT
Fig. 2-1. Institutional Elasticity of Manufact.Technology - Elasticity of the Shift to an Information Society to Marginal Productivity
of Technology （1980-1999） - Index：1990＝100.
19901980 1999
Industrial society Information society
Japan System conflict
GDP
Fig. 2-5. Marginal Produc. of Tech. (1960-2001)．Fig. 2-3. TFP Growth Rate ( Fig. 2-4. R&D Intensity (1975-2001).
TFP change rate (TFP/TFP) = R&D intensity (R/V) × Marginal productivity of technology (MPT)Innovation to GDP growth
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
１９６０－１９７5 １９７５－１９８５ １９８５－１９９０ １９９０－１９９５ １９９５－２００１
Gro
wth
rate（
％p.
a.）
2.0
2.2
2.4
2.6
2.8
3.0
3.2
1975-1985 1985-1990 1990-1995 1995-2001
Rat
io %
JP US JP US
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1975-1985 1985-1990 1990-1995 1995-2001M
argi
nal p
rodu
ctiv
ity o
f tec
hnol
ogy
JP US6.2
1.5 1.4 1.0
2.8
0.9-0.3
0.9 0.2
1.5
3. System Conflict in an Information Society- Complexity Mismatch: Dramatic Decrease in MPT resulting in Innovation Decrease
131960-2001)．
Fig. 3. Technoprenurial Positions of 19 Electrical Machinery Firms (2001-2004).
1 CAN Canon
2 SHA Sharp
3 RIC Ricoh
4 FAN Fanuc
5 SEI Seiko Epson
6 SAY Sanyo
7 SON Sony
8 MUR Murata
9 ROM Rohm
10 KYC Kyocera
11 KEY Keyence
12 HLT Hitachi
13 MAI Matsushita (Panasonic)
14 NEC NEC
15 TOS Toshiba
16 FLT Fujitsu
17 MTE Mitsubishi
18 TDK TDK
19 TOK Tokyo Electron
4. Bipolarization of Technopreneurial Trajectory
Mar
gina
l Pro
duct
ivity
of T
ech.
Operating Income to Sales (OIS)
Group B Group A
y
yz
z
yy
z
160.0
0.047
FAN
CAN
SHA
MAI
HLITOS
MTEFLTNEC
xxx
x
xx
xx
x
x
x
RIC
x
SON
x
- 0.017
xTDK
xTOK
KEYx
xROMMUR x
xKYC
yz
SEISAY
Group A (Virtuous cycle)Group B (Vicious cycle)
LGBP(Learning from Global Best Practice)e
14
NIH(Not Invented Here syndrome)
15
Organizational Inertia by Firm SizeGroup A Group B
SRSDSRTDI /ln)(/lnln 21
(i) Differences of the endeavor to technological diversification challenge due to organizational inertia by firm size
(ii) D(S) can be depicted by a logistic growth function.
TDI : Technological diversification index，R/S : R&D intensity.
0.0
0.5
1.0
1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0
売上高 (1995年実質: 兆円)
組織の慣性
24.1807.5
1ln1
1ln
11
1
1
01
0
01
S
SSSS
SS
e
e
SD
1995-1998
S0: 2.7, S1: 5.1, ε: 0.9, η: 0.0005
24.1807.511
Se
SD
Sa
PanasonicHitachiNEC
Toshiba
Fujitsu
Mitsubishi
Sharp
Sony
Canon
Sanyo
Fig. 4. Organizational Inertia Corresponding to Firm Size in Japan’s Leading 10 Electrical Machinery Firms (1995-1998).
Sales S (1995 fixed prices: trillion Yen)
Organizational inertia
index D(S)
Organizational Inertia Index
16
5. Innovation and Institutional Systems1. Innovation is highly dependent on the co-evolution with the institutional systems.
2. While institutions shape innovation, innovation also changes the institutions leading to a self-propagating dynamism
3. However, it may stagnate if institutional systems can not adapt to evolving conditions.
Fig. 5. Co-Evolutionary Dynamism between Innovation and Institutional Systems.
Self-propagatingdevelopment
Japanese indigenous system of MOT(Co-Evolutionary dynamism between innovation and institutions)
Adaptive
Co-evolution with institutional systems
DiminishDisengaged from institutional systemsJapan’s system in the 1990s
New and evolvinginnovation
Non-adaptive
17
2.1 Strategy and business model
2.2 Employment, Promotion and training
2.3 Structure and organization
2.4 Doctrine, philosophy and ethics
3.1 Geographical structure
3.2 Culture and tradition
3.3 State of development
3.4 Paradigm and phase of society
1.1 National strategy
1.2 Social system
1.3 Economic system
6. Role of Institutional Systems for Resilience(i) Institutional systems consists of 3 dimensions and cultivate emerging innovation.
3. Historical perspectives
1. National strategy andsocio economic system
-
2. Entrepreneurialorganization and culture
Fig. 6. Three Dimensional Structure of Institutional Systems.
(ii) Resilience against external changes can be maintained by means of an elastic interaction between 3 dimensions.
18
Suggestion1. External crises (due to beyond anticipation) can be transformed into a
springboard for resilience.
2. Institutional less elasticity may decrease productivity dramatically.
3. Fusing indigenous strength with learning effects leads to sustainable virtuous cycle.
4. Innovation depends on the co-evolution with institutional systems while itchanges to disengagement by loosing institutional elasticity.
III. Consequence of Dramatic Advancement Beyond Anticipation: A Case of the Internet
III-1. Bi-polarization of IT Driven Global Economy
III-2. Increasing Complaints of Consumers
19
oDiffusion
ration
ratio
Literate ratio
2010
2000
Diff
usio
n ra
tio
Diff
usio
n ra
tio
Literate ratio
Internet
Fixed phone
Mobile phone
Internet Fixed phone Mobile phone
1990 95 2000 05 2010
Fig. 7. Trend in Global Simultaneous Dependency on IT.
Mobile phone
Internet
Fixed phoneGlobal simultaneous dependency on IT
Dramatic decrease in Digital Divide
Literate ratio
Diff
usio
n ra
tio
Dramatic advancement of Internet and subsequent mobile phones
Governing factor of GDP per capita in 100 countries (2011)
876.0.12.103.1ln25.447.3/ln
)(
221 RadjDDNRIPV
NRIFPV
(10.62) (19.47) (9.31) (-9.29)
V/P: GDP per capita, NRI: Network Readiness Index
: Dummy variables21 DandD
11. Global Simultaneous Dependency on IT
20Sources: White Paper on Japan’s ICT (2012), Shinozaki (2012).
III-1. Bipolarization of IT Driven Global Economy
Gin
i’s c
oeff
icie
nt
Highdifferential
Lowdifferential
Fig. 8. IT Driven Economic Development Trajectory in 100 Countries (2011).
)2(
)1(1
)1(1()1(
)1
11(1
)1(
1
)
batebat
batbatbat
bat
bat
batbat
eaN
eeaN
ee
eaN
eeaN
NYaY
dtdY
bat
dtdY
batbat
dtdY
exaNyx
xy
eeaN
,)11()1(
12
IT by Network Readiness Index ( NRI )
GD
P pe
r ca
pita
(V/P
)
Economic development trajectory fits better to IT driven logistic growth
211dDcD
eN
PVY bNRIa
N a b c d adj.57239 1.68 -7.90 46434 -12913 0.885(9.62) (7.58) (-9.80) (14.54) (-5.25)
)(),( 21 yellowDblueD : Dummy
21
Bi-polarizationtrajectory
2. IT Driven Economic Trajectory Economic development trajectory in 100 countries fits better to IT driven logistic growth.
This trajectory led to bi-polarization trajectory.
Russia
2R
Mar
gina
l pro
duct
ivity
of I
T in
crea
se )11()1(x
xy
xy 1
xy 11
IT (I) increase baIex Fig. 9. Bi-polarization of IT Driven Economic Development Trajectory in 100 Countries (2011).
IY
ay
'
3. Bi-polarization of IT Driven Economic Development TrajectoryIT advanced economies (vicious cycle between IT advancement and its marginal productivity increase)
IT growing economies (virtuous cycle)
22
IT driven economic development in 100 countries has split to 2 economies:
IT advanced economies in 30 countries which have fallen into a pit fall of a vicious cycle as IT advancement decreases its marginal productivity.
IT growing economies in 70 countries which have been enjoying a virtuous cycle between them.
RussiaChina
1 SE Sweden 5.94 2 SG Singapore 5.86 3 FI Finland 5.81 4 DK Denmark 5.70 5 CH Switzerland 5.61 6 NL Netherlands 5.60 7 NO Norway 5.59 8 US United States 5.56 9 CA Canada 5.51
10 UK United Kingdom 5.50 11 TW Taiwan, China 5.48 12 KR Korea, Rep. 5.47 13 HK Hong Kong SAR 5.46 14 NZ New Zealand 5.36 15 IS Iceland 5.33 16 DE Germany 5.32 17 AU Australia 5.29 18 JP Japan 5.25 19 AT Austria 5.25 20 IL Israel 5.24 21 LU Luxembourg 5.22 22 BE Belgium 5.13 23 FR France 5.12 24 EE Estonia 5.09 25 IE Ireland 5.02
51 CN China 4.11 52 TR Turkey 4.07 53 MU Mauritius 4.06 54 BN Brunei Darussalam 4.04 55 KZ Kazakhstan 4.03 56 RU Russian Federation 4.02 57 PA Panama 4.01 58 CR Costa Rica 4.00 59 GR Greece 3.99 60 TT Trinidad and Tobago 3.98 61 AZ Azerbaijan 3.95 62 KW Kuwait 3.95 63 MN Mongolia 3.95 64 SK Slovak Republic 3.94 65 BR Brazil 3.92 66 MK Macedonia, FYR 3.91 67 RO Romania 3.90 68 AL Albania 3.89 69 IN India 3.89 70 BG Bulgaria 3.89 71 LK Sri Lanka 3.88 72 ZA South Africa 3.87 73 CO Colombia 3.87 74 JM Jamaica 3.86 75 UA Ukraine 3.85
26 MT Malta 4.91 27 BH Bahrain 4.90 28 QA Qatar 4.81 29 MY Malaysia 4.80 30 AE United Arab Emirates 4.77 31 LT Lithuania 4.66 32 CY Cyprus 4.66 33 PT Portugal 4.63 34 SA Saudi Arabia 4.62 35 BB Barbados 4.61 36 PR Puerto Rico 4.59 37 SI Slovenia 4.58 38 ES Spain 4.54 39 CL Chile 4.44 40 OM Oman 4.35 41 LV Latvia 4.35 42 CZ Czech Republic 4.33 43 HU Hungary 4.30 44 UY Uruguay 4.28 45 HR Croatia 4.22 46 ME Montenegro 4.22 47 JO Jordan 4.17 48 IT Italy 4.17 49 PL Poland 4.16 50 TN Tunisia 4.12
76 MX Mexico 3.82 77 TH Thailand 3.78 78 MD Moldova 3.78 79 EG Egypt 3.77 80 ID Indonesia 3.75 81 CV Cape Verde 3.71 82 RW Rwanda 3.70 83 VN Vietnam 3.70 84 BA Bosnia and Herzegovina 3.65 85 CS Serbia 3.64 86 PH Philippines 3.64 87 DM Dominican Republic 3.60 88 GE Georgia 3.60 89 BW Botswana 3.58 90 GY Guyana 3.58 91 MA Morocco 3.56 92 AR Argentina 3.52 93 KE Kenya 3.51 94 AM Armenia 3.49 95 LB Lebanon 3.49 96 EC Ecuador 3.46 97 GH Ghana 3.44 98 GT Guatemala 3.43 99 HN Honduras 3.43 100 SN Senegal 3.42
Table 1 The Networked Readiness Index 2012
Source: The Global Information Technology Report 2012 (World Economic Forum, 2012).The Network Readiness Index; Environment (Political and regulatory environment, Business and innovation environment), Readiness (Infrastructure and digital
content, Affordability), Usage (Individual usage, Business usage, Government usage), Impact (Economic impact, Social impact)
N: Eurasian, N: Oceania, N: America, N: Africa
23
YI
IY
XX
XY
YY
IXFY
KLX
,
),(
)11()1(FD
aYYYaY
IY
Y
YY
IYFD
IY
YY
IYFD
Fig. 10. Basic Concept of Co-emergence of Institutional Innovation between IT Advanced Economies and IT Growing Economies.
IT advanced economies
IT growing economies
Y = V/P (GDP per capita), X: labor and capital, I: Level of IT by NRI
FD (Functionality development): Ability to improve performance of production processes, goods and services by means of innovation.Potential capacity before reaching obsolescent stage degree of which can be measured by .Y
Y
4. Co-emergence of Institutional Innovation
24
Harness the vigor of IT growing economies
IT advancement supported by ITadvanced economies
-1.00
4.00
9.00
14.00
-1.00
4.00
9.00
14.00-1.00
4.00
9.00
14.00-6.00
-1.00
4.00
9.00
14.00-1.00
4.00
9.00
14.00-1.00
4.00
9.00
14.00-1.00
4.00
9.00
14.00
Marginal productivity of technology
Contribution bytraditional factors
TFP growth rate
EMKLX YR
TY
XX
YX
XY
YY
,,,
FDaY
TY 11
EMKLX YR
TY
XX
YX
XY
YY
,,,
)FD
(aYTY 11
EMKLX YR
TY
XX
YX
XY
YY
,,,
FDaY
TY 11
EMKLX YR
TY
XX
YX
XY
YY
,,,
FDaY
TY 11
1. Growth oriented trajectory
2. Functionality developmentinitiated trajectory
3. Co-evolutionaryacclimatizationtrajectory
JapanU
KC
anadaU
SAN
orway
Netherland
Switzerland
Denm
arkFinlandSingaporeSw
eden
1996-2000
2001-2005
2006-2010
1961-1970
1971-1980
1981-1990
1991-1995
Singapore USA Japan China
Russia
Brazil
IndiaC
hina
IT advanced economies IT growing economiesFig. 11. Global Change in Growth Engine.
Real GDPincrease rate(% p.a.)
5. Global Change in Growth Engine
Functionality development
-1.00
4.00
9.00
14.00
-1.00
4.00
9.00
14.00
-1.00
4.00
9.00
14.00
4.2
9.34.7
10.1
9.13.3
7.8
8.6
5.8
4.8
6.6
3.3
2.5
4.4
2.4
0.7
4.5
4.6
1.4
0.9
1.2
0.4
6.3
9.4
12.3
8.6
9.8
11.2
GDP per capita increase rate
2006-2010
IT advancedEconomies (IAE)
IT growingEconomies (IGE)
Harness the vigor of IGE
Advance IT supported by IAE
25Switzerland in 1961-1980 was estimated by the average of neighboring countries.
III-2. Increasing Complaints of Consumers 1. Maker Movement
26Fig. 12. Maker Movement Paths.
Experience/Learning
Anxiety
Knowledge
Technology
Maker Movement
3D printer Laser cutter
Digitalization of manf.
Dramatic advancement of the Internet
Consumers accumulate more knowledge than producers
Complaints to- Producers- Being remained consumers
1. Supra-functionality beyond economic value2. Shift from claimers to creators 3. Eco-contribution by own option
Wish to manufacture by own hand what anticipate
Commodification of experience Utmost gratification ever experienced has memorized in the brain
FundingFundingCrowd funding
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1980 1985 1990 1995 2000 2005 2010 2015
ln W
2.Consumer’s Instinctive Suppression against Consumption (CISAC)
Fig. 13. Trend in Annual Increase Rate in Japan’s Expected Income (1980-2008).
Change rate in expected incom
e ( Z/Z)
Dramatic decrease after the bursting of the bubble economy (1991) and further decreased due to Asian financial crisis( (1997).While slightly recovered, changed to dramatic decrease due to the Lehman shock (2008).
),( WVZZ
WW
VV
ZZ
)()(ZZ
VV
VC
WW
VV
WW
VV
VV
ZZ
VV
VC
)1(
)(
)()(
VVWW
VC
)1(
1980 1991 1997 2008Bursting of thebubble economy
Asian finan-cial crisis
Lehmanshock
Fig. 14. Trend in CISAC in Japan (1980-2015).
1980 1990 2000 2008 2015
CISA
C(ln W
)
0WW
0WW
Expected income Actual
income CISAC
Dramatic decrease
CISAC changed to increase
Marginal propensityto consume(MPC)
CISAC increase under income increase results in MPC decrease 27
28
2011
20101995
2009
1994
200819962000
20042005
1993 199919972006 2007
2003
2001
200219921998
1991
2011
2008
2010
2007
2009
20062005
2004
2003
2002
2001
2000
Fig. 15. Development Trajectory of MPC induced by GDP of Japan and the US (1980-2011).
Xex 1 1Xex
vcvYy
vcvYy
Mar
gina
l pro
pens
ity to
co
nsum
ptio
n in
crea
se3. Stagnation of Consumption
Japan United States
GDP per capita increase
Vicious CycleAppreciation of yen in 1995After Lehman shock in 2008
Vicious CycleAfter the subprime mortgage crisis in 2006
MPcvvcv
cv
YX
11ln
Y: Size of c; X: level of v(X in logarithmic terms)
0.950.900.850.80
1980 85 1990 95 2000 05 2010
GDP per capita increase
Mar
gina
l pro
pens
ityto
cons
ume
b Trend in Japan’s Marginal Propensity to Consume (MPC)
VCb
bVaC
C: ConsumptionV: GDP
toward a Post-excessive Consumption Society
Source: Fukuda and Watanabe (2012.).
Bipolarization of IT driven global economy
Co-evolutionary acclimatization trajectory for sustainability
Innovation – consumption co-emergence
Transform into a springboard for innovation
Increasing complaints of consumers
Suggestion
Dram
atic advancement of the Internet
beyond anticipation
29
IV. Innovation-Consumption Co-emergence
30
EMKLX YR
TY
XX
YX
XY
YY
,,,
FDaY
TY 11
EMKLX YR
TY
XX
YX
XY
YY
,,,
FDaY
TY 11
IQ
QI
CI
IC
CY
YCC
CU
CQ
QC
CY
YCC
CUQ
QUY
YUQYUFDUU ),()(
Utility function
IT support by IT advanced economies
1. Growth Engine in Co-evolutionary Acclimatization Trajectory
Fig. 16. IT Driven Innovation-Consumption Co-emergence Dynamism.
1972 79 85 90 95 2000 05
Trend in Japanese nation’s preference
Q
Y
Source: Japan’s Cabinet Office.
IQ
QI
CI
IC
CY
YCC
CUQYUFDUU ),()(
IT induce Increase ITconsumption dependency
IT elasticity to consumption
Y Economic functionality
Q Supra-functionality beyond economic valueencompassing social, cultural and emotional value
Income elasticityto consumption
Q elasticity to IT
IT advanced economies
IT growing economies
31
Trigger of co-emergence of such institutional innovation can be depicted as follows:
IQ
QI
CI
IC
CY
YCC
CUQYUFDUU ),()(
IT induce Increase ITconsumption dependency
IT elasticity to consumption
Y Economic functionality
Q Supra-functionality beyond economic valueencompassing social, cultural and emotional value
Income elasticityto consumption
Q elasticity to IT
IT support by IAE
2. Dynamism Inducing Innovation-Consumption Co-emergence
aIT
ga CY
g
g
g
g
CIT
ITC
g
g
g
g
ITQ
QIT
gg YC
g
g
g
g
CY
YC
Fig. 17. Dynamism Inducing Innovation-Consumption Co-emergence.
Harness the vigor of IGE
Accelerate IT advancement
Stimulate QInduce IT
Induce consumption
Increase income elasticity to consumption
Increase economic growth
IT advanced economies (IAE)
IT growing economies (IGE)
],,[ aaa ITCY
],,[ ggg ITCYDramatic advancement of the InternetDigitalization of manufacturing processMaker movement (Web revolution meets manufacturing)
32
Thus, co-emergence of institutional innovation can be governed by dual innovation-consumption co-emergence in which IT advanced economies IT stimulation of supra-functionality in IT growing economies would be a key
Economic Development
Learning & DevelopmentInteractionIndigenous
Industrial Base
Interaction Learning/Absorption
Advanced Technology
Economic Development
National security to be self-
sufficient in water
Government’s catalytic role enhances the
nation’s assimilation capacity and induces
industry’s participation.
Domestication of external knowledge
Broad Dissemination
Global Hydrohub
Export
Import
MNCs
Export
Investment
①②
③
④
Japan/US Singapore
-6.00-5.00-4.00-3.00-2.00-1.000.00
0.00 0.20 0.40 0.60
08 Q3
07 Q2
03 Q1
09 Q4
07 Q2
Mid. East/Africa/Emerg. Ecom.Phase 1 (2000 - 2007 Q1)
Imported technology dependentPhase 2 (2007 Q2 – 2008 Q2)
Transition from learning to indigenous technology development
Phase 3 (2008 Q3 – 2010)Export acceleration
Phase 4 (2010 -)Co-evolutionary acclimatization
ln Pc/Pn
ln N
W/C
W
NEWater (NW) Substitution for Conventional Water (CW)
①
②③
05
101520253035
2003 2004 2005 2006 2007 2008 2009 2010 2011t
50%Dependency on NEWater (%)
30%
④
Fig. 18. NEWater Develop. Dynamism in S’pore.
1. Global Hydrohub2. Forefront R&D3. End user4. Exporter
1. World top firms2. Advanced B.M3. Institutions of E.C
NEWater Desalination Total (Technology-driven water)2011 30% 10% 40%2061 50% 30% 80% 33
3. Success in Singapore by Innovation-Consumption Co-emergence
34
VendorsProposal based on operators ’ needs
Operators Announcement to the vendors
Discussion and adjustment
Products agreed by vendors and operators
Huge testing items than other country vendors
Double testing b y operators and feedback to vendors
Marketing dominated by operators
Invisible efforts such as bugs solving
Operators bear the complaints/ praise of consumers
Feedback to the vendors
IVF(In Vitro
Fertilizat ion)
Institutional technology spillover
Inter-firm technology
spillover
M essa ge exchange
C o m m unicatio n
e-m ail
IP
G P S
M usic d istribution
1968 1980 1999 2001 2005
C a m era
T V pho ne
N etw o rk externality
In teraction
D iffusion
N ew functionalityO ne-seg
M essa ge exchange
C o m m unicatio n
e-m ail
IP
G P S
M usic d istribution
1968 1980 1999 2001 2005
C a m era
T V pho ne
N etw o rk externality
In teraction
D iffusion
N ew functionalityO ne-seg
Panasonic
NEC
Toshiba
Fujitsu
Mitsubishi
Sharp
Sanyo
Sony
Casio
Kyocera
9. Optics
10. Acoustic
11. Micro Devices
12. High Density
13. Application
14. Plat form
15. Security
16. Compression
1. Semi conductor
2. Electronics
3. Sensor
4. Materials
5. Battery
6. Wireless Communication
7. IC-card
8. Liquid Crystal
9. Optics
10. Acoustic
11. Micro Devices
12. High Density
13. Application
14. Plat form
15. Security
16. Compression
1. Semi conductor
2. Electronics
3. Sensor
4. Materials
5. Battery
6. Wireless Communication
7. IC-card
8. Liquid Crystal
Suspended technologies
Commercialized technologies
B JB J
FacsimileFacsimile
Camera
Copying machineNext gen. TVNext gen. TV
ScannerScanner
Computer peripherals
Copyingmachine
FacsimileFacsimileFacsimile
Ferroelectric liquidcristaldisplay
Ferroelectric liquidcristaldisplay
Still videocamcorder
Digital camera
Microfilm systemElectronic
filing systemMicrofilm systemMicrofilm systemElectronic
filing system
Magnetic headsMagnetic headsMagnetic heads
Camera
LensLens
Video camcorder
8 mm Cinecamera
Video camcorderVideo camcorder
8 mm Cinecamera
Compact cameraCompact cameraCompact camera
Optical products
TV broadcasting lensTV broadcasting lensTV broadcasting lens
Optical fiberOptical fiber
SemiconductormanufacturingSemiconductormanufacturing
Optical cardOptical card
X-ray cameraX-ray camera
Ophthalmicequipment
Ophthalmicequipment
X-ray digital cameraX-ray digital camera
TypewriterTypewriter
Business systemsPV cellPV cellPV cell
Handy terminalHandy terminalHandy terminal
Synchroreader
PCsBilling machine
CalculatorCalculator
Electronicprinting system
Japanese-languageword processor
Electronicprinting system
Japanese-languageword processor
Japanese-languageword processor
LBPLBP
Intra-firm technology spillover
CoopetitionPrinter
PC
Cannon
Ricoh..
Canon(LBP, BJ)
NECFujitsuSony
Toshiba・・・
DELLIBM・・・
→ HP →
OEM PCsCanon(LBP, BJ)
NECFujitsuSony
Toshiba・・・
DELLIBM・・・
→ →
OEM PCs
Market stimulation
VendorsProposal based on operators ’ needs
Operators Announcement to the vendors
Discussion and adjustment
Products agreed by vendors and operators
Huge testing items than other country vendors
Double testing b y operators and feedback to vendors
Marketing dominated by operators
Invisible efforts such as bugs solving
Operators bear the complaints/ praise of consumers
Feedback to the vendorsVendors
Proposal based on operators ’ needs
Operators Announcement to the vendors
Discussion and adjustment
Products agreed by vendors and operators
Huge testing items than other country vendors
Double testing b y operators and feedback to vendors
Marketing dominated by operators
Invisible efforts such as bugs solving
Operators bear the complaints/ praise of consumers
Feedback to the vendors
IVF(In Vitro
Fertilizat ion)
Institutional technology spillover
Inter-firm technology
spillover
M essa ge exchange
C o m m unicatio n
e-m ail
IP
G P S
M usic d istribution
1968 1980 1999 2001 2005
C a m era
T V pho ne
N etw o rk externality
In teraction
D iffusion
N ew functionalityO ne-seg
M essa ge exchange
C o m m unicatio n
e-m ail
IP
G P S
M usic d istribution
1968 1980 1999 2001 2005
C a m era
T V pho ne
N etw o rk externality
In teraction
D iffusion
N ew functionalityO ne-seg
Panasonic
NEC
Toshiba
Fujitsu
Mitsubishi
Sharp
Sanyo
Sony
Casio
Kyocera
9. Optics
10. Acoustic
11. Micro Devices
12. High Density
13. Application
14. Plat form
15. Security
16. Compression
1. Semi conductor
2. Electronics
3. Sensor
4. Materials
5. Battery
6. Wireless Communication
7. IC-card
8. Liquid Crystal
9. Optics
10. Acoustic
11. Micro Devices
12. High Density
13. Application
14. Plat form
15. Security
16. Compression
1. Semi conductor
2. Electronics
3. Sensor
4. Materials
5. Battery
6. Wireless Communication
7. IC-card
8. Liquid Crystal
Suspended technologies
Commercialized technologies
B JB J
FacsimileFacsimile
Camera
Copying machineNext gen. TVNext gen. TV
ScannerScanner
Computer peripherals
Copyingmachine
FacsimileFacsimileFacsimile
Ferroelectric liquidcristaldisplay
Ferroelectric liquidcristaldisplay
Still videocamcorder
Digital camera
Microfilm systemElectronic
filing systemMicrofilm systemMicrofilm systemElectronic
filing system
Magnetic headsMagnetic headsMagnetic heads
Camera
LensLens
Video camcorder
8 mm Cinecamera
Video camcorderVideo camcorder
8 mm Cinecamera
Compact cameraCompact cameraCompact camera
Optical products
TV broadcasting lensTV broadcasting lensTV broadcasting lens
Optical fiberOptical fiber
SemiconductormanufacturingSemiconductormanufacturing
Optical cardOptical card
X-ray cameraX-ray camera
Ophthalmicequipment
Ophthalmicequipment
X-ray digital cameraX-ray digital camera
TypewriterTypewriter
Business systemsPV cellPV cellPV cell
Handy terminalHandy terminalHandy terminal
Synchroreader
PCsBilling machine
CalculatorCalculator
Electronicprinting system
Japanese-languageword processor
Electronicprinting system
Japanese-languageword processor
Japanese-languageword processor
LBPLBP
Intra-firm technology spillover
CoopetitionPrinter
PC
Cannon
Ricoh..
Canon(LBP, BJ)
NECFujitsuSony
Toshiba・・・
DELLIBM・・・
→ HP →
OEM PCsCanon(LBP, BJ)
NECFujitsuSony
Toshiba・・・
DELLIBM・・・
→ →
OEM PCsCanon(LBP, BJ)
NECFujitsuSony
Toshiba・・・
DELLIBM・・・
→ HP →
OEM PCsCanon(LBP, BJ)
NECFujitsuSony
Toshiba・・・
DELLIBM・・・
→ →
OEM PCs
Market stimulation
Fig. 18-2. Scheme of Canon’s Co-evolutionary Acclimatization. .
4. Success in Canon by Co-evolutionary Acclimatization(1) Co-evolutionary Acclimatization
Canon’s hybrid management consists of (i) Market stimulation, (ii) Institutional technology spillover, (iii) In vitro fertilization, (iv) Acclimatization through coopetition, and (v) intra-firm technology spillover.
Digital economy Global co-evolution with US institutionalsystems through coopetion with HP
35Fig. 18-3. Canon’s Identical Business Model.
Optical products
TV broadcasting lens
Optical fiber
Semiconductormanufacturing
Optical card
X-ray camera
Ophthalmicequipment
X-ray digital camera
Business systems
Copying machine
Scanner
BJPrinters
LBP
Facsimile
Ferroelectric liquidcristal display
Still videocamcorder
Digital camera
Microfilm systemElectronic
filing system
Magnetic heads
Camera
Camera
Lens
Video camcorder
8 mm Cinecamera
Compact cameraTypewriter
Business systemsPV cell
Handy terminal
Synchro reader
PCBilling machine
Calculator
Electronicprinting system
Japanese-languageword processor
Suspended technologies
Commercialized technologies
BJ
LBPFacsimileDigital camera
Camera
PCs
Next gen. TV
(2) Technological Diversification Strategy
Terminated in 1998
Copying machine
Technologicaldiversification
Intra technologylearning
Cooperation and competition (coopetition)
between printerand PC
PC by rival firms
36
(3) Virtuous Cycle between Printers and PCs: Learning by Inspiring Competitors - Coopetition
Fig. 18-4. Virtuous Cycle between Canon Printers and PCs (1986-2005).
DELLIBM
PCCanon printers
Lag for one year
Lag for one Printer market
PCs market
P Cs
External Learning
Induce PCs demand
PCs
T(Printers technology stock)
PC(Cumulative PC shipment)
Canon printers
Lag for one year
Lag for one Printer market
PCs market
P Cs
External Learning
Induce PCs demand
PCs
T(Printers technology stock)
PC(Cumulative PC shipment)
PR(Cumulativeprinters sales)
Satisfaction of (i) two factors learning and (ii) technology inducement by PC can be enabled not only by its own technology stock but also by inspiring competitors. This is called coopetition.
Canon(Printer)
NECFujitsuSony
Toshiba・・→ HP →
Coopetition
PCTP 1AInduce
Co-evolution
TFL
00.1997.0.)(92.1ln30.0ln40.0ln40.0ln26.099.8ln 2324321 DWRadjDDPCDPCDPCDPCDT
(27.63) (10.20) (12.77) (14.13) (17.20) (-3.22)
60.1997.0.25.0ln40.0ln08.034.3ln 2 DWRadjDPCTP (165.75) (67.66)) (67.66) (-8.14) D: 1986, 2000-05 = 1, other years = 0
Two factors learning and technology inducement by PC in printers development42.1997.0.16.0ln26.0ln62.085.4ln 2 DWRadjDPCTPv
(12.70) (-6.44) (-6.27) (-2.52) D: 2003-05 = 1, other years - 0
Pv: Price of printersP: Relative technology
prices of printers
62.1994.0.ln81.1ln82.1ln77.1ln71.106.7ln 24321 DWRadjPDPDPDPDPC
(-22.62) (16.10) (24.83) (28.54) (29.67)
D1: 1986-1990 = 1, D2: 1991-1997 = 1, D3:1998-2000 = 1, D4: 2001-2005 = 1, other years = 0
(4) Assimilation of Spillover Technology
dDRRcSRbaOIS ln
R RConstant ln R/S
A 0.534 0.156 -5.8E-03
B 0.534 0.156 0.2E-03
C 0.104 0.033 6.0E-03
D 0.104 0.033 0.2E-03
Involved inmobile phones (20)
Not involved inmobile phones (19)
Large firms
A PanasonicNEC
HitachiToshibaMELCOFujitsuSony
Mediumfirms
B SharpSanyoRohmTDK
NIDECCasio
MurataOther 6
C
D
Canon
RicohFanuc
KeyencePioneerDaikinOther 13
Own R&D intensity Spillover effect
Fig. 18-5. Japan’s leading 39 Electric Machinery Firms and their Relevance to Mobile Phones.
Table 2 Contribution to OIS in 39 Firms.
tgikfmb DDDDOIS 039.0571.0287.0563.0097.0
SRDSRDSR gimb ln160.0ln164.0ln030.0
RRDRR ca 005.010528.1 4
782.0. 2 Radj
(1.89) (-2.44) (3.36)(5.18)
(1.76) (4.76) (-1.94)
(6.20) (2.40)
(10.87)
Dmb: Mobile firms = 1, non-mobile firms = 0; Dgi: Large firms = 1, medium firms = 0; Dt: 2003-2005 = 1, 2000-2002 = 0; Dca: Canon = 1, other firms = 0; Dkf: Fanuc, Keyence = 1 (Non-mobile but high OIS: over 25%), other firms = 0.
While Canon has not involved in mobile business, it fully enjoys the advancement of mobile technologies.This can be attributed to spillover effect through coopetition.
37
Fig. 18-6. Canon’s Unique Business Model in Co-emerging Innovation and Consumption.
Co-emergence
38
(5) Co-emergence of Innovation and Consumption
Printers
Copying machineCamera
Digitalcamera
Inno
vatio
n
Consum
ption
Consump-tion of mobile phones
PC
PanasonicNECToshibaFujitsuSharpSony
Mobile tech.Liquid crystalMicro devicesHigh densitySensorBattery
Coopetitionbetween
printer and PC
Intra technology learning
1. Individual technology
(Own technology)
2. Intra-technology learning
(Domesticate Other organization within the firm)
3. Coopetion(Domesticate Rival firm)
4. In-vitro fertilization(Domesticate Market innovation)
Coretechnology
Rivalfirms
(PC) (Printer)
Rival firms
(Vendors)
Market
Operators
Fig. 18-7. Canon’s Business Model in Co-emerging Innovation and Consumption.
Technologicaldiversification
Intra technologylearning
Digital camera
Printer
MarketConsumer Operator
Vendor(PC producer)
Innovation
Consumption Innovation
(6) Canon’s Way of Innovation-Consumption Co-emergence
39
0.00
0.04
0.08
0.12
0.16
キヤノン
三菱
パナソニック
シ
ャープ
富士通
日立
三洋
NEC
東芝
ソニー
OIS = OI/S (Operating Income to Sales)
R/S0.6 0.6 0.6 0.5 0.5
0.2 0.2 0.1
1.51.9
0.0
0.5
1.0
1.5
2.0
キヤノン
三菱
パナソニック
シ
ャープ
富士通
日立
三洋
NEC
東芝
ソニー
(7) Canon’s Conspicuous R&D Profitability
OIR = OI/R (Operating Income to R&D)
Can
onM
itsub
ishi
Pana
soni
cSh
arp
Fujit
suH
itach
iSa
nyo
NE
CTo
shib
aSo
ny
Can
onM
itsub
ishi
Pana
soni
cSh
arp
Fujit
suH
itach
iSa
nyo
NE
CTo
shib
aSo
ny
Fig. 18-8. OIS, R/S, OIR in Japan’s 10 Leading Electric Machinery Firms (average 2006-2008). 40
4,4814,094
3,209
3,707 3,557 3,53216.9%
12.1%
6.8%
10.5% 10.6% 10.1%
10.9%
7.6%
4.1%6.7% 7.0% 6.6%
0%
5%
10%
15%
20%
25%
0
1,000
2,000
3,000
4,000
5,000
2007 2008 2009 2010 2011 2012
10億円
売上高 営業利益率 純利益率Canon’s sales, OIS and NPR (2007-2012)
NRP: Net Profit Ratio
Billion Yen
Ope
ratin
g In
com
e to
Sal
es (O
IS)
Lehman shock
10.5 10.6
6.8
12.1
16.917.0
Canon
Mitsubishi
HitachiNECToshibaFujitsuPanasonicSonySharp
Shipment (Production: Y) = Sales (S) + Inventory (Iv)| |
IMI (Intermediate input): Materials (M) and energy (E)＋
Value added (GDP: V)| |
Labor (L) costCapital (K) cost
+R&D (R), Advertisement
+Operating income (OI)
Sales increase Price maker, Market appeal, R&D increase Firms targets
Operating income increase Dividend, MVE (Market Value of Equity) increase
Key indices S, OI, V, ROI/S, R/S, R/V
Trade off between OI/S and S increase R and OI S
SOIOI
SOISOI
Decrease in M, E, L, K
Utiliz of external resources
5. Firm’s Technopreneurial Strategy (1) R&D Profitability
Iv
Sales(S)
IMI(M, E)
GDP(V)
L, K
R&D (R)
OI
Y
V
R/S contribution to OI/S increase OI/R (R&D profitability)
Learning/Assimilation
Productivity increaseTechnology substitution
AppleSamsungNokiaMicrosoftGoogleDellHPIntelHitachiNECFujitsuMitsubishi CanonSharpKyoceraSiemensLenovoZTE
OI/S R/S OI/R OI/S R/S OI/R2010 2007
(2) Profitability Structure in Global R&D Firms
0.280.130.040.390.350.060.090.360.010.010.010.020.100.010.040.070.020.07
0.030.060.120.130.130.010.020.150.040.080.050.040.090.060.050.060.010.11
10.232.070.383.002.765.283.882.390.250.170.170.531.220.090.961.301.210.60
0.180.100.120.380.310.060.080.210.020.030.040.050.170.050.110.070.030.06
0.040.060.100.140.130.010.030.150.040.070.050.030.080.060.050.040.020.09
5.091.561.132.782.425.562.421.400.540.350.851.382.090.792.591.751.640.66
OI/S: Operating income to sales,R/S: R&D intensity (R&D expenditure per sales).OI/R: Operating income to R&D (figures in red indicate above 1)
2010: After Lehman shock in 20082007: Before Lehman shok
Fig. 18-9. Comparison of R&D Profitability Structure in Global R&D Firms in 2010 and 2007. 42
43
6. Apple’s Way of Innovation-Consumption Co-emergence
Japan clings to this focusShould transfer to EMS (Electronics Manufacturing Service)
Apple’s focusI
Fig. 18-10. Apple’s Business Model in Co-emerging Innovation and Consumption.
Innovation Consumption
Bridging innovation and consumption by leveraging coordinating role of EMS
Innovation-consumption co-emergence
Suggestion
Innovation Co-emergence Consumption
Production Diffusion Consumption
from “Invisible hand of God” to “Voiceless voice of consumers”Complaints to
- Producers- Economic value oriented market- Being remained consumers
Conceptualize invisible voice of consumers
People can never forget utmost gratification of consumption ever experienced which affects lifetime consumption(Modgiliani et al.)
Commodification of experiences
Innovation value chain
44
V. Commodification of Experiences
45
46
Search existing learning record in the brain
Elevate brain temperature Homeostasis
Release from the face Elevate face temperature
1. Conceptualization of Invisible Voice of Consumers- Facial Temperature Feedback Hypothesis
Modigliani (1965) EconomicsMaslow (1954) Psychology Katahira (1998) Branding
Collation with utmost gratification of consumption ever experienced
Learning experience
SurpriseSurprise,Gratification
Vasoconstriction
Descend face temperature
Narrow blood vesselsDecrease blood flow
MCS (Metabolic Control System)
SNS (Sympathetic Nervous System)
Utmost gratification ever experienced has memorized in the brain
Facialtemperature measurement
Fig. 19. Scheme of Facial Feedback Hypothesis.
1 2
3 4
5 6
Innovative goods and services
Monitor the consumers’ facial temperature by the thermography: novelpsychophisiologal measuring technique enables observation in the objectivecircumstances without providing any cautions to examinees.
Record in a PC
Analyze the recorded data by the exclusive software “FLIR Research IR” (able to identify a pin-point temperature)
33.4
2. Demonstration by Experiment Utilizing Thermography
(a) With the measurement of the relationship between attractive goods and consumers’ temperature elevations at the leading supermarkets in Japan and Finland.
(b) Demonstrate a hypothesis that “There exists a resonance between attractive goods and consumers constructing a spiral cycle with energy leading to elevating consumers’ facial temperature.”
47
31.0
31.5
32.0
32.5
33.0
33.5
34.0
1 2 3 4 5 6 7
Accessed to theevent corner
PerceivedRecognized
Decidedto purchase
31.4 31.731.7 31.6 31.9 31.7 33.3
Further perceived
Further recognizedAccessed to the event corner
Perceived Further perceived Recognized
Further recognized
Resemble past learning Surprise Rememberpast learning Gratification Correspondence with
gratification experienced
Face temperature
MCS SNS MCS SNS MCS
3. Empirical Results
31.4 31.7 31.7 31.6 31.9 31.7 33.3
MCS: Metabolic Control System (elevate temperature), SNS: Sympathetic Nervous System (descend temperature)
Fig. 20. Standard Pattern of Facial Temperature Change in Shoppers Decided to Purchase.
Decided to purchase
While elevating trend, strong surprise and gratification, effects of balance between MCS and SNS may fluctuate facial temperature change before MCS taking initiative.
48
Source: White Paper on Japan’s Economy and Finance 2010 (2010).
20s
30s40s50s
50s
食料、保健医療、交通通信、教養娯楽が顕著に増加（20代の消費体験の覚醒）
People can never forget utmost gratification of consumption ever experienced which affects lifetime consumption (Modgiliani et al.)
4. Evidences in Silver Consumption
Fig. 21. Contribution to Average Consumption Propensity by Ages.
Call back consumption in their 20s
Enjoyed non-depressive consumption
Depressed by expenditures for
education and housing
Relieved from the burdens
Since 1990s significant contribution of silver consumption (age above 60s) to average consumption propensity has been observed which can be attributed to calling back of consumption in their 20s
Increase rate (% p.a.)
Contribution bysilver consumption
49
Roman holiday Tokyo Olympic Game Giants Beatles Apollo(1953 ） (1964) (1965-1973 V9) (1966) （1969)
Bowling Haiseiko MacDonald Sapporo Olympic Game Panda(1970-) (1970-) (1971) (1972) (1972)
5. Unforgettable Impressive Memory Experienced in their 20s
50Fig. 22. Major Impressive Memory Never Forget Experienced in their 20s.
6. Platform for Commodification of Experiences for Innovation-Consumption Co-emergence
Utmost gratification of consumption ever experienced
Memorize in the brain
Similar innovative goods/services
Collate with memory of utmost gratification
Facial temperature change
Elevate Descend
Awake sleeping experiences on utmost gratification once experienced
Real PseudoCommodification of experiences corresponding to utmost gratification of consumption ever experienced
Fig. 23. Platform for Commodification of Experiences.
Induce resonance betweeninnovative goods and consumers
Trigger innovation-consumption co-emergence
51
Conclusion1.
2.
3.
4.
5.
52
Resilience against beyond anticipation issues can be maintained by elasticinstitutional systems.
Given the bipolarization of IT driven global economy that revealed the limit ofindividual challenge, and increasing complaints of consumers, innovation-consumption co-emergence by transforming such complaints into a springboardfor new challenge could lead a resilient business.
This co-emergence can be triggered by commodification of experiences thatgovern lifetime consumption.
This approach is beyond mechanical analogy and necessitates interdisciplinaryendeavor paying special attention to Marshall’s warning.
International network for the X-Center endeavors is expected to make asignificant contribution to this endeavor.
From Mechanical Analogy to Biological Analogy in economics.
Develop an extremely sophisticated mathematical model utilizing numerically measurable factors while neglecting factors difficult to measure
Beyond Mechanical Analogy (Alfred Marshall, 1842-1924)
53
1.2 Innovation and Growth: Techno-economic Approach
1.2.1 Production function
1.2.2 Growth rate
1.2.3 Elasticity
1.2.4 Cobb-Douglas type production function
1.2.5 Profit maximum condition
1.2.6 Implications of firms’ profit maximum behavior
1.2.7 Elasticity of substitution
1.2.1 Production function(1) Basic concept
Output Input
V = F (L, K) (1)
GDP Labor Capital
NationA country developing its GDP (V) by increasing employees (L) and capital stock (K) + innovation
FirmA firm increasing semiconductor (V) by employing humans (L) and/or robots (K) + innovation
OrganizationA laboratory contemplating patents (V) by increasing students (L) and/or PC (K) + innovation
V: GDP, L: Labor, K: Capital stock,IMI (Intermediate input: Materials
and Energy)
V + IMI = Y (Output)
= Sales + Inventory
Number of employed person x Working hour Cumulative stock of machines x Operating rate
54
Ｃ
ＮＯ
111
込
Graphical Image of Two Factors Production Function: Total Product Hill
L
K
Height of hill
),( KLFV C
This concept can be developed to multi-factors production functions.
e.g., LKMET production function (Watanabe, 1991)
),,,,( TEMKLfY
Y: output; L: labor, K: capital; M: materials; E: energy; and T: technology
C. Watanabe, “Trends in the Substitution of Production Factors to Technology,” Research Policy 21, No. 6 (1992) 481-505.55
Labor Capital
Labor
Capital
V = F (L, K) (1)
(1) Basic concept
(2) Productivity
V/L: (Labor) Producitvity, V/K: Capital productivity, K/L: Capital intensity
∂V/∂L: Marginal productivity of labor, ∂V/∂K: Marginal productivity of capital
V: GDP, L: Labor, K: Capital stock,IMI (Intermediate input: Materials
and Energy)
V + IMI = Y (Output)
= Sales + Inventory
laborofQuantityproductTotal
LV
LV
LV
laborofquantityinChangeproducttotalinChange
LV
LtconsheldisK
tan|
LV
LV
laborofquantityinChangeproducttotalinChange
LV L
tconsheldisK
tan|
Marginal productivity of labor
The rate of total product changes when the firm changes the quantity of one unit of labor input, holding capital input constant.
56
V = F (L, K) (1)
(1) Basic concept(2) Productivity
(3) Necessary requirements for production function
∂V/∂L＞0, ∂V/∂K＞0 Marginal productivities of L and K are positive.
Marginal productivities will decrease.
Constant returns to scale: linear homogeneous.
V: GDP, L: Labor, K: Capital stock,IMI (Intermediate input: Materials
and Energy)
V + IMI = Y (Output)
= Sales + Inventory
0,0 22
22
K
VL
V
),( KLFV
laborofQuantityproductTotal
LV
LV
LV
laborofquantityinChangeproducttotalinChange
LV
LtconsheldisK
tan|
KLAVKLAV
lnlnlnln)1,0,(
e.g., Cobb-Douglas type production function
1. Partial differentiation with respect to
0,lnln
LV
LV
VL
LV
LV
Lln
2. Partial differentiation with respect to L
0)1( 22222
2
LV
LV
LLV
LLV
LLV L
VLV
LV
VKLAKLAKLAKLA 3. 57
1.2.1 Production functionV = F (L, K) (1)
(1) Basic concept(2) Productivity(3) Necessary requirements for production function
1.2.2 Growth rate
Growth rate (dV/dt)/V of production function (1) can be computed as follows:
Change volume
Change rate (growth rate)
Contribution to change
KLKL VVK
KVL
LVK
KVL
LVV
dtdK
KV
dtdL
LV
dtdV
KK
LL
KK
VK
KV
LL
VL
LVK
VKVL
VLV
VV
11
(2)
ttt VVVdtdV
1
VV
VVV
V t
ttdtdV
1
1
VK
KV
VL
LV
KVKV
LVLV
Singapore GDP (bil. S$) at 2005 market prices (MTI Annual Statistics)
2009 2010 2011 2012
GDP (bil. S$) 249.6 286.4 301.2 305.2Change volume (bil. S$) 286.4. – 249.6 = 36.8 301.2 - 286.4 = 14.8 305.2 – 301.2 = 4.0
Change rate 148.06.249
6.2494.286
052.0
4.2864.2862.301
013.02.301
2.3012.305
L contrib. K contribution
(3)
LV
LV
LV L
tconsheldisK
tan|
14.8% 5.2% 1.3%
%8106.054.0
%,10%,5
,6.04.0
VV
KK
LL
KKVL
LVKLFV
),(
[Reference] Euler’s theorem
59
1.2.3 ElasticityEquation (3) indicates that 1% increase in labor and capital induces and
% increase in GDP, respectively. These coefficients are called elasticity of labor and capital.
1.2.4 CobbDouglas type production function C.W. Cobb and P.H. Douglas, 1928
A: Scale factor
)1(lnlnln
lnlnlnln)1,0,(
LKA
LV
KLAVKLAV (4)
(4’)
Differentiate equation (4’) with respect to time t,
KLVdtdK
dtdL
dtdV
KK
LL
VV
X
XXdt
Xd dtdX
ln
VK
KV
KV
VL
LV
LV
lnln
lnln
VK
KV
VL
LV
KVKVLVLV
ln: (natural) logarithm
Partial differentiation of equation (4’) with respect to ln L and ln K, respectively, YX
XY
YXXY
YXY
XY
11
lnlnln
60
1.2.5 Profit maximum conditionThere exists Cost function (5) corresponding to Production function (1).
Production and its factors V L KCost GC GLC GCCPrices Pv Pl Pk
Ｖ = F (L, K) (1)GC = C (Ｖ, Pl, Pk) (5)
Given that prices are decided in a competitive way, profit maximum under the cost constrains (5) corresponds to maximum condition of equation (6) as depicted in equation (7).
W = V + Γ [GC C(V, Pl, Pk)] (6)
where Γ: Lagrange Multiplier
∴ ∂W /∂Γ = ∂W /∂V = ∂W /∂L = ∂W /∂K = 0 (7)
Given the linear homogeneity conditions of production function, cost function (5) can be depicted by the following linear function:
GC = C(V, Pl, Pk) = Pv*V = Pl*L + Pk*K (8)
∂W /∂V = 1 +Γ [∂GC /∂V ∂C /∂V] = 1 Γ ∂C /∂V = 1 Γ Pv = 0 ∴ Γ = 1/Pv
∂W /∂L = ∂V /∂L Γ ∂C /∂L = ∂V /∂L Γ Pl = 0 ∂V /∂L =Γ Pl = Pl/Pv
∴∂V /∂L = Pl/Pv Similarly, ∂V /∂K = Pk/Pv (9)
(10) Marginal productivity corresponds to relative pricesElasticity corresponds to cost share
V: Quantity of output (GDP,: value added), L: Labor, K: Capital stock
GC: Gross CostGLC: Gross Labor Cost,GCC: Gross Capital Cost
Pv: Price of productPl: Price of labor (wage)Pk: Price of capital
W: Profit
Identify the optimal combination of V, Pl and Pk maximizing W under given gross cost GC.
GC is fixed thus
1//)(
,,
GCGCGCGCCGLCGC
GCCsimilarlyGC
GLCVL
PP
VL
LV
v
l
0
VGC
lkl
vv
PLCKPLPC
PVCVPC
,
,
61
1.2.6 Implications of firms’ profit maximum behavior
(1) Invisible investment based on lifetime employment: Japan’s unique risk investment system
0.5
1.0
1.5
2.0
20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59
賃金
限界生産性
1998 年
0.30
0.80
1.30
1.80
20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59
賃金
限界生産性
1990 年
0.30
0.80
1.30
1.80
20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59
賃金
限界生産性
1985 年
0.30
0.80
1.30
1.80
20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59
賃金
限界生産性
1980 年
0.00
0.50
1.00
1.50
2.00
20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59
賃金
限界生産性
1975 年
1995 年
0.50
1.00
1.50
2.00
20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59
賃金
限界生産性
Trends in Marginal Productivity of Labor and Wage by Age in Japan’s Electric Machinery（1975-1998）.
GCGCC
VK
PP
VK
KV
GCGLC
VL
PP
VL
LV
PP
KV
PP
LV
v
k
v
l
v
k
v
l
,
,
LV
Younger age
Elder age
Securing risk investment fund for future development.
Facilitate welfare for securing loyalty to the firm.
v
l
PP
LV
PP
LV
PP
v
l
v
l
Marginal productivity corresponds to relative prices
Elasticity corresponds to cost share
LV
v
l
PP
LV
v
l
PP
LV
v
l
PP
LV
v
l
PP
LV
v
l
PP
62
(2) Productivity increase criteria for wage management: Guideline for inflation avoidance
0
v
v
l
l
l
l
v
v
v
v
l
l
vl
v
l
PP
LVLV
PP
LVLV
PP
PP
PP
LVLV
PP
PLVP
VL
PP
VL
LV
Elasticity of labor
Nominal wage
Increase in nominal wage ( is stable in short term,)
Increase in prices of production (Deflator)
If wage increase is higher than productivity increase, inflation is apprehended.
0
YY
XX
YXYX
YY
XX
XYXY
//
Source: International Federation of Robotics (2009).
International Comparison of Industrial Robotics (2006).
1.2.7 Elasticity of substitution (EOS)(1) Firms perplexity in investment decision: Employment or replacement by robots?
A semiconductor firm that is contemplating investments in advanced robotics would naturally be interested in the extent to which it can replace employees with robots.
How many robots will it need to invest in to replace the labor power of one worker?
Increasing competitiveness in emerging economies (EEs) based on cheap labor
Shift to EEs Stay at HCs
Technology substitution for labor Reshoring
Home countries
Articulated robot share in the world market (2011)
1. Fanuc 18.0 %(Japan)
2. ABB 12.8 %(Switzerland)
3. KUKA 11.5 %(Germany)
4. Yasukawa 11.5 %(Japan)
63
Top 10 Countries by Manufacturing Robot Intensity (2007)- Industrial robots per 10,000 manufacturing workers.
Manufacturing
Medical
Nuclear
Space
Construction
Entertainment
Jp US EP
Comparative Advantagesin Robots by Field
64
KL
KL
VV
KK
VLL
V
KKVL
LVV
dtdK
KV
dtdL
LV
dtdV
1.2.7 Elasticity of substitution (EOS)(1) Firms perplexity in investment decision: Employment or replacement by robots?
A semiconductor firm that is contemplating investments in advanced robotics would naturally be interested in the extent to which it can replace employees with robots.
How many robots will it need to invest in to replace the labor power of one worker?
1) Contribution to output increase
2) Marginal Rate of Technical Substitution (MRTS): Input substitution without affecting output
MRTSLKK
KVL
LVV
KVLV
0K (robots) increase L (employees) decrease
Robots substitute for labor power
i.e., MPL = 10, MPK = 2, MRTS = 10/2 = 5, the firm can substitute 1 unit of labor by 5 units of robots without affecting output.
66
(2) Elasticity of substitution (EOS): Describe firm’s input substitution opportunities by measuring how quickly MRTS changes
EOS = ＝Change rate of K/L ratio
Change rate of MRTS (MPL/MPK ratio)
),(ln
ln
/)/(
/)/(
KLXPP
XYf
ffdLKd
ffffd
LKLKd
y
xX
K
L
KL
KL
K
L
KL
KLPPdLKd
PPPPdLKLKd
ln
ln
/)/(
/)/(
Equation (12) can be obtained by integrating equation (11).
（11）
(12)
K
L
PPc
LK lnln
Change rate of K/L ratio
Change rate of Pl/Pk ratio
MPL: Marginal Productivity of laborMPK: Marginal Productivity of capital
Pl: Prices of laborPk: Prices of capital
c: constant term.
k
l
k
l
k
l
PPc
PPd
LK
PPd
LKd
lnlnln
lnln
ElasticpPd
LKd
k
l lnln1
67
K
L
PPc
LK lnln
k
l
k
l
k
l
k
l
l
k
PPc
PP
PPc
PP
LK
LPKP
enditureLaborenditureCapital
ln)1(lnlnlnlnln
expexp
When elastic , wage increase reacts to increase (increase in capital expenditure)enabling capital substitution for labor.
)1(
Implication of substitution in an ecosystem
In an ecosystem, in order to maintain homeostasis (checks and balances thatdampen oscillations), when one species slows down, another speeds up in acompensatory manner in a closed system (substitution), while depending onsupplies from an external system leads to dampen homeostasis (complement).
1.2 Technology Substitution for Constrained Factor(1) Technology Substitute for Energy
Trends in Technology Substitution for Production Factors in the Japanese Manufacturing Industry (1955-1997) - Allen Partial Elasticity of Substitution. Source: Watanabe (1999).
Inducingfurther
innovation
-1.5
-1
-0.5
0
0.5
1
1.5
1955 57 59 61 63 1965 67 69 71 73 1975 77 79 81 83 1985 87 89 91 93 1995
Subs
titut
eC
ompl
emen
t
Alle
n Pa
rtia
l Ela
stic
ity o
f Sub
stitu
tion 1st energy crisis
in 1973
97
Technology－Energy
Substitution
Technology－Labor
Technology－Capital
Inducingfurther
innovation
-1.5
-1
-0.5
0
0.5
1
1.5
1955 57 59 61 63 1965 67 69 71 73 1975 77 79 81 83 1985 87 89 91 93 1995
Subs
titut
eC
ompl
emen
t
Alle
n Pa
rtia
l Ela
stic
ity o
f Sub
stitu
tion 1st energy crisis
in 1973
9797
Technology－Energy
Substitution
Technology－Labor
Technology－Capital
Production
Energy consumption
1994
1983
1955
1973
Production
Energy consumption
1994
1983
1955
1973
Production
Energy consumption
1994
1983
1955
Production
Energy consumption
1994
1983
1955
1973
Inducingfurther
innovation
-1.5
-1
-0.5
0
0.5
1
1.5
1955 57 59 61 63 1965 67 69 71 73 1975 77 79 81 83 1985 87 89 91 93 1995
Subs
titut
eC
ompl
emen
t
Alle
n Pa
rtia
l Ela
stic
ity o
f Sub
stitu
tion 1st energy crisis
in 1973
9797
Technology－Energy
Substitution
Technology－Labor
Technology－Capital
Inducingfurther
innovation
-1.5
-1
-0.5
0
0.5
1
1.5
1955 57 59 61 63 1965 67 69 71 73 1975 77 79 81 83 1985 87 89 91 93 1995
Subs
titut
eC
ompl
emen
t
Alle
n Pa
rtia
l Ela
stic
ity o
f Sub
stitu
tion 1st energy crisis
in 1973
9797
Technology－Energy
Substitution
Technology－Labor
Technology－Capital
Production
Energy consumption
1994
1983
1955
1973
Production
Energy consumption
1994
1983
1955
1973
Production
Energy consumption
1994
1983
1955
Production
Energy consumption
1994
1983
1955
1973
1st energy crisisin 1973
Inducingfurther
innovation
-1.5
-1
-0.5
0
0.5
1
1.5
1955 57 59 61 63 1965 67 69 71 73 1975 77 79 81 83 1985 87 89 91 93 1995
Subs
titut
eC
ompl
emen
t
Alle
n Pa
rtia
l Ela
stic
ity o
f Sub
stitu
tion 1st energy crisis
in 1973
97
Technology－Energy
Substitution
Technology－Labor
Technology－Capital
Inducingfurther
innovation
-1.5
-1
-0.5
0
0.5
1
1.5
1955 57 59 61 63 1965 67 69 71 73 1975 77 79 81 83 1985 87 89 91 93 1995
Subs
titut
eC
ompl
emen
t
Alle
n Pa
rtia
l Ela
stic
ity o
f Sub
stitu
tion 1st energy crisis
in 1973
9797
Technology－Energy
Substitution
Technology－Labor
Technology－Capital
Production
Energy consumption
1994
1983
1955
1973
Production
Energy consumption
1994
1983
1955
1973
Production
Energy consumption
1994
1983
1955
Production
Energy consumption
1994
1983
1955
1973
Inducingfurther
innovation
-1.5
-1
-0.5
0
0.5
1
1.5
1955 57 59 61 63 1965 67 69 71 73 1975 77 79 81 83 1985 87 89 91 93 1995
Subs
titut
eC
ompl
emen
t
Alle
n Pa
rtia
l Ela
stic
ity o
f Sub
stitu
tion 1st energy crisis
in 1973
9797
Technology－Energy
Substitution
Technology－Labor
Technology－Capital
Inducingfurther
innovation
-1.5
-1
-0.5
0
0.5
1
1.5
1955 57 59 61 63 1965 67 69 71 73 1975 77 79 81 83 1985 87 89 91 93 1995
Subs
titut
eC
ompl
emen
t
Alle
n Pa
rtia
l Ela
stic
ity o
f Sub
stitu
tion 1st energy crisis
in 1973
9797
Technology－Energy
Substitution
Technology－Labor
Technology－Capital
Production
Energy consumption
1994
1983
1955
1973
Production
Energy consumption
1994
1983
1955
1973
Production
Energy consumption
1994
1983
1955
Production
Energy consumption
1994
1983
1955
1973
1st energy crisisin 19731st energy crisis in 1973
Technology- Labor
Technology- Energy
co-evolutionary dynamism between innovation and institutional systemsTechnology Substitution for Energy
Japan’s explicit co-evolutionary dynamism between innovation and institutional systems by transforming external crises into a springboard for new innovation was typically demonstrated by technology substitution for energy in the 1970s.
Technology- Energy
Technology- Capital
1) DynamismO
il pr
ices
(US$
/B)
68
Fig. 9. Energy Consumption per GDP in 40 Countries (2004).
1. Japan accomplished the highest GDP growth in a decade after the 2nd energy crisis in 1979.2. This can be attributed to its conspicuous energy efficiency enabled by technology substitution for energy.3. Consequently, Japan demonstrates the world’s highest energy efficiency.
69
2) Conspicuous Energy Efficiency (2004)
0.1
0.5
0.9
~~
2.0
1.8
Russia
India
Indonesia
USA
JapanGermany
Korea
Thailand
Malaysia
Philippine
Singapore
China
Australia
70
3) Conspicuous Energy Efficiency (2007)- Japan by far leads the world in energy efficiency
1,638
524 493396
311 303 303 268 267 260 258 253 212 204 200 196 175 161 151 150 122 99
553593
1,212
595621
738
2,606
0
500
1,000
1,500
2,000
2,500
3,000
Ukr
aine
Rus
sia
Iran
Chi
na
Sau
di A
rabi
a
Vie
t Nam
Indo
nesi
a
Indi
a
Mal
aysi
a
Thai
land
Bru
nei D
arus
sala
m
Can
ada
Phi
lippi
nes
Kor
ea
Mex
ico
Aus
tralia
Taiw
an
Chi
le
New
Zea
land
Bra
zil
US
A
Sin
gapo
re
Spa
in
Fran
ce
Ger
man
y
Italy
Per
u
UK
Japa
n
TOE/Million US$ (2000 Prices)
Sources: GDP：World Bank (2009), World Development Indicators, and Total Primary Energy: IEA(2009), Energy Balances of OECD and Non-OECD Countries
Phase 1 (1945 -1951): Economic recovery and readjustment of energy policies
Phase 2 (1952 -1961): Economic development and modernization of energy industry
Phase 3 (1962 -1972): High economic growth and comprehensive energy policies
Phase 4 (1973 -1985): Oil shocks and the shift to energy efficient economy
Phase 5 (1986 -1996): Liberalization of energy market and an issue of climate change
Phase 6 (1997 - today): Globalization of energy market and the climate change initiative
6 phases of Japanese energy policy
71
References: David Besanko and Ronald R. Braeutigam,Micro Economics, John Wiley & Sons (Asia) Pte Ltd(2006). ISBN: 0-471-69679-X
Chihiro Watanabe, Managing Innovation in Japan- The Role Institutions Play in Helping or Hindering
How Companies Develop Technology, Springer,Berlin (2009) ISBN: 978-3-540-89271-7
1. 7 Aug (W) AM2. PM
3. 8 Aug (T) AM4. PM
5. 9 Aug (F) AM6. PM
Technological innovation, growth, diffusion and consumptionProductivity, technological progress, competitiveness
Diffusion of technology, Effects of learningTechnology spillover, Rate of return to R&D investment
Basic concept of institutional innovationNew Stream for institutional innovation
72
COM8: Techno-economic Systems, Institutional Innovation
Chihiro Watanabe ([email protected])
AM: 10-12 am PM: 13-15pm
Identity: SEARCH Systems approach, Empirical approach, Analytical approach, challenge to Rationale, Comprehensive approach, with Historical perspective