Co-evolution of Firm Strategies and Institutional Setting in Firm-based Late Industrialization — The Case of the Japanese Commercial Aircraft Industry

Abstract

This paper examines the reciprocal evolutionary changes that occur through mutual interactions between firm strategies and the institutional setting in which the firms are embedded, in a context of firm-based late industrialization (FLI). More specifically, it delineates how such mutual interactions create a “micro-macro loop” and the co-evolutionary structure between (micro-level) firm strategies and (meso/macro-level) institutional setting. We elaborate the concept of a micro-macro loop by identifying the specific aspects in which firm strategies and institutional setting mutually interact in the context of firm-based late industrialization. By focusing on those specific aspects of the micro-macro loop, we then delineate the co-evolution of those two variables during the postwar development of the Japanese commercial aircraft industry. Finally, the empirical part of the paper describes how such a co-evolutionary structure has fostered and/or hindered the FLI of the postwar Japanese commercial aircraft industry.