Converging trend of innovation efforts in high technology firms under paradigm shift—a case of Japan's electrical machinery

Abstract

Japan's electrical machinery firms are typical high technology firms and have been playing a leading role in Japan's economic development. This is primarily due to the large amount of R&D investment motivated by technoprenuership leading to high level of technology stock. However, such a high level of technology stock has dichotomized the firms resulting in the converging trend over the last two decades. This converging trend can be attributed to the contrasting performance between gigantic and follower firms. While challenges to new functionality development in the gigantic firms were impeded by organizational inertia, the follower firms could overcome such impediments so as to lead to active development of new functionalities. Furthermore, higher functionality development of the follower firms guarantees them successfully securing their R&D funds by shifting from their operating income to market place; lower functionality development of the gigantic firms with strong organizational inertia impedes such a shift. In order to demonstrate the foregoing hypothetical view and also to elucidate the structural sources compelling the firms to such contrasting performance, an empirical analysis is attempted taking Japan's leading electrical machinery firms by classifying into gigantic and follower groups. By means of a comparative analysis of development trajectories of these firms utilizing bi-logistic growth model, the sources of such convergence are identified leading to implications supportive to survival strategies of high technology firms amidst megacompetition.