Institutional frameworks and technological paradigms in Japan: targeting computers, semiconductors, and software

By comparing the differences and similarities in the development of compute rs, semiconductors, and software within the single Japanese context, this a rticle looks for patterns of fitness between different technological paradi gms and institutional frameworks. Japan's postwar history suggests that a h ybrid strategy of national champions and R&D consortia enabled the governme nt to target computers and semiconductors through a policy of controlled co mpetition and cooperation. Partly because of this public-private partnershi p, in the 1980s Japan's information technology industry established strong international competitiveness. The major force was a small group of large f irms characterized by a high degree of vertical integration and a wide rang e of technologies and products. As the new paradigm of microcomputers emerg ed, however, Japan's advances in hardware provided little impetus for devel oping packaged software, and the country's strength in mainframes even cons trained the growth of the microcomputer industry. In Japan, both the firms and the government overlooked the new trends of disintegrating complementar y software from hardware and of developing microcomputers independent of ma inframes and minicomputers. In addition, the industry structure of multiple computer champions led to a fragmented environment for hardware and softwa re architectures. The prominence of Japan's large computer vendors also inh ibited the growth of smaller independent software houses. In this new era, the country as a whole did not recognize in time new information rules such as de facto standards, network externalities, and increasing returns. The recent explosive growth of the Internet and multimedia represents another n ew paradigm of digital convergence. Japan's experiences in targeting comput ers, semiconductors, and software suggest that, to a significant extent, ve rtical integration just gives way to horizontal integration and government involvement to market mechanisms. (C) 2000 Published by Elsevier Science Lt d. All rights reserved.