Management of Technology and Innovation in Japan

The Domestic Shaping of Japanese Innovations 123
used. The consumption specialization index is calculated as the share of a particular
good within total private consumption of a country divided by the average
share of that good among the six industrialized countries examined. In the table
the logarithm of this ratio multiplied by 100 is shown in order to shift the average
to zero and make it a more intuitive figure. A negative sign means therefore below
average expenditure and a positive sign above average expenditures of a country
for a specific good.
The analysis shows that the Japanese spend relatively more on food, rail travel,
and consumer electronics, optics, and pens, and less on health care and some
household products. Remarkable is the low willingness to spend on computers
(and software), much in contrast to the Americans, who spend more on computers
and computer related equipment than on audio and video equipment. Japanese
buyers purchased about one fifth to one sixth the number of PCs compared to
Americans during the 1990s (OECD 2000). This pattern is also observable in related
product fields such as semiconductors. Japan is more specialized in chips for
consumer electronics (OECD 2000). In contrast, US companies hold a sustainable
competitive position in computer related ICs. 2 Consequently, the market for MP3
players and pocket computers (PDAs) which are complementary goods to computers
are dominated by US companies. In the 1990s digital cameras were widely
expected to be a computer accessory as well, in order to take photos that could be
stored and altered in computers and viewed on a computer screen. This led computer
companies such as HP and Apple to enter this new market at an early stage.
But the digital camera took a different road that started in Japan. The traditional
fondness of the Japanese for cameras poured over to digital ones. Instead of being
used solely for computers digital cameras were used independently and ultimately
substituted the traditional film cameras 3 As a result cameras had to be optimized
for print outs. For instance, the numbers of pixels had to be increased (computer
screens require a much lesser number of pixels). The Japanese market went on to
significantly shaping advanced digital cameras. In contrast, in the computer industry,
the proprietary designs of Japanese computer manufacturers could not set
standard, which corresponds (and is probable due) to the low share of computer
expenditures in Japan.
Local consumption patterns matter for other countries as well. Germans spend
more on cars and Italians more on clothing and footwear. This corresponds to each
countries trade specialization as Linder (1961) originally postulated. Yet, only a
few studies, for instance Anderson et al. (1981), Fagerberg (1992) and Porter
(1990) have looked into this causality. We will discuss the relationship between
demand structure and export performance of a country in the following section.
2 The dominance of the Japanese in memory chips, so called DRAMs was only temporary.
The demise of the Japanese manufacturers of DRAMs in the 1990s demonstrates
that Japan has no genuine competitive advantage in computer related electronics.
3 One of the reasons for the early adoption of digital cameras in Japan that was mentioned
during an interview with the Japanese camera association was the significant
higher price of print outs in Japan.