Hybrid Management of Technology toward a Service-Oriented Economy: Co-Evolutionary Domestication by Fusing East and West
Watanabe, Chihiro, Akaike, Shinichi, Shin, Jae-Ho, Journal of Services Research
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Japan's high-technology miracle in the industrial society up until the end of the 1980s prompts the postulate that co-evolutionary dynamism between innovation and institutional systems is decisive for an innovation driven economy. While not a few studies analyzed the structure and the inducing role of institutions (e.g., North, 1990, 1994, Nelson and Sampat, 2001), they remained no direct link with the foregoing co-evolutional dynamism. Watanabe et al. postulated that institutional systems are similar to soil in that they cultivate emerging innovation realized by means of a three-dimensional system consisting of (i) a national strategy and socio-economic system, (ii) an entrepreneurial organization and culture, and (iii) historical perspectives (Watanabe and Zhao, 2006) as illustrated in Figure 1.
While this concept provides clear insight on the Japan's explicit function in accomplishing its sophisticated co-evolutionary dynamism in an industrial society, Japan's long-lasting economic stagnation in an information society that emerged in the beginning of the 1990s resulting from a "lost decade" in the 1990s provides another postulate that an innovation driven economy may stagnate if institutional systems cannot adapt to innovations, and Japan's economy in the 1990s is one example.
The foregoing observations prompt the following hypothetical view that Japan indigenously incorporates an explicit function which induces co-evolutionary dynamism enabling it to achieve conspicuous performance in a virtuous cycle between innovation and rapid economic growth in the 1960s followed by technology substitution for energy in the 1970s leading to the world's highest energy efficiency improvement and broad advances in manufacturing technology level in the 1980s (Watanabe, 1999).
Although Japan's dynamism shifted to the opposite in the 1990s resulting from a lost decade due to a systems conflict between indigenous institutional systems and a new paradigm in an information society, a swell of reactivation emerged in the early 2000s (Watanabe et al., 2006) which prompts also the following hypothetical view that this can largely be attributed to hybrid management fusing the "East" (indigenous strength) and the "West" (lessons from corresponding to a digital economy).
Noteworthy success in such hybrid management can be seen the self-propagating development in mobile phone driven innovation (Chen and Watanabe, 2006) and also in a co-evolutionary domestication initiated by Canon Inc. which effectively utilizes its indigenous strength ("East") in assimilating external technology ("West") while preserving its own organization by not depending on M&A (Watanabe, Hur and Lei, 2006, Watanabe and Lei, 2007).
M&A reacted to deteriorate indigenous organization which does not necessary adapt to exotic systems in Japan. However, as a consequence of the fusing efforts, certain firms have shown noteworthy accomplishments in the synergy of M&A leading to a dramatic increase from 2004 (Tanaka, 2007).
Aiming at demonstrating the foregoing hypothetical views, this paper first reviews Japan's indigenous explicit function in co-evolution between innovation and institutional systems. Then, it demonstrates the effect of fusing "East" and "West." by means of an empirical analysis of the dramatic advancement in Japan's mobile phone-driven innovation and also Canon's conspicuous accomplishment in its high performance technopreneurial trajectory management.
This paper reviews Japan's indigenous explicit function. It also analyzes Japan's misoption in its growth trajectory and demonstrates surge of the reactivation of co-evolutionary dynamism. The paper postulates a new approach in identifying the sources of a selfpropagating innovation. It also demonstrates hybrid management fusing "East" and "West". The last part of the paper briefly summarizes new findings, policy implications and points for further analysis. …