The development of the bicycle industry and technological absorption in pre-war Japan

Abstract

This study analyses the relationship between technological absorption and economic development using the bicycle industry in Japan as an example. The relationship between patterns of industrial development and technological absorption is of central importance to this paper. The analytical results confirm the 'catching-up product cycle theory' of economic development. Section 2 discusses the process of technological absorption in the bicycle industry and its special features. Just as late-comers go through a process of first importing goods, then producing them domestically, and finally exporting them, technological absorption goes through a continual process of acquisition, diffusion, and finally innovation. The three stages of formation, establishment and maturity which occurred in the development of the bicycle imadustry itself were found to correspond roughly to the three periods of technological development. In this article this process is therefore called the 'catching-up product cycle theory of technological development'. Patent data was used as a measure of technological development in order to confirm this hypothesis. Traditional 'catching-up product cycle theory' suffers from certain weaknesses, and an attempt to repair these is made in section 3 through an analysis of the conditions required for effective technological absorption. First, there is a need for innovative entrepreneurs, a high-level technical personnel and a well trainedlabor force. This is referred to as the human resource condition. Secondly, the successful introduction of a new technology requires the pre-existence of related technology domestically. This condition is necessary for the technology to take firm roots in the domestic market. The third condition is the existence of a developed market. As demand factors, the degree of development and structure of the market determine the extent to which the imported technology will be absorbed. Finally, organizational factors and other systems must also be considered. In general, the organization of firms, for example, enterprise groups, will play a major role in an industry with a large number of small and medium-sized firms while government policies play a major role in an industry with a proportionately greater number of large firms.