Eisenman (2013) argues that the importance of design innovation increases in the early and late stages of an industry and is lowest in the middle stage. In response, this study empirically examines her proposition through an examination of mobile phones during the feature phone era (1999–2008) when various types of designs were being generated using design patent data. We analyze the number of mobile phone design patents registered before the current advent of smart phones as well as examining the yearly averages of forward citations (the number of times a particular design patent is cited in later design patents) and backward citations (the number of times a particular design patent cites previous design patents). Further, to shed light on interactions with an accumulation of design-related technology, the study also analyzes the number of design-related patent applications per year. Results reveal that while there was an increase in the number of design patents registered in the late stage of the industry, especially between the years of 2007–2008, the average number of forward citations drops below the average number of backward citations from 2003 onward. In other words, although at the late stages of the industry many design innovations emerged, most of these were incremental changes that followed past designs. In contrast, design-related patent applications reached a peak in 2004 and fell thereafter. It is hypothesized that this trend was influenced by the growing number of design-related patents that facilitated the easy generation of new variations in design. These results show the dilemma: Although design innovations continue to be generated over time by accumulating design-related technology, creating genuinely impactful design innovation becomes more difficult as time progresses. The study therefore demonstrates the difficulty of realizing Eisenman (2013)’s theoretical proposition.
Tolerance is defined as “the difference between the maximum and minimum dimensions that can be allowed in terms of product functionality.” Company A, a steel manufacturer, follows the textbooks in presetting and managing tolerances so that its processes can flow seamlessly without any adjustments, as long as conditions remain within the range of tolerance. However, tolerance stack-up risk has been observed in the production of high-grade products such as automotive steel sheets because the quality measurements have approached the tolerance limits in several consecutive processes even though the said measurements have stayed within the tolerance range (which means that the products are not classified as defective). On the other hand, Company B (also a steel manufacturer) has been successful in managing tolerance through a method that is entirely different from the textbook model by having its Integrated Quality Control Group adjust the tolerances between processes and adopting strict controls that almost amount to integrated management.
Does keiretsu in the Japanese automotive industry vary by company in terms of firm performance and strategic behavior? This paper classifies parts-supply keiretsu into (1) Toyota suppliers and non-Toyota suppliers and (2) Nissan suppliers and non-Nissan suppliers and then conducts a comparative analysis of the suppliers to test differences in (a) firm performance, (b) customer scope, and (c) product diversity. The following results emerge from the analysis: (a) in regard to “firm performance (return on sales),” Toyota suppliers outperformed non-Toyota suppliers, but there was no difference between Nissan suppliers and non-Nissan suppliers; (b) with respect to “customer scope,” both Toyota suppliers and Nissan suppliers outperformed non-Toyota suppliers and non-Nissan suppliers, respectively; (c) as for “product diversity,” Toyota suppliers have less product diversity than non-Toyota suppliers, but there was no difference between Nissan suppliers and non-Nissan suppliers. These results indicate that the strategic behavior of Toyota suppliers differs from that of Nissan suppliers in that Toyota suppliers achieve high profitability by broadening customer scope and simultaneously narrowing product diversity. While prior research on keiretsu has not focused attention on the differences among keiretsu, the finding of this paper provides suggestive evidence that strategic behavior may vary across keiretsu member firms.
The keiretsu, or long-term stable business network that exists between Toyota and its suppliers, seems to demonstrate exceptional resilience in the face of natural disasters. Toyota shares production knowledge among the firms in its keiretsu through long-term kaizen-based inter-company learning activities (jishuken). In this regard, we have confirmed that (A) in times of normal operations, jishuken adopt a flat structure of interpersonal connections among firms that facilitates mutual trust. From case studies, we also found that (B) in times of disaster response, the structure “switches” to a hierarchical one with a clearly delineated leadership to bring knowledge and human resources into play.
Japan’s prewar railroad business (Ministry of Transport) was transferred to a public corporation, Japanese National Railways (JNR), after World War II and eventually went bankrupt. This was due to a number of factors, including the decline in the position of railroads, ballooning personnel costs, and the existence of unprofitable local lines. However, the issue that directly caused the crash was the failure of the financing scheme that formed part of the company’s third long-term plan, which commenced in FY 1965. The company had not taken government subsidies or increased its borrowings from the Fiscal Investment and Loan Program (FILP), but instead went outside the FILP and issued large volumes of high-interest rate tokubetsu (special) bonds without a government guarantee, so that by FY 1967, interest and debt-related expenses totaled 101.2 billion yen, or about the same as the 104 billion yen raised by tokubetsu bonds. In other words, tokubetsu bonds were being issued to finance the payment of interest on railway bonds. As a result, the company went bankrupt in the first few years of its seven-year plan, which changed into a financial rehabilitation plan starting in FY 1969.
When a market grows and matures so that its product becomes commoditized, we can usually expect product prices to decline due to price competition. However, in the digital camera market, although prices started to decline after they first went on sale, camera prices then began to rise. This was not because mass consumers shifted from the low-priced segment to the high-priced segment. Prices went up across all segments of the market. (A) In the low-priced segment, companies making low-priced products exited the market, and the remaining companies raised their prices by focusing on higher-quality products. (B) In the higher-priced segment, the number of major makers started declining, and prices steadily rose because products priced close to the highest-class products were released into the market. (C) In the mid-priced segment, two types of companies entered the market: companies in the low-priced segment that had developed higher-quality products and companies in the high-priced segment that added mid-priced products as alternatives.