This study explores how firms respond to changes in product or process architecture. Product or process architecture is the design rules of a system which can be described as the pattern of interrelations between components. Firms must prepare adequate knowledge in a specific architectural condition, so changes of architecture cause serious managerial problems for firms, called modularity traps (or integrity traps). A case study of the optical storage media industry gives some hints for overcoming such traps. First, firms have to alter their strategies and business domains when architectural conditions are changing. That is, in a modularity condition firms have to specialize, and in an integrity condition firms have to coordinate some activities. Second, and more importantly, firms have to retain their component and system knowledge, in order to maintain competitiveness both in specialized activities and in integrated activities.

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In this paper, in order to answer the question: “In an industry where imitation by competitors is easy, how has differentiation between companies been created and maintained?" we provide a new framework, based on the Dynamic Capability-Based View of the Firm and Action System Theory. On the basis of this framework, we analyze the early stages of competition in the online securities industry in Japan. We found that when a Dominant Perception created in an industry is strengthened by the actions of companies, the strategy of a successful company may not be imitated for several years and consequently that an expansion in differentiation between companies may occur.

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Academic and business literature in Japan on merchandising, a core capability in the management of department stores, describe the “Buyers Manual" edited by the National Retail Merchants Association. This manual was introduced into department stores in Japan, as the nation was recovering after World War II. Among Japanese department stores, Isetan tried to transplant the knowledge presented in this manual by re-editing it into an in-house document entitled “Merchandising (MD) Notes." Subsequently, both of these sets of knowledge materials were transferred to multiple department stores when top Isetan managers left the company to join competitors. Focusing on these knowledge materials, the author analyzes the transfer of knowledge in the department store industry.

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This study reconsiders product development strategies for the introduction of advanced technologies into new products. The exploitation and exploration of novel technologies in product development are critical issues for manufacturing firms. Yet, thus far, the concept and determinants of novel technology introduction strategies have often been blurred. Drawing on 118 successful Japanese assembly product development projects, this study attempts to elaborate the concept of novel technology introduction strategies and explores the effects of other determinants on the strategies. The study finds two alternative novel technology introduction strategies: technology integration and separated technology development. The results demonstrate that successful projects exploit either of these strategies according to knowledge regarding product designs and/or customer/market needs as well as technological uncertainty. The findings of this study should help firms contrive to develop novel technology introduction strategies at the project level, as well as multiproject strategies at the business level.

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