In recent years, the production systems of Japanese manufacturing industry have gained knowledge-intensive or technology-intensive features. This tendency extended from metropolitan to rural areas. The purpose of this study is to elucidate, the technological and local conditions of innovative SMEs from the viewpoint of knowledge and learning. This paper takes the innovative SMEs in the Suwa area as an advanced example of the transformation of small and medium-sized manufacturing firms in Japanese nonmetropolitan industrial agglomerations. For this purpose, the author conducted interviews at the headquarters of 20 SMEs in 2001.
Innovative SMEs have formed and grown with the transformation of the production systems of Japanese manufacturing industry. In the hope of breaking away from their subcontracting work and expanding their business opportunities, innovative SMEs began to add new lines of work, such as experimental production or the development of original products, in the early 1990s. Continual technological learning enabled them to create a technological base with their highly skilled and sophisticated knowledge workers. Technological learning consists of the collection, acquisition, and creation of knowledge or information related to machining technology. Information creating knowledge is collected from other actors such as business service companies, suppliers, and other companies. Technological learning brought about the growth and development of innovative SMEs.
Information relevant to technological learning is mainly information creating tacit knowledge of machining technology. Most such information used in technological learning concerns materials or tools. Innovative SMEs have acquired and collected information by “learning by doing.” Such experimental learning contributes to the information on tacit knowledge, and innovative SMEs have accumulated the technology needed to expand their businesses. Information needed for experimental work is provided by actors located in the Suwa area. In that sense, technological learning depends heavily on the existence of the Suwa area as an agglomeration.
In conclusion, innovative SMEs have grown and developed during the economic evolution of Japan. In this process, the production systems of Japanese manufacturing industry have changed to knowledge- and technology-based ones. The author suggests that innovative SMEs are the forerunners of other Japanese SMEs in the globalized economy.

View full abstract

The purpose of this paper is to clarify how Japanese feed firms change their locational strategies from the viewpoint of economic geography. Until the mid-1970s, Japanese feed firms had developed by distributing their own feed factories throughout the country. However, after the mid-1980s, Japanese feed firms have been forced to change their locational strategies markedly because of the locational changes in livestock farming areas and the liberalization of livestock product trade. Under these conditions, it is clear that the private feed firms have gained feed production share by changing their feed production and supply strategies drastically, whereas Zen-Noh (National Federation of Agricultural Cooperative Associations) has lagged behind in changing its strategies after the mid-1980s.
The locational strategies by private feed firms are examined, taking the examples of the largest 10 nationwide. Those 10 private firms have rationalized their feed production and supply systems after the mid-1980s through interfirm alliances: 1) organization of joint-venture feed factories; and 2) entrusting feed production to other firms. In particular, three private firms (Nippon Formula Feed Mfg. Co., Ltd., Kyodo Shiryo Co., Ltd., and Marubeni Shiryo Co., Ltd.) have reduced production ratios in their own factories markedly by entering into alliances with other private firms. That is, they have moved their feed supply bases to peripheral regions without investing in the establishment of new feed factories by making use of interfirm alliances.
On the other hand, when the locational strategies of Zen-Noh are examined, it is clear that it has rationalized feed production and supply systems by: 1) amalgamation of affiliated feed firms; and 2) extension of feed supply areas. The aim of the former is to reduce farmers' feed purchase costs by authorizing affiliated feed firms to supply them with feed directly, and the aim of the latter is to establish an efficient feed transport system by extending feed supply areas across prefectural borders. However, Zen-Noh cannot change the locational strategies drastically because it still holds small-scale livestock farming areas and farmers throughout the country. Consequently, Zen-Noh has steadily lost feed production share to private firms.
It is clear that Zen-Noh has relied on strategies based on vertical integration, whereas private firms have relied on strategies based on horizontal integration. Therefore the locational strategies of Japanese feed firms have been polar opposites since the mid-1980s.

View full abstract