According to Franco Modigliani's relative income hypothesis, a consumer holds the memory of the "utmost satisfaction ever experienced", which affects his/her later consumption behavior. A similar formulation may be made for the "utmost fear ever experienced". The oil crises in 1973 and 1979 were indeed the utmost fear for the Japanese industry, but it stimulated innovation, which led the country to the top position in energy productivity, thus engendering "the utmost hubris". Everybody knows which of them prevailed and brought about what. The oil price of $147 per barrel in July 2008 was certainly another fear, which prompted the development of photovoltaic solar cell (PV) energy technology in various industrial sectors. The solar technology is fundamentally different from the conventional technology based on fossil fuels, and suggests a direction to Daniel Bell's "post-industrial" society and further more, "post-oil" society, free from the limitations of the economy based on goods production and mechanical technology. For this to become reality, a policy design would be required which combines the 147-dollar fears with the recognition that the "utmost hubris" resulted from the "utmost fear" in the 1990s.
The role of science, technology and innovation in moving towards sustainability is explored in the context of Africa. Most of the scientific and technological knowledge needed to help Africa improve its welfare while protecting the environment is available. It is necessary to create institutional mechanisms and build human resources needed to harness the knowledge and put it to effective use. For competence building and enhancement of human resources, institutions of higher learning will play a critical role, and their capacity needs to be strengthened through international support to tackle local problems. Substantial adjustments in public policy in Africa as well as in international aid agencies will be required to encourage universities to contribute to sustainability. While it will take long periods of learning for necessary changes, the first step will be to establish new international partnerships, including those with Japan.
Among a variety of environmental taxes which have been introduced in Sweden since the early 1990s, the carbon tax and nitrogen oxides emission charge are examined for their effects on technological changes. The carbon tax triggered the massive turnover from fossil fuels to biomass fuels and developments of associated technologies in local heat supply sector, but its effects on the manufacturing industries have been limited, chiefly because the tax was reduced for manufacturers to keep them competitive in the global market. In contrast, the nitrogen oxides emission charge has been successful in stimulating adoption of new technologies due to a relatively high charge rate which was made possible by a system of refund according to the amount of energy produced. The both measures have led to evolutionary, if not revolutionary, innovation. The environmental tax can be very effective even at an initially insufficient rate if the rate is expected to rise in future. The success of the environmental tax depends on its appropriate combination with other political measures.
This paper investigates the impacts of environmental regulations on technological innovation using a unique data set of Japanese firm-level environmental R & D expenditure. First, from descriptive statistics, we find that environmental R & D increased from 1991 to 2001. The two sources of the expansion are confirmed: 1) more firms investing in environmental R & D and 2) increase in the average environmental R & D expenditure per firm. Second, we empirically test the "weak version" of the Porter Hypothesis, defined by Jaffe and Palmer (1997). We find that environmental regulation, measured by environmental conservation investment, increases the probability of investing in general R & D and environmental R & D. In contrast, the expenditures of R & D and environmental R & D, standardized by sales, are not found to be affected by environmental regulations. The stringent environmental regulation, however, increases the ratio of environmental R & D to general R & D expenditures. Thus, we find a supporting evidence of the "weak version" of the Porter Hypothesis.
This paper looks at how technological-forcing regulation has influenced the inter-firm relations when new technological innovation carried out under the technological uncertainty. In previous studies, technology-forcing approach, in which innovative activities are stimulated by the onset and enforcement of stringent regulation, is generally believed to be a more efficient way to bring about technological innovation. This paper, however, shows how firms respond strategically when facing technological uncertainty influenced by "technological-forcing regulation". Drawing on the case analysis on emission control technology development in the Japanese automobile industry, this paper shows that automobile assemblers expanded their knowledge base in components by building up in-house development when developing technologies that are relatively unfamiliar or new to their existing product base. The result suggests that strategic inter-firm relation is a key factor in achieving regulation standards and competitiveness of the regulated industry.
While Japanese enterprises have a potential to provide environmental innovation against the environmental crisis, particularly the aggravating global warming, few systematic investigations have been made on the relationship of environmental innovation to corporate growth. The present paper reviews existing studies on this relationship and discusses the possible compatibility of corporate environmental activities with growth. The paper also tries to describe general characteristics of innovations that contribute to both environmental protection and business growth and profitability, with an emphasis on innovative business models rather than technological novelties. Specifically, some cases of servicizing, defined as a change in the business model from selling products to providing product functions and maintenance, in Japanese enterprises along with some similar business models. Finally, the paper proposes a category of "function innovation" as an extension of servicizing.
With long-term constraints on resources including food, water, and energy, there has been a strong concern with regard to global sustainability. In such issues as those involving science, technology, economy, policy, and institution, relevant information and knowledge are widely distributed among various actors, and no single organization has all the necessary knowledge to bring forth innovation at the societal level. Sustainability science has been developed to describe the characteristics of complex and dynamic interactions between natural, human, and social systems. To understand the mechanisms of innovation for sustainability, the social process of production, diffusion, and utilization of various types of knowledge needs to be analyzed. There are many phases of knowledge process with feedbacks among different actors, without so much coordination with each other. Cases of photovoltaics and water treatment technologies suggest that gaps and inconsistencies in the knowledge circulation system could be serious challenges in pursuing sustainability innovation.
The global economy became the reality following the end of the cold war in the early 1990s. The Japanese economy has, however, been weak since that time, leading to even a worse situation in recent days. This paper describes the present status of the Japanese economy as a part of the global economy, discusses how innovation can contribute to overcome the economic slump, and reports the author's personal experiences in an innovative process of the replacement of copper communication cables with optical fibers. The author's ideas on the role of innovation in the global economy conclude the paper. Analysis of the current Japanese economy reconfirms the universally recognized importance of innovation to overcome the difficulties it has been facing since ten or twenty years ago. The history of Japanese enterprises provides many good examples of successful innovation, including one in copper smelting by Sumitomo family, and another in fiber optics for communication by Sumitomo Electric in which the author was involved. These historical and personal experiences suggest what makes innovation successful in the global economy and how innovation should be conducted in future. Such findings should be shared by the industry, government and academia in this country.