The aim of this paper is to analyze how a mass production and distribution system for radio sets was built up and developed in prewar Japan. The companies that succeeded in building up the system would become the giant consumer electrical appliance companies after the war.
The building up of the system was not easy for the companies, because the radio industry was comprised of many small companies, whose behavior tended to be opportunistic. Especially, distribution was in a state of disorder.
Hayakawa (later Sharp) and Matsushita, whose sets were very successful, invested heavily in plants and introduced scientific management into the plants. Hayakawa was the first to introduce a belt conveyor system and Matsushita, partly influenced by the introduction of Hayakawa, followed close behind. In order to keep product quality, they had to integrate parts production.
Both companies also tried to regulate the distribution system by establishing agencies, hopefully exclusive ones, to which retail stores were assigned. In pursuing this, they interacted with each other.
In the long run, Matsushita was the best in building up a mass production and distribution system. It is also clear, however, that this institutional innovation was not a product of a company's originality but that of interaction of the companies.
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