|Technological Independence The Asian experience (UNU, 1994, 372 pages)|
The general problems related to Japan's acquisition of technology are best illustrated by the case-studies of two technologies, the food-processing and the electronics industry. The first is an industry initially embedded in tradition, in that many of the foods were known and made in pre-industrial Japan. The second industry, electronics, is today synonymous with the highest technology, in which Japan is now a world leader. These two case-studies, with their judicious mixture of tradition and modernity, provide an insight into the Japanese mastery of technology.
The food-processing industry
Grafting a modern technology onto a traditional one
Agro-based industry links the agricultural with the non-agricultural sector. The development of this industry, therefore, depends on the simultaneous growth of these two sectors, and in this regard it may well reflect a pattern or patterns of national economic development.
The food-processing industry depends to a significant extent on related industries such as the storage and distribution of processing materials and processed outputs. Also, it has to be supported by the manufacturing industries which produce processing machinery and equipment, materials used for packing, wrapping, and filling, and transport machinery for distribution. Thus, these related industries are integrated within the framework of the food industry.
Every country has a variety of traditional food industries based on well-established indigenous processing technologies. These traditional technologies have been improved by the application of modern scientific knowledge. In this sense, there is clearly a process by which traditional technologies are combined with modern ones, creating a hybrid of the two. We believe that the transfer of technology is a widening cycle of adoption, adaptation, and indigenization of borrowed technology. The creation of hybrid technology must be an essential part of the cycle. The food industry, with its extensive traditional technology, provides an excellent example of this hybridization process.
The interactions of five Ms. the extent and nature of inter-industry technological linkages, and the diffusion process and mechanism of technological information in the food industry were given high priority in the research. Furthermore, R&D activities within a firm, in the private sector, and in the public sector are carefully studied.
Using the detailed case-study, we can divide the technological development of the Japanese food industry into three stages.
The first stage, up to the Second World War, was a period of stagnation, except for the development of the canning industry. Most manufacturing was carried out by small producers or shops, and the food habits of the Japanese centred around fresh foods. The only other demand was for salted and dried fish and seasonings. Flour milling, sugar refining and food oil manufacture were the only food-processing industries in this period.
The second stage was a "leaping" period. Westernization, and diversification of the daily life of the Japanese, dramatically increased the demand for processed foods, and brought in mass production. The modernization of the bread-baking, the dairy products, and the meat processes were now developed. There was also the development of the eating-out industry and a rapid increase in the consumption of processed and instant foods. The increase in consumers' income and the penetration of electric cookers and electric refrigerators were major factors in the changes in consumption. The rapid expansion of demand for processed food led to the modernization and the quick growth of the industry. The market developed enough to warrant large-scale production. During this period, technology development concentrated on increases in productivity and the introduction of mass production.
In the third stage, technology improvements in related industries contributed to the development of the food industry. Things took a dramatic new turn in such areas as the development of packing machines and packing materials (plastics, etc.) and the computerization of freezing devices.
The import and improvement of overseas technology was the initial stage. Once imported technologies had been well assimilated and digested, they were then improved to conform to the economic and social conditions of Japan, and were further developed and "Japanized." Canned tomatoes were one example. Techniques such as canning and tomato cultivation and the know-how of contract cultivation, which had been imported from the US, were improved. Plant breeding to produce species suited to the natural conditions of Japan, and other improvements of technology, were achieved through trial and error. The industry made much use of the "experiences and perception" of workers on the shopfloor. The purpose of imitation was not just to make a dead copy, but, through a learning process, to exploit fully these accumulated "experiences and perceptions."
Although the Japanese food-processing industry had modernized itself mainly with imported technology, constant efforts were also made to achieve self-reliance. The efforts of the National Food Research Institute towards the technology development of the food-processing industry were crowned with great success. The R&D efforts of local agricultural experimental institutes and food industry institutes were also beneficial in terms of the specific conditions of individual districts. Since local features strongly influenced the food-processing industry, many skilful technology leaders appeared throughout the nation, even at small research facilities, and made a considerable contribution to the modernization of the Japanese food industry.
In recent years, the food industry has applied the achievements of gene technology to the food-processing industry, and has moved successfully into a new field of production.
In particular, monosodium l-glutamate monohydrate (MSG, called aji-no-moto in Japanese), which has become a huge enterprise, is an outstanding example. This product, invented in Japan in the 1900s, was a rare case of independent invention. The Ajinomoto Company is a leader in food-processing technology. All further development of the technology, ranging from adoption of fermenting techniques to the development of large-scale synthesis methods from oil, was carried out by the company's own research institutes. This is a good example of technological self-reliance, in which continuous efforts to achieve technological development created new manufacturing methods.
In general, the high degree of self-reliance was the result of much effort combined with (a) fundamental research by universities, (b) applied research by the state research organization, and (c) the R&D expenditure of the research institutes of private enterprises.
The technological development of related industries was also important for the improvement of the food-processing industry. Improvement in the technology of the producers of raw material (farmers) plays an important role. The correlations between the canning industry and the technology of horticulture were also important. An additional contributing factor was the standardization of agricultural products by the government through the establishment of JAS (Japan Agricultural Products Standard). The technological development of food-processing machines and improvements in packing materials and packing machines were significant and should be viewed as innovations in marketing, one of the five Ms. Taking soy sauce as an example, changes in packing materials from barrels to bottles, and then to plastic bottles, also prompted innovations in the area of transportation.
Modern and traditional technologies
It is significant that the traditional food industry already had a high level of processing technology in the middle of the Meiji era, when industrialization began. Fermenting technology had also been developed for the production of miso, soy sauce, and sake. The skilful use of these traditional technologies, the introduction of scientific methods, the adoption of processing methods suitable for mass production, and the development of marketing, which brought about a big rise in consumption, were the basis for the remarkable development of Japanese food-processing technology.
Taste and flavour are characteristics not only of foods, but also of associated bacteria and fungi. These differ from one district to another, and are also subtly influenced by climate and other natural conditions. This is where traditional technology can be utilized. Since the food habits of a country depend on its culture, traditional processing methods cannot be radically changed by the adoption of scientific technology alone.
As the taste and flavour of soy sauce have played an important role in the traditional food habits of the Japanese, one cannot dispense with the yeast, even for the purposes of industrialization. The brewing process was speeded up by replacing the soybean protein with amino acid, after researchers had studied the biology and biochemistry of the necessary microbes. The development of research on the microbes increased the earning ratio of amino acid, and succeeded in shortening the brewing time. But the traditional skills of experienced workers were utilized here, and were an integral part of the improvement.
Technological development based on a grass-roots movement
The Japanese food-processing industry consists of a mixture of small and very large enterprises. Technological innovations are carried out by the huge enterprises, but an important characteristic of Japanese industry is that minor enterprises are aggressive enough to absorb the new technology and are very curious about it. The field survey has proved that the minor enterprises have an excellent entrepreneurial spirit and do not hesitate to invest in technology improvement.
What is particularly significant here is that government support and guidance to minor enterprises also contributed to good results. Additionally, as in the case of soy sauce, the technology developed by huge enterprises was made accessible to other enterprises free of charge for the sake of overall industrial development. This also contributed to a levelling up of the technology standards of minor enterprises. Another contributing factor was the establishment of a canning technology training centre by private enterprises (tin-makers) at their own expense.
The special nature of Japanese society, in which "conciliation and competition" coexist, has given the technological development of the food-processing industry some of the characteristics of a grass-roots movement. Moreover, the role of the Agricultural Cooperative Union in the development of the industry should not be ignored. This development, which has also embraced the farming community, has resulted in the spread of technology and the increase in the number of creative ideas and inventions coming from the shopfloor.
The electronics industry
In addition to the food industry, the Japanese team has done new empirical studies on the electronics industries, especially the semiconductor industry. These industries differ from the food industry in that they can only be developed through their own creative technologies. Our research, therefore, was conducted in the following sequence.
1. The identification of technological structures and the linkages between these industries and related ones.
2. An analysis of the process of indigenization of borrowed technology in the electronics industries and of government policies for self-reliance.
3. The organizational structure of these industries, with a special emphasis on R&D expenditure practices.
4. Technology transfer by Japanese multinational enterprises through direct investment abroad.
The theoretical framework for the analysis of the semiconductor industry embraces three systems: the technology system, the organization system, and the inter-organization systems. Why Japanese corporations became successful in the semiconductor industry, although they started out by imitating US technology, was very much a question of their flexibility of management strategy. Our research concentrates on the relationship between technological development, companies' strategies, and government policies.
The case-study describes how and why Japanese integrated circuit (IC) technology has outrun that of the US and achieved self-reliance in high technology.
Keen competition in the consumer product market
One of the reasons why Japanese corporations became successful in the IC industry was their choice of product market. They produced semiconductors and ICs for commercial goods rather than for military and space use. Keen competition in the market stimulated drives for product innovation, such as in transistor radios, portable colour televisions, and calculators, and for production efficiency, in order to produce cheaper, better quality goods. It was therefore inevitable that Japanese corporations would gradually increase their R&D expenditure in order to keep up with the newest technological developments and to develop an indigenous, self-reliant technology that would cut the cost of patents and technical agreements and give them the leadership in the market.
In the period of innovative imitation of the transistor stage, research activities centred on the utilization of already existing semiconductors to produce new commercial goods. This was market-oriented innovation. However, with the accumulation of basic knowledge and the constant effort to catch up with the latest technologies, the emphasis began to shift from market-driven to technology-driven innovation. Competence in technological innovation became the key to success at this period, and greater efforts and larger expenditures for research activities were therefore required. It was this successful transformation from market-competition-driven innovation to technology-driven innovation that enabled Japan to obtain the world leadership in the field of memory IC. Thus, choice of the market and R&D-oriented corporate strategies did much to stimulate the development of the technological system.
Flexible organization in tune with the developmental stage of technology The second reason for success was that even big Japanese IC companies avoided bureaucratic organizational structures and used flexible organization to support technology development. There was evidence of a fairly orderly development of the R&D organizational structure. As the demand for innovativeness increased, the layer of research activities was increased from one to three steps: (1) basic research in the central research institutes; (2) applied research for both technological development and commercial product development in the technical centre outside the division (but inside the division group); and (3) immediate technological and commercial research within the division.
Furthermore, in order to bring about changes in the social system without being restricted by the current bureaucratic organizational structure and to create the proper environment for researchers, task forces and outside ventures were and are made use of. Such clear correspondence between the innovativeness of the technological system and the changes in the R&D organizational structure indicates a need for the corresponding development of the organization in order to promote development in the technological system.
Coordination of business and government
The technological development of Japanese IC industry has often been thought to be heavily supported by the government. However, it should be pointed out that the coordination of private enterprises and the government is a strong factor contributing to the realization of self-reliance in technology.
Organizational interdependency also contributes a great deal to the development of the technological system. In the case of Japan particularly, the government was the most influential party in stimulating development. It reduced uncertainty, not only by providing protection but also by stimulating research activities. Government and business relationships with regard to the development of the technological system could be described as having a reverse U shape.
In the initial period, government research institutes took the initiative in promoting research activities in the transistor field, and helped corporate researchers by providing information, grants, and targets. When it came to the second period of the transistor and IC stage, the government began to pursue the two policies of protection and promotion of research activities. In the third stage, the policies of liberalization of some IC industries were added in order to cope with trade pressures from the US, but the protection and promotion policies remained the same.
As a result of these policies, Japanese corporations came to possess sufficient technological capabilities to compete against the US. Thus, in the VLSI stage, government policy began to concentrate on the establishment of a background support system in order to promote research activities. Thus, the characteristics of interorganizational relationships were transformed along with the changes in the technological system.
Effects of infrastructure of science and technology
The infrastructure of science and technology has to be regarded as a more important interorganizational relation. In particular, the utilization of manpower that has received a thorough education in high-technology industry plays an important role in the establishment of self-reliance.
Future of IC technologies and industries
In IC technological development, the progress of integration will never see an end; it will progress to a further stage, even after the "mega-bit age." We are now in the mega-bit age of this super integration. In
Japan, production of the 1M and 4M bit class is already under way. The range above 16M bit class will be called ULSI (U for ultra).
In Japan, the manufacturing technology for VLSI was developed over a short period. Success was achieved by the development project which brought in the Super LSI Research Technology Association, a semiconductor industry association outside the framework of private enterprise and under government guidance. These results therefore drew attention both at home and abroad. The objective of the project was to develop the necessary elements for the development of a computer of the next generation.
The application of VLSI created the personal computer, smaller than the mini-computer, and was then popularized. During the same period, after the personal computer, the word-processor was developed as a response to the long-standing need for a Japanese typewriter that was as convenient as an English typewriter.
This trend in O.A. (office automation), F.A. (factory automation), and H.A. (home automation) is now the leading factor in high technology. The application of these semiconductor products constitutes the "micro-electronics revolution," which at present is having a social impact in many fields. In the pursuit of goods that are smaller in size, lighter in weight, longer in life, and more reliable, the semiconductor industry is now not only looking forward to the age of a mega-bit class using silicon material, but also laying stress on the development of semiconductors made from a combination of gallium and arsenic. There will be a period during which both will coexist.
Japan's semiconductor industry achieved an output of 2.5 trillion yen in 1984, 1.9 trillion yen of which was ICs, and today it is responsible for one-third of world production. Thus, dispelling the myth that military demand is the driving force of high technology, Japan's semiconductor technology has reached the world's top rank. Although in the long run great developments are expected in terms of both technology and demand, the industry is now facing some problems which have to be overcome.
Japanese enterprises have achieved competence in producing standard goods such as memory, but when it comes to circuits for operation they are still behind the US. This design and development ability in the area of custom use (ASlC) is expected to be strengthened. In the field of design, attempts have been made to induce CAD since the latter part of the 1960s.
Second, the advance in integration - in other words, the development of microscopic processing technology - renders the existing manufacturing equipment obsolete in a shorter time. Equipment needs renewing every three years - once in five years is no longer sufficient. Semiconductor manufacturing, which has already become a capital-intensive industry, should be able to renew its equipment within a short time, and also carry out thorough automatization.
Third, in the shift from the LSI to the VLSI stage - in spite of the fact that the industry is undergoing rapid growth - there is an undulating discrepancy in the balance of supply and demand. Some call it the "silicon cycle," which undulates at intervals of about three to four years.
To enter the semiconductor business as a newcomer used to be thought difficult because of the need for technology accumulation and the high investment in equipment. However, in Japan, new assembly makers continue to join the business. On the other hand, there are examples of withdrawal. For this reason, more attention should be paid to the fact that in addition to technology, economic and managerial factors are influential in the semiconductor business.
Fourth, semiconductor goods have increased in importance in Japan-US trade. The recession which started in the latter part of 1984 increased friction between the two countries, and made Japan increase imports and overseas production. It is now necessary for the semiconductor business to be run with a worldwide perspective; Japan has to give due consideration to the situation in developing countries.
In the micro-electronics revolution, semiconductor goods should not be considered as only part of the electronics industry itself, but as something that concerns all industries, taking into account the general trend in electronization. Semiconductors should be regarded as the raw material for all industries, and not only as an end-product. The trends toward digitalization in electronics and the desire to make every machine intelligent are crucial factors. Semiconductors are important wherever information is made use of in society.