COM8 Techno-economic Systems Institutional Innovation (6 ...

23rd JyvaskylaSummer School

7-9 Aug.. 2013, University of Jyvaskyla, Jyvaskyla

COM8Techno-economic SystemsInstitutional Innovation

(6)

COM8 (6)

1

Chihiro Watanabe

Professor, Department of Industrial Management, Tokyo Seitoku UniversityProfessor Emeritus, Tokyo Institute of Technology

Visiting Professor, National University of SingaporeVisiting Professor, University of Jyvaskyla, Finland

Research Scholar, International Institute for Applied Systems Analysis (IIASA)

[email protected]

1. 7 Aug (W) AM2. PM

3. 8 Aug (T) AM4. PM

Technological innovation, growth, diffusion and consumptionProductivity, technological progress, competitiveness

Diffusion of technology, Effects of learningTechnology spillover, Rate of return to R&D investment

COM8: Techno-economic Systems, Institutional Innovation

Chihiro Watanabe ([email protected])

AM: 10-12 am PM: 13-15pm

4. PM

5. 9 Aug (F) AM6. PM

Technology spillover, Rate of return to R&D investment

Basic concept of institutional innovationNew Stream for institutional innovation

2

Identity : SEARCH Systems approach, Empirical approach, Analytical approach, challenge to Rationale, Comprehensive approach, with Historical perspective

1.Basic Concept of Institutional Innovation

2. New Stream for Institutional Innovation2.1 New Stream of Inst. Innov. toward Post-excessive Cons. Soc.

2.2 Acclimatization

Institutional Innovation

3

2.3 Innovation-Consumption Co-emergence

2.4Dynamism of Innovation – Consumption Co-emergence

2.5 Supra-functionality beyond Economic Value

2.6 A Way to Supra-functionality

2.7 Growth Option- Supra-functionality Seeking or Economic Functionality Oriented

2.1 New Stream of Inst. Innov. twd Post-excessive Consp. Socit.(1) Shift of Growth Engine

1) Strategy for Substitution

Table 1 Concept of Imitator Substitutes for Innovator

Sustainable Functionality Development (FD)

Innovator Imitator

Leader Follower

Supplier Customer

Producer Consumer

Fear to new products Gratification of consumption

4

⇔⇔⇔⇔ Customer substitutes for supplier

⇔⇔⇔⇔ Open innovation

⇔⇔⇔⇔ Coopetiotion (Cooperation and competition)

⇔⇔⇔⇔ Co-evolutionary domestication

q (imitator) substitutes forp (innovator) ⇔⇔⇔⇔ Assimilation of spillover technology

⇔ Hybrid management of technology

Knowledge transfer

Fear to new products Gratification of consumption

2) Chronology of the Shift of Growth Engine

),( TXFY =Y

R

T

Y

X

X

Y

X

X

Y

Y

Y ⋅∂∂+∆

⋅∂∂=∆∑

)FD

(aYT

Y 11−=

∂∂

Increase in

X

R by R&D invest.

SupplyProduction func.

Chronology of the Shift of Growth Engine.

R

T

Y

∂∂

FD

through T substitution for X

by Y increase

by FD increase

by sustainable FD self-propagating FD

by open innovation

Diffusion

Consumption

Innofusion func.

Innofumption func.

5

(2) Shifting from Production to Innofusion and to Innofumpsion

1) Innovation at Production Cite

2) Innovation through Diffusion - Innofusion

3) Innovation by Gratification of Consumption - Innofumption

6

Co-emergence of Innovation and Consumption

Integration of Production, Diffusion and Utility Fu nctions - Innofumption

(iii) Production Diffusion Integration －－－－ Innofusion

(i) Production Function (ii) Diffusion Function (Cumulative Y diffuses as a function of T)

),( TXFY =Y

R

T

Y

X

X

Y

X

X

Y

Y

Y ⋅∂∂+∆

⋅∂∂=∆∑

Traditional production factorsTFP

MPT R&D intensity

Functionality development

Growth rate

Y

R

T

Y

X

X

Y

X

X

Y

Y

Y ⋅∂∂+∆

⋅∂∂=∆∑

FD=

∂∂T

YaY (1 )

1

increase rate

)NN

1(NaTN

k

, −−−−====∂∂∂∂∂∂∂∂

Y

R

T

Y

X

X

Y

X

X

Y

Y

Y ⋅∂∂+∆

⋅∂∂=∆∑ Y

R

T

Y

X

X

Y

X

X

Y

Y

Y ⋅∂∂+∆

⋅∂∂=∆∑

−=

−=∂∂

FDaY

N

YaY

T

Y 111

In order to maintain sustainable FD,further integration of utility function is indispensable.

7

Functionality development ∂T

(iv) Production, Diffusion and Utility Integration －－－－

Innofumption

Utility function

FDNTRYCFDU →→→→→→)(

Y

R

T

Y

X

X

Y

X

X

Y

Y

Y ⋅∂∂+∆

⋅∂∂=∆∑

−=∂∂

FDaY

T

Y 11

FD

T

Y

X

YXT

TX

∂∂−

∂∂=

lnln

/lnσ

1. FD enhances utility which induces C (consumption)leading to Y increase.2. Increased Y induces R (R&D) leading to T (technology stock)increase.3. Increased T enhances N (carrying capacity) leading to FD (= N/Y) increase.4. Increased FD increases MPT which induces higher ETS.5. Higher ETS induces X productivity increase ( )

X

Y

X

T

T

Y =⋅

Technology substitution for constrained production factors

: Elasticity of technology substitution (ETS) for X, andc: coefficient.

TXσ

(3) Shifting from Competition to Coopetition and to Actipetition

(1) Competition - Sources of Japan’s Vigorous R&D Efforts

(2) Cooperation and Competition –Coopetition (A. Brandenburger and B. Nalebuff, 1996)

(3) Activate and Competition –Actipetition (C. Watanabe, 2009)

Acclimatization

8

Acclimatization

Co-emergence of innovation and consumption

M. Porter (2011): Creating Shared Value (CSV)

A business needs a healthy, educated workforce, sustainable resources and adept government to compete effectively.

For societyto thrive, profitable and competitive business must be developed and supported to create income, wealth, tax revenues, and opportunities for philanthropy.

2.2 Acclimatization (1) Concept of Acclimatization

Process whereby a population of animals or plants, through a process of artificial selection, becomes accustomed to human provision and control.

Domestication

Acclimatization

1. To get used a new place, situation or climate2. The process in a individual organism adjusting to a gradual change in its

9

1. Artificial selection based on humans experiences,

2. Multi-functionalities (economic, social, cultural, aspirational, emotional, and spiritual),

3. Instills in humans an exciting story with their own initiative as heroes and thrills them with gratification

2. The process in a individual organism adjusting to a gradual change in its environment

(in temperature, humidity, photoperiod, pH)

Flow of TSO

Capacity to distinguish

Identification of the available TSO AssessmentSelection

Reject Accept

InternalizeAbsorption

Embody to production system

Treat homogeneous to own TS Extract STSO’s potential comparative advantage

Flow of TSO


Identification of the available TSO AssessmentSelection

Reject Accept

InternalizeAbsorption

Embody to production system

Treat homogeneous to own TS Extract STSO’s potential comparative advantage

Cumulative learning

Absorption

Treat homogeneous to owntechnology stock

Flow ofTechnology Spillover


Accept

Internalize

Embody to whole system

Identification of the available spillover technologyAssessment and selection

(should learn, should not learn, cannot learn)

1. Cumulative learning cultivate the capacity of distinguishing technology spillover flows by assessing and selecting them into (i) Should learn,(ii) Should not learn, and (iii) Can not learn

leading to absorptive capacity to be able to treat accepted spillover technologies homogeneous to own technology stock.

2. Through co-evolutionary exercise of absorption assimilation capacity can be developed thereby to be able to embody

(2) Concept of Co-evolutionary Acclimatization

10

Taming into the whole institutional systems consist of three dimensions

Maximize theeffects of TSO on SED

Assimilation

Learning exerciseInstitution (esp. Organizational culture)

DiffusionCommercialization

Domesticative

Nat

iona

l str

ateg

y a

ndso

cio-

econ

omic

sys

tem

Entrepreneurialorganization and culture

Taming into the whole institutional systems consist of three dimensions

Maximize theeffects of TSO on SED

Assimilation

Learning exerciseInstitution (esp. Organizational culture)

DiffusionCommercialization

Domesticative

Nat

iona

l str

ateg

y a

ndso

cio-

econ

omic

sys

tem

Entrepreneurialorganization and culture

The Concept of Co-evolutionary Acclimatization.

Assimilation

Acclimatization

Taming into the whole institutional systemsby convince and empower

Historical perspectives

National strategy and socio-economic system

Entrepreneurial organization and culture

in Production, Diffusion and Consumption (Inno-fumption system)

Embody to whole system developed thereby to be able to embody absorbed technology to whole system in (i) Production,(ii) Diffusion, and(iii) Commercialization.

3. This ability then develop to acclimatization thereby tamingassimilated spillover technology into the whole institutional system by activating it through convincing and empowering.

4. Accimatized technology/knowledge in turn further improve distinguishing capacity, absorption, assimilation and domestication ability in a co-evolutionary way

(3) Institutional Sources Leveraging Co-evolutionary Acclimatization

Flow of technology spillover

Cumulative learning

Distinguish

Accept

Absorption

Internalize

Abundant curiosity,

assimilation proficiency,

and thoroughness

in

Japan’s institutional strength

11The Concept of Co-evolutionary Acclimatization.

Internalize

Assimilation

Embody to whole system

Acclimatization

Taming into the whole institutional system by activating through convincing and empowering

Xenophobia and uncertainty avoidance

inlearning and absorption

Key strategy in

overcomingglobal

stagnation

Missing strength

Institutional technology spillover

M essage exchange

C om m unica tion

e-m ail

IP

G PS

M usic d istr ibu tion

1968 1980 1999 2001 2005

C am era

TV phone

N etw ork ex terna lity

In teraction

D iffusion

N ew functionality

O ne-seg

M essage exchange

C om m unica tion

e-m ail

IP

G PS


1968 1980 1999 2001 2005

C am era

TV phone


In teraction

D iffusion

N ew functionality

O ne-seg

B JB J

FacsimileFacsimile

Copying machineNext gen. TVNext gen. TV

ScannerScanner

Computer peripherals

Copyingmachine

FacsimileFacsimileFacsimile

Ferroelectric liquid

cristaldisplay


cristaldisplay

Still video

camcorder

Digital cameraCamera

Business systemsPV cellPV cellPV cell

Handy terminalHandy terminalHandy terminal

PCs

Electronic

printing system

Japanese-language

Electronic

printing system

Japanese-languageJapanese-language

LBPLBP

Intra-firm technology spilloverMarket stimulation

Institutional technology spillover

M essage exchange

C om m unica tion

e-m ail

IP

G PS


1968 1980 1999 2001 2005

C am era

TV phone


In teraction

D iffusion

N ew functionality

O ne-seg

M essage exchange

C om m unica tion

e-m ail

IP

G PS


1968 1980 1999 2001 2005

C am era

TV phone


In teraction

D iffusion

N ew functionality

O ne-seg

B JB J

FacsimileFacsimile

Copying machineNext gen. TVNext gen. TV

ScannerScanner

Computer peripherals

Copyingmachine

FacsimileFacsimileFacsimile


cristaldisplay


cristaldisplay

Still video

camcorder

Digital cameraCamera

Business systemsPV cellPV cellPV cell

Handy terminalHandy terminalHandy terminal

PCs

Electronic

printing system

Japanese-language

Electronic

printing system

Japanese-languageJapanese-language

LBPLBP

Intra-firm technology spilloverMarket stimulation

(4) Co-evolutionary Acclimatization through Hybrid ManagementCanon’s hybrid management consists of (i) Market stimulation, (ii) Institutional technology spillover, (iii) In vitro fertilization, (iv) Acclimatization through coopetition, and (v) intra-firm technology spillover.

Digital economy Global co-evolution with US institutionalsystems through coopetion with HP

12

VendorsProposal b ased on operators ’ needs

OperatorsAnnouncement to the vendors

Discussion and adjustment

Products agreed by vendors and operators

Huge testing items than other country vendors

Double testing b y operators and feedback to vendors

Marketing dominated b y operators

Invisible efforts such as bugs solving

Operators bear the complaints/ praise of consumers

Feedback to the vendors

IVF(In Vitro

Fertilizat ion)

Inter-firm

techno

logy

spillove

r

Panasonic

NEC

Toshiba

Fujitsu

Mitsubishi

Sharp

Sanyo

Sony

Casio

Kyocera

9. Optics

10. Acoustic

11. Micro Devices

12. High Density

13. Application

14. Plat form

15. Security

16. Compression

1. Semi conductor

2. Electronics

3. Sensor

4. Materials

5. Battery

6. Wireless Communication

7. IC-card

8. Liquid Crystal

9. Optics

10. Acoustic

11. Micro Devices

12. High Density

13. Application

14. Plat form

15. Security

16. Compression

1. Semi conductor

2. Electronics

3. Sensor

4. Materials

5. Battery


7. IC-card

8. Liquid Crystal

Suspended technologies

Commercialized technologies

Camera

Microfilm system

Electronic

filing systemMicrofilm systemMicrofilm system

Electronic

filing system

Magnetic headsMagnetic headsMagnetic heads

LensLens

Video camcorder

8 mm Cinecamera

Video camcorderVideo camcorder

8 mm Cinecamera

Compact cameraCompact cameraCompact camera

Optical products

TV broadcasting lensTV broadcasting lensTV broadcasting lens

Optical fiberOptical fiber

Semiconductor

manufacturing

Semiconductor

manufacturing

Optical cardOptical card

X-ray cameraX-ray camera

Ophthalmic

equipment

Ophthalmic

equipment

X-ray digital cameraX-ray digital camera

TypewriterTypewriter

Synchroreader

PCsBilling machine

CalculatorCalculator

word processorword processorword processor

Coopetition

Printer

PC

Cannon

Ricoh..

Canon(LBP, BJ)

NECFujitsuSony

Toshiba・

・

・

DELLIBM・

・

・

→ HP →

OEM PCsCanon(LBP, BJ)

NECFujitsuSony

Toshiba・

・

・

DELLIBM・

・

・

→ →

OEM PCs

VendorsProposal b ased on operators ’ needs









Feedback to the vendorsVendors

Proposal b ased on operators ’ needs









Feedback to the vendors

IVF(In Vitro

Fertilizat ion)

Inter-firm

techno

logy

spillove

r

Panasonic

NEC

Toshiba

Fujitsu

Mitsubishi

Sharp

Sanyo

Sony

Casio

Kyocera

9. Optics

10. Acoustic

11. Micro Devices

12. High Density

13. Application

14. Plat form

15. Security

16. Compression

1. Semi conductor

2. Electronics

3. Sensor

4. Materials

5. Battery


7. IC-card

8. Liquid Crystal

9. Optics

10. Acoustic

11. Micro Devices

12. High Density

13. Application

14. Plat form

15. Security

16. Compression

1. Semi conductor

2. Electronics

3. Sensor

4. Materials

5. Battery


7. IC-card

8. Liquid Crystal



Camera

Microfilm system

Electronic

filing systemMicrofilm systemMicrofilm system

Electronic

filing system

Magnetic headsMagnetic headsMagnetic heads

LensLens

Video camcorder

8 mm Cinecamera

Video camcorderVideo camcorder

8 mm Cinecamera

Compact cameraCompact cameraCompact camera

Optical products

TV broadcasting lensTV broadcasting lensTV broadcasting lens

Optical fiberOptical fiber

Semiconductor

manufacturing

Semiconductor

manufacturing

Optical cardOptical card

X-ray cameraX-ray camera

Ophthalmic

equipment

Ophthalmic

equipment

X-ray digital cameraX-ray digital camera

TypewriterTypewriter

Synchroreader

PCsBilling machine

CalculatorCalculator

word processorword processorword processor

Coopetition

Printer

PC

Cannon

Ricoh..

Canon(LBP, BJ)

NECFujitsuSony

Toshiba・

・

・

DELLIBM・

・

・

→ HP →


NECFujitsuSony

Toshiba・

・

・

DELLIBM・

・

・

→ →


NECFujitsuSony

Toshiba・

・

・

DELLIBM・

・

・

→ HP →


NECFujitsuSony

Toshiba・

・

・

DELLIBM・

・

・

→ →

OEM PCs

Scheme of Canon’s Co-evolutionary Acclimatization.

Net income(2011/4-12/3)¥ billion

Nissan 340

Toyota 280

Canon 250

Honda 210

Hitachi 200

Komatsu 160

Mitsubishi 110

Shift to social infrastructure business

Focus on automotive equipments

Cost reduction, increase in competitive products

Advantage in knowhowin assembling

Providing HV technology to China

Canon’s unique business model

(1) Dramatic advancement of the Internet (2) Digitalization of manufacturing (3) New stream of emerging economies(4) Increasing anger of consumers

Beyond anticipation stream

2.3 Innovation – Consumption Co-emergence(1) Bi-polarization in High-technology Firms Profit:

TDK ▲2.5

NEC ▲100

Sharp ▲390

Sony ▲520

Panasonic▲770

Mitsubishi 110

Toshiba 65

Fujitsu 43Stagnation in Condenser

Mobile

TV

TV

TV

770 billion ¥= 8 billion Euro

Co-evolutionary acclimatization

1. Technological diversification strategy leveraging intra technology learning

2. Cooperation and competition (coopetition) between printer and PC

Co-emergence of Innovation and Consumption13

Business systems

Copying machine

Scanner

BJPrinters

LBP

Facsimile


cristal display

Still video

camcorder

Digital camera

CameraBusiness systems

PV cell

Handy terminal

Electronic

printing system

BJ

LBPFacsimileDigital camera

Next gen. TV

(2) Canon’s Unique Business Model1) Technological Diversification Strategy

Copying

Cooperation and competition (coopetition)

between printerand PC

PC by rival firms

14Canon’s Identical Business Model.

Optical products

TV broadcasting lens

Optical fiber

Semiconductor

manufacturing

Optical card

X-ray camera

Ophthalmic

equipment

X-ray digital camera

Microfilm system

Electronic

filing system

Magnetic heads

Camera

Lens

Video camcorder

8 mm Cinecamera

Compact cameraTypewriter

Synchro reader

PCBilling machine

Calculator

Japanese-language

word processor



Camera

PCs Terminated in 1998

Copying machine

Technologicaldiversification

Intra technologylearning

2) Virtuous Cycle between Printers and PCs- Learning by Inspiring Competitors -Coopetition

PrinterCanon

PCsNEC, Fujitsu,

Sony, Toshiba,,,

Induce PC demand

Rivals

Competition

Cooperation

Coopetition Advancement of PCS

Technological diversification


Ability to Produce attractive printerHigh efficient learning

15

Virtuous Cycle between Canon Printers and PCs.

Canon

External learning

Advancement of Printer

High efficient learning

PrinterCanon

Induce PC demand

RivalsCompetition

Cooperation

Coopetition

PCsNEC, Fujitsu,

Sony, Toshiba,,,,

Mobile phonesConsumers market

InduceIn-vitro

3) Acclimatization of Consumers Demand



Ability in emergingAttractive innovationHigh efficient learning

Intra-firm Rival firms Consumers

External learning

Inducecustomers demandin the market

Digital cameraCanon

In-vitrofertilization

Dynamism in Co-emerging Innovation and Consumption - In-vitro fertilization.

16

Market

OperatorsTechnological


Digital camera

Printer

MarketConsumer Operator

Vendor(PC producer)

Innovation

Consumption Innovation

4) Innovation-Consumption Co-emergence by Co-evolutionary Acclaimatization

1. Individual technology

(Own technology)

2. Intra-technology learning

(Domesticate Other organization within the firm)

3. Coopetition(Domesticate Rival firm )

4. In-vitro fertilization(Domesticate Market innovation )

Coretechnology

Rivalfirms

(PC)(Printer)

Rival firms

(Vendors)

Operators

Canon’s Business Model in Co-emerging Innovation and Consumption.


17

1) Limit of co-evolutionary domestication by firm level(i) Bi-polarization

(ii) Stagnation of IT

(iii) Consumption haters

2) Innofumption

2.4 Dynamism of Innovation - Consumption Co-emergence (1) From Innofusion to Innofumption

Vicious cycle Limit of co-evolutionary domestication by firm level

Integration of Consumption Function

Construct this dynamism between Tech. and Cons.

3) Co-emergence of Tech. and Cons.→ Spirally developing virtuous cycle→ Supra-functionality beyond economic value

4)Tech. and Cons. Co-emergence can be triggered by Resonance between signals emitted by Tech. and Cons. :Affordance(Gibson, 1977)

→ Resonance theory

5) Resonance is induced by Learning of Tech. and Cons. →→→→ Learning theory

18

(2) Integration of Production, Diffusion and Utilit y Functions: Innofumption

(iii) Production Diffusion Integration －－－－ Innofusion

(i) Production Function (ii) Diffusion Function (Cumulative Y diffuses as a function of T)

),( TXFY =Y

R

T

Y

X

X

Y

X

X

Y

Y

Y ⋅∂∂+∆

⋅∂∂=∆∑

Traditional production factors TFP


Growth rate

Y

R

T

Y

X

X

Y

X

X

Y

Y

Y ⋅∂∂+∆

⋅∂∂=∆∑

FD=

∂∂

T

YaY (1 )

1

increase rate

YNFD =

Y

R

T

Y

X

X

Y

X

X

Y

Y

Y ⋅∂∂+∆

⋅∂∂=∆∑ Y

R

T

Y

X

X

Y

X

X

Y

Y

Y ⋅∂∂+∆

⋅∂∂=∆∑

−=

−=∂∂

FDaY

N

YaY

T

Y 111

In order to maintain sustainable FD, self-propagating FD cycleshould be constructed by means of integration of utility function

MPT R&D intensity Functionality development

atbe−−−−++++==== 1Declining nature

Integration of Production, Diffusion and Utilization Functions: Innofumption.19


(iv) Production, Diffusion and Utility Integration －－－－ Innofumption

Utility function


T

Y

X

YXT

TX

∂∂−

∂∂=

lnln

/lnσ

1. FD enhances utility which induces C (consumption)leading to Y increase.2. Increased Y induces R (R&D) leading to T (technology stock)increase.3. Increased T enhances N (carrying capacity) leading to FD (= N/Y) increase.4. Increased FD increases MPT which induces higher ETS.5. Higher ETS induces X productivity increase ( ) 6. Increased productivity increases Y leading to self-propagating FD

X

Y

X

T

T

Y =⋅


: Elasticity of technology substitution (ETS) for X, andc: coefficient.

TXσ

Y

R

T

Y

X

X

Y

X

X

Y

Y

Y ⋅∂∂+∆

⋅∂∂=∆∑

FD=

∂∂T

YaY (1 )

1

ETS

MPT

Co-emergence of T and C

Innovative goodsincorporatingsupreme functionality

Consumersanticipating an exciting function.Emitting

tempting signals(Affordance)

Innovative goods Consumers

Innovative goods incorporating supreme function emit tempting signals, while consumers anticipatingexciting function emit anticipating signals. Both resonates each other and triggers co-emergence oftechnology and consumers.

Emittinganticipating signals(Eula)

(3) Resonance between Innovation and Consumption1) Resonance of Signals Emitted by Innovative Goods and Consumers

20

Resonance

Triggers co-emergence of technology and consumers

Innovative goods incorporate

supreme functionality

Consumers anticipating an

exciting function

Resonance of Signals Emitted by Innovative Goods and Consumers.

Trajectory of carrying capacity

Initial target setting, cumulative

Institutional spiral trajectory

IT driven self-propagating trajectory

Phase of interactions

Time t

Time t




IT driven self-propagating trajectory

Phase of interactions

Time t

Time t

IT Driven self-propagating trajectory


2) Resonance between Technology and Consumption in Mobile Phones

Market condition


Phase of interactionsResonant double spiral trajectory

Higher

Technology

Consumers

(i) T and C Resonance

Market condition


learning, various participants, etc. Market condition


learning, various participants, etc.

Periodogram

0.00E+00

5.00E+11

1.00E+12

1.50E+12

2.00E+12

2.50E+12

3.00E+12

3.50E+12

0 5 10 15 20 25 30 35

Fig. 11. Resonant Double Spiral Trajectory.

Comparison of Periodograms on the Development Trajectory of MP with and without IP Services.

Mobile phones with IP services (Feb. 1999 – May 2002)

Mobile phones without IP services (Jun. 1996 – Apr. 1999)

Power spectral density

Cycle period (months)21

Market condition functionality

Res

onan

ce

(ii) Trigger Co-emergence

3) Spectrum Analysis of the Diffusion Trajectory of Japan’s Mobile Phones

Number of subscribersN(t)

Difference: New purchase )(tN∆

without IP services with IP services

Resonance can be anticipated

)()()( tFtGtN ≡−∆Trend in new purchase eliminating time trend

Spectrum analysis using F(t): Periodogram

[ ]tT

nbt

T

na

ctf n

nn

ππ 2sin

2cos

2)(

1

0 ++= ∑∞

=

Time trend

Fourier Transform22

Innova-tion Co-emergence

Consu-mption

Advancement of institutions

Triggered by resonancebetween signalsemitted by both technology and consumer

Correspondence of consumers’ demand and innovation emerges new value which in turn enhances demand and innovation, and leverages learning leading to spirally developing virtuous cycle.

(4) Co-emergence of Innovation and Consumption

Inducement of innovation

Institutional innovation

Service system modeling Affordance

Dynamism Co-emerging Supra-functionality beyond Economic Value.

Hybrid management Systems science Ecological psychology

Supra-functionality beyond economic value

23

Co-evolution between innovation and institutions

New value could be created through interactions among variety of stakeholders

Signals inducing consumers and anticipating technology resonate

2.5 Supra-functionality beyond Economic Value (1) Significance of FD for Sustainable Growth

(2) Declining Nature of FD and Significance of Sustainable FD

(3) Earlier Emergence of Functionality Development

(4) Role of Learning in Innovation Dynamism

(5) Requirement for Earlier Functionality Development Emergence

(6) Sustainability of Functionality Development in Major Innovation

24

(6) Sustainability of Functionality Development in Major Innovation

(7) Functionality of Sustainable Functionality Development

(8) Innofumption enabled by Supra-functionality

(1) Significance of FD for Sustainable Growth As paradigm shifts to an information society, spot where innovation takes place shifts from production site to diffusion process leading to the significance of production diffusion integration: innofusion function.

(i) Production Function

(ii) Diffusion Function (Cumulative Y diffuses as a function of T)

),( TXFY =Y

R

T

Y

X

X

Y

X

X

Y

Y

Y ⋅∂∂+∆

⋅∂∂=∆∑

aTbe

NY −+

=1

,1

11

−=

−=∂∂

FDaY

N

YaY

T

Y

stageinitialtheatDiffusionb

capicityCarryingN

investmentDRR

CapitalK

goodsinnovativeofodY

:

:

&:

:

.Pr:

Y

NFD =

Y New functionality development model: Stimulate FD

TechnologyT

LaborL

:

:

FD: Functionality developmenta: Diffusion velocity

Growth

Traditional production factors (Labor, Capital)

TFP

R&D intensity

Marginal productivity of technology (MPT)

GDP

Diffusion velocity

FD

25

Economic growth dependent model: Depend on Y- Growth Oriented Trajectory

New functionality development model: Stimulate FD- New Functionality Development Initiated Trajectory

Japan (1980s, 1990s) US (1980s) US (1990s)

System conflict System match

Contribution to labor and capital

Marginal productivity of technology

TFP growth rate (technological progress)

−=∂∂

FDaY

T

Y 11

∑=

⋅∂∂+∆

⋅∂∂=∆

EMKLX Y

R

T

Y

X

X

Y

X

X

Y

Y

Y

,,,

)FD

(aYT

Y 11−=

∂∂

∑=

⋅∂∂+∆

⋅∂∂=∆

EMKLX Y

R

T

Y

X

X

Y

X

X

Y

Y

Y

,,,

YFD

Contrast of Growth Option.

(2) Declining Nature of FD and Significance of Sustainable FD

aTbe

NY −+

=1

aTbeY

NFD −+== 1

1. FD incorporates declining nature as follows:

2. Therefore, attaining sustainable FD is firms critical strategy.

ephemeral

26

1. While emergence of innovation creates new functionality, it obsolesces “immediately.”2. Given the lengthy years of efforts for emerging an innovation (e.g. 100 years from its origin),

life time of newly created functionality is an ephemeral existence.3. Firms sustainable development effort corresponds to the effort to prolong this ephemeral

existence.

10 years-100 years 0

FD

10 years-100 years 0

FD New functionality development(Potential capacity before reaching obsolescent stage)

l

(3) Earlier Emergence of Functionality Development

t

t

FD

])32(1[

33

q

p+−

+

dt

dY

Y

tqp

tqp

e

ep

q

⋅+−

⋅+−

−

+=

)(

)(

1

1

tqp

tqp

ep

qeN

Y⋅+−

⋅+−

+

−=)(

)(

1

)1(

FDFD∆

1t∆ t1

Earlier Emergence of FD

↓↓↓↓ ↑↑↑↑1t∆ FD∆

Aiming at identifying conditions enabling “learning from preceding innovation,” dynamic game between follower (imitator q) and leader (innovator p) in the diffusion process is analyzed by utilizing the Bass model.

27

t1t2

3

3

dt

Yd

t

t

t

( ) ( )

+

+−=

q

p

qpt 32ln

11

2

2

dt

Yd

Emergence of FD

Timing of the Emergence of Functionality Development.

Timing of FD emergence

03

3

=dt

Yd

p, q relation decreasing t1 (earlier FD emergence)

Learning from preceding innovation conditions leading to sustainable FD

Earlier Emergence of Functionality Development (Supplement)

t

t

FD

])32(1[

33

q

p+−

+

dt

dY

Y

tqp

tqp

e

ep

q

⋅+−

⋅+−

−

+=

)(

)(

1

1

tqp

tqp

ep

qeN

Y⋅+−

⋅+−

+

−=)(

)(

1

)1(

FD∆

1t∆ t1

Aiming at identifying conditions enabling “learning from preceding innovation,” dynamic game between follower (imitator q) and leader (innovator p) in the diffusion process is analyzed by utilizing the Bass model.

Y

NFD =

0,0 <>dt

dFD

pqd

dFD

0/

>⋅=dt

dFD

pdq

dt

pqd

dFD

0<dt Sustainable FD

**Appendix 2

28

t1 t2

3

3

dt

Yd

t

t

t

( ) ( )

+

+−=

q

p

qpt 32ln

11

2

2

dt

Yd

tqpe ⋅+−− )(1

Emergence of FD

Timing of the Emergence of Functionality Development.

↓↓↓↓ ↑↑↑↑1t∆ FD∆

Timing of FD emergence 03

3

=dt

Yd

p, q relation decreasing t1 (earlier FD emergence)

Learning from preceding innovation conditions leading to sustainable FD

YFD =

1t

Early emergency of FD

0<pqd

dt Sustainable FD condition

(4) Role of Learning in Innovation Dynamism

Increase in profits

Prices increase Prices decrease

Learning Economies of Black box

Traceable

Learnin

g ro

le in in

no

vation

emerg

ence

and

diffu

sion

dyn

amism

Learnin

g in

mo

delin

g

29

Role of Learning in Innovation Emergence and Diffusion Dynamism.

scale

Increase in production/sales

Functionality development: FD

Innovation effort

Black box

Traceable(Diffusion function)

Lack of data,uncertainties

To be measured by both ways

Learnin

g ro

le in in

no

vation

emerg

ence

and

diffu

sion

dyn

amism Learn

ing

role fo

r su

stainab

le FD

Learnin

g in

mo

delin

g

(5) Requirement for Earlier FD Emergence

03

3

=dt

Yd( ) ( ) ( )]32

ln[32

1ln

11 +

=

++−= x

yq

p

qpt

( ) x

yx

dx

dy

dx

dt

pdq

dt+

+== ]

32ln[

/11

where .2)]1([

])1[(,

)1(

1,

)1(

1

xp

pdx

dpx

dx

dy

xxpx

y

xpy

+

++−=

+=

+=

where and .yqp

xpq =+

= 1/

dt Necessary condition

p: innovatorq: imitator

Learning from preceding innovation ( q/p)

Earlier FD emergence of FD (t1 )

30

Therefore, can be developed as follows:

+

++++

+=

++

++

++−=

)1(

])32(

ln[])1[(1

)1(

1

)1(

1]

)32(ln[

)]1([

])1[(

/ 21

xp

xx

pdx

dpx

xpxxpx

x

xp

pdx

dpx

pdq

dt

pdq

dt

/1

In case when ,1)1(

])32(

ln[])1[()( −<

+

+++=

xp

xx

pdx

dpx

xW

0/1 <pdq

dt Necessary condition for earlier FD emergence

0/1 <pdq

dt

Sustainable FD

Diffusion Parameters in Major Innovative Goods and Services

Bi-Bass Model

N p q adj. R2

Printer a

LLBP(1975-1994)

1581(19.33)

5.43×10-

3

(15.13)

5.8×10-2

(9.94)0.999

LBP/BJ

(1987-2005)

97205(166.57

)

1.47×10-

3

(2.27)

2.9×10-

2

(37.96)0.999

MP(1990-2006)

MP 138216

(149.45)

0.12×10-1

(5358.9)0.58×10-1

(2616.7)

MP 265741

(170.24

)

0.22×10-

2

(1270.1)

0.35×10-1

(438.3)0.2×10-

x =q/p

10.7

19.3

5.0

15.6

2.59

-0.24

xd

pd

ln

ln=ε

-0.35

0.03

Sky Walker(1997/10)

0.999

Trigger of new innovation

tqp

tqp

tqp

tqp

ep

qeN

ep

qeN

tY)(

2

2

)(2

)(

1

1

)(1

22

22

11

11

1

)1(

1

)1()(

+−

+−

+−

+−

+

−++

−=– Diffusion of successive innovation

with leader and follower dynamism

LBP(1987)

q/p ratio increase

1.8

3.1

a Since the period of co-existence of LLDP and LBP/BJ was limited, simple Bas model was used for respective innovation.b Figures in parentheses indicate t-value. All demonstrates statically significant at the 5% level.c LLBP: Large-scale Laser Beam Printer; LBP: Laser Beam Printer; BJ: Bubble Jet Printer; LCD: Liquid Crystal Display; MP: Mobile phone; and Web: Internet dependency

based on the number of co.jp domains.d Sky Walker: Triggered e-mail transmission by mobile phone; TFTAM (Thin Film Transistor Active Matrix): Triggered interactive viewing system in TV; RSS 2.0 (Really

Simple Syndication): Triggered publishing updated works in a standardized form as blog and video; NGPVs (Next Generation PV System): Triggered acceleration of customers initiative in PV development and introduction by means of highly advanced next generation technology.

) (1270.1) (438.3)

LCD(2000-2008)

LCD 1 2.4×103

(1654.3)

0.3×10-2

(1654.3)

0.2×10-

1

(1654.3) 0.999LCD 2

2.4×103

(656.1)0.4×10-4

(1654.3)0.8×10-1

(1654.3)

Web(1993-2006)

Web 1.0

2.42×105

(145.87)1.38×10-5

(8.35)1.08×10-1

(58.33) 0.999Web 2.0

2.49×105

(75.66)0.25×10-5

(2.60)0.55×10-1

(22.74)

PV(1976-2007)

PV 1 0.50×105

(8.81)19.36×10-5

(3.87)

2.66×10-1

(45.22) 0.999

PV 212.71×105

(8.82)0.04×10-5

(5.72)4.11×10-1

(47.89)

0.607.3

7.8××××103

0.1××××104

105.4××××104

-0.87

-0.83

-0.92

1.9××××103

22.0××××103 -0.89

-0.83

RSS 2.0(2003/7)

NGPVs(2006)

TFTAM(2000)

260

2.8

1054

(6) Sustainability of FD by Major Innovation

0

0.5

1

1.5

2

5 10 50 100 500 1000 5000 10000 15000 20000 2500032+ x (q/p)

px

dxdp⋅=εεεε

LLBPx# = 11.1

)1(]

)32(ln[

1)(

x

x

x

xB+

−+

−=

MP 1

LCD 1

func

tiona

lity

Res

ista

nce

to in

nova

tion

LBP/BJq substitutes for pMP 2

)(ln

0 xBpdxdp >=⋅=> εεεε

(x = q/p) p, qdynamism forEarlier emergence ofFD

0/1 <pdq

dt

Sustainable Functionality Development Condition.

1. While latest high-technology products as LBP/BJ, MP 2, LCD 2, Web 1.0, Web 2.0, PV 1 and PV 2satisfy conditions for sustainable functionality development, LLBP (1976), MP 1 (1996) and LCD 1do not satisfy these conditions resulting in being substituted by LBP, BJ, MP 2 and LCD 2.

2. This can be considered as substitution from ‘resistance to innovation’ in the early introduction to market, to supra-functionality with customers own initiative.

-1

-0.5

Sup

ra-fu

nctio

nalit

y

Sky Walker

Web 1.0 Web2.0LCD 2

RSS 2.0 NGPVs

PV 2PV 1

)(ln

ln0 xB

xdpd

px

dxdp >=⋅=> εεεε

32

Sustainable FD by Major Innovation (Supplement)

0

0.5

1

1.5

2

5 10 50 100 500 1000 5000 10000 15000 20000 2500032+ x (q/p)

px

dxdp⋅=εεεε

LLBPx# = 11.1

)1(]

)32(ln[

1)(

x

x

x

xB+

−+

−=

MP 1

LCD 1

func

tiona

lity

Res

ista

nce

to in

nova

tion

LBP/BJq substitutes for pMP 2

ln pdxdp

(x = q/p) p, qdynamism forEarlier emergence ofFD

0/1 <pdq

dt

Sustainable Functionality Development Condition.

-1

-0.5

Sup

ra-fu

nctio

nalit

y

Sky Walker

LBP/BJ

Web 1.0 Web 2.0LCD 2

RSS 2.0 NGPVs

PV 2PV 1

)(ln

ln0 xB

xdpd

px

dxdp >=⋅=> εεεε

Really Simple Syndication Next Generation PV System(2006)

Magnitude of learningfrom preceding innovation

1. While latest high-technology products as LBP/BJ, MP 2, LCD 2, Web 1.0, Web 2.0, PV 1 and PV 2 satisfy conditions for sustainable functionality development, LLBP (1976), MP 1 (1996) and LCD 1 do not satisfy these conditions resulting in being substituted by LBP, BJ, MP 2 and LCD 2.

2. Among high-technology products with sustainable FD, PV2 (NGPVs) demonstrated conspicuously high level of learning from preceding nnovation.

TFTAMThin Film Transistor Active Matrix

q/p ratio increase 3.1 260 2.8 1054

Broad inter-sectoral learning

1. Highest magnitude of learning from preceding innovation

2. Conspicuous broad inter-sectoral learning

33

(7) Functionality of Sustainable FD

Explore new FD frontier

Instills customers“ exciting story with their initiative as heroes/heroines” and thrills them gratification

Printers

Print office

Mobile phone

Communication Watch

LCD Web

Passive information

PV

Electric power company

Depend on

only dependent

Purchase from

only

Resistance to new innovation

New Functionality Development Frontier Leading to Supra-functionality

thrills them gratification

Incorporates innovation new social,cultural and aspirational value beyond economic value

Home print Internet IPTV Blog Clean energyby own design

Explore new world

with as preferred as hero/heroines by own interior design

multimedia services

interactivity

Supra functionality

34

MP[Sky Walker]

Web[RSS 2.0]

PV[NGPVS]

E-mailtransmission

Blog, video, news headline

User orientedPV systems

Only communication

E-mailtransmission

Onlyvisit and watch

RSS Expensive,

inconvenient NGPVS

MP[Sky Walker]

Web[RSS 2.0]

PV[NGPVS]

E-mailtransmission

Blog, video, news headline

User orientedPV systems

Only communication

E-mailtransmission

Onlyvisit and watch

RSS Expensive,

inconvenient NGPVS

1) Sustainable FD by Learning from Preceding Innovation in MP, Web and PV

BroadInter-sectorallearning

35

New FD frontier which instills in users an “exciting story on their own initiatives as heroes/heroines” thrills them with gratification beyond economic value

New communication

community

Embraced by Web publisher

House designinterior

curtain, wall

New FD frontier which instills in users an “exciting story on their own initiatives as heroes/heroines” thrills them with gratification beyond economic value

New communication

community

Embraced by Web publisher

House designinterior

curtain, wall

Dynamism in Creating Sustainable FD by Learning from Preceding Innovation.

Learning from preceding innovation



q/p ratio increase15.6/5.0 = 3.1

q/p ratio increase

8.2108.7/100.22 33 =××

q/p ratio increase

1054101.0/104.105 44 =××

Among innovation with sustainable FD, NGPVs demonstrates conspicuously high FD advancement

Advanced solar cell(economically competitive) 1. Innovative solar cell technology

(user inspiring (e.g. color pigments, bendable))

2. Innovative PV systems technology(recycling and reuse process technology)

2001 2005 2006 2010

Suppliers initiative

R&D

on

sola

r cell

and

PV

sys

tem

s te

chno

logy

func

tiona

lity

in P

V d

eve

lopm

ent

Initi

ativ

e

Resistance to new innovation(expensive and inconvenient than traditional electric ity)

　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　Supra-functionality(explore new FD frontier which instills in users an “exciting story on their own initiat ives as heroes/heroines” thrills them with grat ification beyond economic value)

Next generation PV systems

Users initiative

Advanced solar cell(economically competitive) 1. Innovative solar cell technology

(user inspiring (e.g. color pigments, bendable))

2. Innovative PV systems technology(recycling and reuse process technology)

2001 2005 2006 2010

Suppliers initiative

R&D

on

sola

r cell

and

PV

sys

tem

s te

chno

logy

func

tiona

lity

in P

V d

eve

lopm

ent

Initi

ativ

e

Resistance to new innovation(expensive and inconvenient than traditional electric ity)

　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　Supra-functionality(explore new FD frontier which instills in users an “exciting story on their own initiat ives as heroes/heroines” thrills them with grat ification beyond economic value)

Next generation PV systems

Users initiative

2) Sources Enabling High-intensity Learning Broad inter-sectoral learning in NGPVs can be attributed to its strong mass development and user initiatives.

36

Preliminary research for Next generation PV systems

Mass development(standardization of performance, reliability

test for PV cells, modules, and systems)Phase I

(recycling and reuse process technology)

Mass development(performance monitoring tech., forecast for power

generation, environmental adjustments)Phase II

Economic value

R&D

on

sola

r cell

and

PV

sys

tem

s te

chno

logy

Mas

s de

velo

pment

Sup

ra-fu

nctio

nalit

yin

PV

deve

lopm

ent

Fun

ctio

nalit

y

Long-term perspective roadmap (Roadmap PV2030)

Social, cultural, andaspirational value

Preliminary research for Next generation PV systems

Mass development(standardization of performance, reliability

test for PV cells, modules, and systems)Phase I

(recycling and reuse process technology)

Mass development(performance monitoring tech., forecast for power

generation, environmental adjustments)Phase II

Economic value

R&D

on

sola

r cell

and

PV

sys

tem

s te

chno

logy

Mas

s de

velo

pment

Sup

ra-fu

nctio

nalit

yin

PV

deve

lopm

ent

Fun

ctio

nalit

y

Long-term perspective roadmap (Roadmap PV2030)

Social, cultural, andaspirational value

Dynamism Inducing Broad Inter-sectoral Learning in NGPVs.


Housemaker

PVmaker

General contractor

Engineeringmaker

Electric/powermaker

Systematization

Constructionmaker

PVmaker

Manufacturingequipment maker

Systemmaker

Silicon material,substrate

Raw material,

cell/module

Electronic component

Other raw materials

Nonferrous metal

Chemical

Glass/Ceramic

Steel

Metal

Machinery

Electronic/Electric

Transportation

Precision

Cell

Module

InverterEquipmentBattery

Integration of PV module

Related industry

Housemaker

PVmaker

General contractor

Engineeringmaker

Electric/powermaker

Systematization

Constructionmaker

PVmaker

Manufacturingequipment maker

Systemmaker

Silicon material,substrate

Raw material,

cell/module

Electronic component

Other raw materials

Nonferrous metal

Chemical

Glass/Ceramic

Steel

Metal

Machinery

Electronic/Electric

Transportation

Precision

Cell

Module

InverterEquipmentBattery

Integration of PV module

Related industry

3) Inter-sectoral Learning Accelerating Full Utilization of Learning from Preceding Innovation

Broad inter-sectoral

Broad inter-sectoral learning together with self-propagating diffusion dynamism under strong users initiatives accelerates full utilization of learning from preceding innovation.

37

Individual Company Autonomy Government IPPa Electric power company

Housemaker

PVmaker

General contractor

Engineeringmaker

Electric/powermaker

utility

utility

Individual Company Autonomy Government IPPa Electric power company

Housemaker

PVmaker

General contractor

Engineeringmaker

Electric/powermaker

utility

utility

Industrial Network Induced by PV Development.1970s 1980s 1990s 2000s

PV development

<New concept PV b >(Dye-sensitised)

<Crystalline PV>

<Chemical PV>

<Amorphous Si PV><CISa thin film PV>

<Poly Si PV>

1970s 1980s 1990s 2000s

PV development

<New concept PV b >(Dye-sensitised)

<Crystalline PV>

<Chemical PV>

<Amorphous Si PV><CISa thin film PV>

<Poly Si PV>1. Innovative solar cell technology inspiring users (e.g., color pigments, bendable).

2. Innovative PV system technology ( e.g., recycling, reuse process technology)

3. Mass development (performance monitoring, forecast for power generation, environmental adjustment).

4. Users initiative inducing social, cultural, emotional and aspirational value.

Fully utilizing learning from preceding innovation


a IPP: Independent Power Producer

Installed capacity (10 MW)

4) PV Development Dynamism in Japan

Power generation cost (|kWh)

Prices of system(10thos. ¥/kW)

Total installedcapacity

Installed capacity(residential use)

Prices of system for residence (10thoud. ¥/kW)

1. Learning from preceding innovation

2. Earlier FDemergence

3. Sustainable FD4. Broad inter

-sectorallearning

5. Users initiative

Japan maintains institutional advantages in PV development as technology-driven energy and endeavors maximum utilization of learning potentials.

38

Government subsidy

Trends in PV Development in Japan (1993-2011).

2008 2009 2010 2011

72 62

5. Users initiative in eco-friendly innovation

6. Resonance between suppliers and users

(8) Innofumption enabled by Supra-functionality


: Elasticity of technology substitution (ETS) for X,

TXσ

Utility function


Y

R

T

Y

X

X

Y

X

X

Y

Y

Y ⋅∂∂+∆

⋅∂∂=∆∑

−=∂∂

FDaY

T

Y 11

T

Y

X

YXT

TX

∂∂−

∂∂=

lnln

/lnσ

Productionfunction

Diffusionfunction

Utilityfunction

Inno-fusion

Innofu-mption

1. Co-evolution between innovation (FD) and institutional systems (C)

6. Supra-functionality functions Innfusion39

Innova-tion Co-emergence

Consu-mption

Advancement of institutions

Triggered by resonancebetween signalsemitted by both technology and consumer

Supra-functionality beyond economic value

Inducement of innovation

Y(T1)

Y(T2)

Y(T3) T3 > T2 > T1

Y

N/2

33++++N

N

Level of diffusion when FD emerges t

2. Co-emergence of innovation and consumption enabled earlier emergence of FD leading to supra-functionality

123 ttt

3. Earlier emergence of FD4. Sustainable FD5. Supra-functionality

2.6 A Way to Supra-functionality (1) Historical Trajectory

(1) Rapid economic growth (1960s)(2) Energy crises(1970s)

(3) Bubble economy/bursting(1987-1991) (4) New economy(1990s)

2015

Japan

US/Europe

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Post information society>

Technology developmentProduction/quality

controlLogistics

Industrial society Information society >< <<

(5) Sub-prime loan/Lehman shock

40

(5) Sub-prime loan/Lehman shock(2006-2008)

1972 1979 1985 1990 2000 2004

Socio-cultural functionality

Economic functionality

Energy conservationSmall is beautiful

EcoCool

SensitivenessPrivate brand

Community service“Wabi, sabi”

Supra-functionality

(Aesthetic sense in Japanese art emphasisingquiet simplicity)

107.8 103.8

100

74.1 80

100

120

(1973年度＝100)

Index: 1973 = 100

(1973年度＝100)

Index: 1973 = 100Index

(1973年度＝100)

(2) Trend in Energy Consciousness Corresponding to Economic Environment

Simultaneous global

stagnation

Unit energy consum

ption

41

58.5 55.5

60.4 59.7 58.3 55.6

0

20

40

60

65 70 73 75 80 85 90 95 00 05 08

（年度）Fig. 3. Trend in Unit Energy Consumption in Japan’s Manufacturing Industry (1965-2008).Fig. 3. Trend in Unit Energy Consumption in Japan’s Manufacturing Industry (1965-2008).

65 70 73 75 80 85 90 95 00 05 08

Fig. 3. Trend in Unit Energy Consumption in Japan’s Manufacturing Industry (196

11971973 1979 1990 2001 200740

Trend in Unit Energy Consumption in Japan’s Manufacturing Industry (1965-2008).

Unit energy consum

ption

①①①① Social value

②②②② Cultural value

③③③③Aspiration value

Energy

conservation

Small is beautiful

Eco

Cool

Distance between firms and society→ Creating Shared Value(CSV)

Social welfare、、、、Support of social disabilitySocial communication

Brand, Private brand (PB)“Wabi, sabi.” Cool, Cute, J-sense

Aspiration to traditional beautyGenuine, real thing

(3) Sublimation to Supra-functionality beyond Economic Functionality

42

④④④④ Tribal value

⑤⑤⑤⑤ Emotional value

Cool

Sensitiveness

Private brand

Community service

Wabi/sabi

Genuine, real thing

Cognitive senseTribal senseLove of home province

Perceptional valueAppeal to sensesSensitiveness

Customers decision making

Behave as rational based on economic value→ Private psychology, social mood→ Socio-psychological factor

- Similarity and Disparity between Singapore and Finland(1) Similarity

1) High Competitiveness

High level of economic development

High level of Network develop/depend

Highly organized institutional systems

Singapore

49.3 1000US$

NRI No. 2

Finland

48.8

NRI No. 3

Efficiency of legal frameworkTransparency of governm. Policy making

2.7 Growth Option: Supra-functionality Seeking or Economic Functionality Oriented

43

Transparency of governm. Policy makingEthical behavior of firmsQuality of the educational system

High level of competitiveness No. 2 No. 3 in the world

Finland Singapore Japan USA China

Global competitive ranking 3 2 10 7 29

Population (mil.) 5.4 5.3 127.9 312.0 1347.4

GDP/capita (1000US＄＄＄＄: actual) 48.8 49.3 45.9 48.3 5.4Networked Readiness Index ranking 3 2 18 8 51

R&D intensity (per GDP %)

Energy intensity (Mtoe/mil . US$)

3.1

230

2.2

140

3.3

100

2.7

190

1.8

810

2012

2011

2011

2011

2011

2009

WEF (2012)

IMF (2012)

IMF (2012)

WEF (2012)

Battelle, Chinese Bureau

of Statistics (2012)

IEA (2010)

2) Sources of Competitiveness in Finland and Singapore in Comparison to Japan, US and China

44

Energy intensity (Mtoe/mil . US$)

Efficiency of legal framework

230 140 100 190 810

Transparency of government policy making5.7

6.3 5.1 4.9 4.5

Ethical behavior of firms

Quality of the educational system

6.2 6.2 4.5 5.0

Population density (/Km2)16 739 3 33

Income disparity (GINI index )

World happiness index ranking

26 52 38 45

2009

2009

2009

2009

2009

2011

2002-07

2011

IEA (2010)

WEF (2010)

WEF (2010

WEF (2010)

WEF (2010)

IMF (2012)

CIA (2002-07)

UN (2012)

6.0 6.2 5.3 4.9 3.95.7 6.3 5.1 4.9 4.5

6.6 6.6 5.6 5.2 4.2

6.2 6.2 4.5 5.0 3.8

16 7428 338 32 14047

2 33 44 11 112

(2) Disparity1) Disparity and Its Sources

Singapore Finland

Cultural dimension of the nations

Economic development strategy

HigherPower Distance (PDI: Power and inequality) andMasculinity (MAS: distribution

of roles between genders)

Home attracting

Higher Individualism(IDV) and Uncertainty Avoidance (UAI)

Abroad exploring

45

Economic growth

Unemployment

Income disparity

Birth rate

Happiness

Sustainably conspicuous

Low

High

Low

Low

Stagnating

High

Low

High

High

Supra-functionality beyond economic value?

4

6

8

10

12

14

2) Cultural Dimensions of the Nations in 5 Countries

1. Finlanddemonstrates higher Individualism (IDV) and Uncertainty Avoidance (UAI) than Singapore.

2. Singaporedemonstrates higherPower Distance (PDI: Power and inequality) and Masculinity(MAS: distribution of roles between genders)than Finland.

Finland Singapore Japan USA China

3.3 7.4 5.4 4 8

6.3 2 4.6 9.1 2

2.6 4.8 9.5 6.2 6.6

5.9 0.8 9.2 4.6 3

4.1 4.8 8 2.9 11.8

PDIIDVMASUAILTO

0

2

Finlang Singapore Japan USA China

Source: G. Hofstedo, Cultures and Organizations, McGraw-Hill International, London (1991).

than Finland.

Singapore Finland Japan USA China

1.02 0.99 0.97 0.99 1.00

Home

Abroad

ForeignerHomenation

GNP

GDP

3) Comparison of GDP and GNP per capita in 5 Countries in 2009-2012

Clear contrast between Home attracting (Singapore) and Abroad exploring (Finland).

GDP/GNP

Home attracting

Abroad exploring

47

GNP

4) Unemployment rate in 3 Countries in 2012

Singapore Finland Japan

2.13 7.64 4.51 %

5) Birth rate in 3 Countries in 2010

Singapore Finland Japan

1.3 1.9 1.4

0

5

10

15

1 2 3 4

0

5

10

1 2 3 4

0

10

1 2 3 4

0

10

1 2 3 4

4.62 3.81 3.07 -0.54 4.81 2.63 0.96

10.12 9.08 7.81 8.57 5.84 4.83 6.62

9.3 4.5 4.64 1.42 0.85 1.2 0.35

4.21 3.27 3.25 2.54 4.35 2.41 0.74

1961-1970(Ind. society)

1971-1980(Energy crisesIn 1973,79)

1981-1990(bubble economy in Ind. society)

1991-1995(Inform. Society,Relax. of cold war) .

FinlandSingaporeJapanUSA

1961 1971 1981 1991 1996 2001 2006-1970 -1980 - 1990 -1995 -2000 -2005 - 2010

Economic Development Trajectories in 5 Countries(1961-2010):- Real GDP increase rate (% p.a)

6) Economic Growth Trajectory

Industrial society Information society Post-infm society

1991 Bursting of Japan’s bubble economyCommercialization of the InternetCollapse of USSR-10

0

5

10

1 2 3 4

0

5

10

1 2 3 4

0

10

1 2 3 4

Finland Singapore Japan US

.1996-2000(Inform. SocietyAsian financial ct¥risis in 1997)

2001-2005(Post inform. Socireyy after the IT bursting in 2000)

2006-2010(Post-excessive consumption society)

Commercialization of the InternetCollapse of USSR

1998 Asian financial crisis

2000 Bursting of the Net bubble

2006 US sub-prime loan issue

2008 Lehman shock

2010 Euro crisis

48

7) Comparison of Education Policy between Singapore and Finland

Singapore Finland

Score-oriented Individual, Self, Harmony

Competition Equal opportunity

Efficiency Redundancy

Medium High social statusHigh level expertise

Basic principle

Teacher’sHigh level expertise

Control Support

Teacher’ssocial status

Stance of the state

Economic functionality oriented Supra-functionality seeking

49

References1.

2.

3.

4.

5.

6.

C. Chen and C. Watanabe, “Competitiveness through Co-evolution between Innovation andInstitutional Systems: New Dimensions of Competitivenessin a Service-oriented Economy,”Journal of Services Research 7, No. 2 (2007) 27-55.

J.J. Gibson, “The Theory of Affordances,” in R. Shaw and J. Bransford (eds.),Perceiving, Actingand Knowing, Erlbaum, Hillsdale, NJ (1977).

R. Kondo, C. Watanabe and K. Moriyama, “A Resonant Development Trajectory for ITDevelopment: Lessons from Japan’s i-mode,”International Journal of Advances in ManagementResearch 4, No. 2 (2007) 7-27.

V. Mahajan, E. Muller and F.M. Bass, “New Product Diffusion Models in Marketing: A Reviewand Directions for Research,”Journal of Marketing 54 (1990) 1-26.

D. McDonagh, Satisfying Needs beyond the Functional: The Changing Needs of the Silver MarketConsumer,Proceedings of the International Symposium on the Silver Market Phenomenon, Tokyo(2008).

M. Polanyi,Knowing and Being, Universityof ChicagoPress,Chicago(1969).6.

7.

8.

9.

10.

11.

M. Polanyi,Knowing and Being, Universityof ChicagoPress,Chicago(1969).

C. Watanabe,Managing Innovation in Japan: The Role Institutions Play in Helping or HinderingHow Companies Develop Technology, Springer, Berlin (2009).

C. Watanabe, K. Moriyama and J. Shin, “Functionality Development Dynamism in a DiffusionTrajectory: A Case of Japan’s Mobile Phone Development,”Technological Forecasting and SocialChange 76, No. 6 (2009) 737-753.

C. Watanabe and J. Shin, “Co-evolutionary Dynamism betweenInnovation and InstitutionalSystems: The Rise and Fall of the Japanese System of Management of Technology,” in C.Watanabe (ed.),The Science of Institutional Management of Technology, Tokyo Institute ofTechnology, Tokyo (2009) 21-34.

C. Watanabe, W. Zhao and M. Nasuno, “Resonance between Innovation and Consumers:Suggestion to Emerging Market Consumers,” Journal of Technology Management for GrowingEconomies 3, No. 1 (2012) 7-31.

C. Watanabe G. Kanno, and Y. You, “Inside the Learning Dynamism Inducing the Resonancebetween Innovation and High-demand Consumption: A Case of Japan’s High-functional MobilePhones,”Technological Forecasting and Social Change 79, No.7 (2012) 1292-1311.

19

International

NationalIndustry

Sector

Firm

TechnologyInteraction

1 A Comparison of Competitive Economic Growth between Finland and SingaporeInternational Growth

Primal analytical dimension

Term Paper submit to [email protected] by 31 Aug. 2013

Industry

Examples

Subject

Analyze noteworthy business modelFrom the view of Institutional innovation

2.Technology Diffusion and Spillover through foreign direct investment (FDI) in Singapore3. Co-evolutionary Dynamism for Sustainable Innovation: Green Growth Policy

Creates New Development Economics

4. Strategic Opportunities for the Oil and Gas Industries in India5. Analysis of the Tablet PC Industry & Market

6. Comparison of Technology Diffusion for Auto Manufacturing Industries

7. Rate of Return to R&D Investment Comparison between Huawei and Alcatel-Lucent

8. Strategies Adopted by Apple and Samsung toward Smart Phone Innovation

9.. Diffusion of Two Co-Existing Innovation: Cellular Phone vs Smart Phone

10. Co-evolution Dynamism of Mobile Phone in Emerging and Developed Markets

11. Analysis of PV Technology Industry, Solar Technology Development in China

National

Industry

Sector

Firm

Technology

Diffusion/spillover

Co-evolution

SpilloverLearning

Diffusion

Rate of return to R&D

Diffusion/learning

Diffusion

Co-evolutionDiffusion/Learning

51

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