Imitation and convergence

A final reason for the gradual opening-up of Japanese production networks is that some Japanese firms have consciously set out to imitate what they perceive to be successful strategies by their American counterparts. This desire for emulation not only characterizes the large, diversified business groups like Matsushita, Hitachi, Toshiba, NEC and Fujitsu but also medium-sized companies that have become global competitors like Kyocera, Canon, and Sharp, and many others whose names are less familiar to Western observers. As American computer and semiconductor firms have been able to consolidate their competitive position during the early 1990s, learning from the American experience has become a top priority for their Japanese counterparts. This is hardly surprising, in that US subsidiaries in Southeast Asia and the NICs have been even more profitable than their Japanese counterparts  Japanese managers frequently mentioned Hewlett-Packard  which conducts much of its R&D for its printers in Singapore, as a model they would like to emulate.22 Other American role models frequently mentioned are GE, Compaq, and the successfully restructured IBM. Imitation generates a complex process of hybridization where partial convergence coexists with persistent diversity. The fact that NEC has learned from Compaq’s new strategy to combine price leadership with differentiation through a systematic rationalization of its IPNs, does not imply that NEC will develop in an identical manner. Although it has absorbed some elements of Compaq’s approach, NEC has preserved some of its idiosyncratic features. For instance, Compaq has moved to an extreme form of outsourcing: in a contract with Taiwan’s Mitac International, Compaq outsourced all stages of the value chain except marketing for which it retains sole responsibility.23 NEC, however, prefers a much more gradual approach that enables it to balance some dispersion of value-chain stages with what it perceives to be necessary to maintain corporate coherence. To achieve this balance, at home NEC maintains an integrated set of high value-added manufacturing and knowledge-intensive support services that it considers necessary to exercise systemic control. At the same time, NEC supports a substantial two-way flow of personnel between its three major product units in Japan  and its overseas affiliates. Such systematic rotation is regarded as essential to establish a two-way learning process: (1) a transfer of NEC routines from Japan to overseas affiliates and suppliers, and (2) a continuous flow of feedback information on the functioning of these different nodes of its IPNs, including information on new trends in local capabilities and market requirements. In short, NEC remains distinctively different from Compaq with its focus on the generation and groupwide distribution of tacit knowledge.24 We could cite many other examples to support the argument that learning from the American experience is consistent with persistent diversity. Practically all the leading Japanese electronics firms over the last few years have attempted to learn from the American experience. The following example of Yokogawa Electronic shows that this is also true for second-tier, medium-sized companies 25 Yogokawa has long-standing links with two American companies, each of which in its own field is widely regarded as a pacesetter for organizational innovations. Since 1963, Yogokawa has had a joint venture with HP, originally for measurement equipment and control devices, and now for PCs and workstations. Since 1982, it has also had a joint venture with General Electric  which has become a worldwide market leader for small-scale computed tomography equipment. Yogokawa’s management has stressed the crucial importance of learning from US management practices.26 How did this emulation develop in practice? Does this desire to learn from American partners imply that Yogokawa is simply transforming itself into a clone of HP or GE? And, furthermore, has such learning been a one-sided affair where Yogokawa adopts features of its American partners, while the American partners  unchanged? Clearly, not so. Yogokawa continues to differ from American firms in essential features of its organization. For instance, one important objective of the company’s “global corporate management” doctrine is to balance increasing empowerment at every node of its IPN with corporate coherence. This brings us back to our earlier example of NEC: the key mechanism for providing such coherence is an elaborate scheme of information-sharing through constant rotation of human resources. The focus is on the exchange of tacit knowledge embodied in skilled operators, technicians, engineers, and managers. This peculiar approach to human resource management continues to distinguish Japanese firms from most of their American competitors.