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Email this citationCIAO DATE: 11/02
From Keiretsu to Startups: Japan's Push for High Tech Entrepreneurship
Henry Rowen, A. Maria Toyoda
October 2002
How much does it matter that Japan creates relatively few new high technology companies? Many observers estimate,or at least assume,that entrepreneurial dynamism and its associated innovations promote economic growth and in the long run are necessary for it. In recent years there has been much attention devoted to fostering such new firms in many countries, including Japan, with much of this interest derived from the example of Silicon Valley. Before the 1990s, after several decades of excellent performance by the Japanese industry, any observer noting that it had few new high tech companies would probably have met with indifference. Success spoke for itself. Now,after an economic plateau lasting over a decade, questions about the late and relatively small-scale emergence of high tech startups have become increasingly salient.
Specific questions are raised here about the institutional,legal,and social contexts in which startups are created,funded,and compete in the market. Japan's famed economic policies and institutions of the catch-up and high-growth eras have come under criticism for producing rigidities that undermine and delay the creation of high-risk, high-return startups. In this chapter, we consider functions of regulation, finance, and the national system of innovation, and how these factors affect entrepreneurship in high technology. Other factors, such as culturally mediated preferences, might also be important, but we do not address them here. We compare Japan's institutions with those found in the United States,where high tech entrepreneurship has flourished in many areas. We note significant changes made, or being planned, in the regulatory and financial spheres in Japan. We conclude that while Japan still has much work ahead in dismantling the embedded barriers to high tech entrepreneurship, there is gradual convergence toward the mix of policy- and market-driven behavior that has enabled the rapid creation and rise of startups in the United States.
