Innovation by Strategic Community-Based Firms

Recently, markets in the hi-tech field such as system LSI are suddenly in the process of being started up by Japanese semiconductor manufacturers and firms such as Canon, Matsushita Electric and Sharp, who are large Japanese manufacturers in the digital consumer electronics field. The characteristic points about these companies lie in the accumulated know-how resulting from core technical strength, thorough-going cost reductions and quality improvements due to production reforms. In the United States, on the other hand, the dynamic growth of dot-corn companies such as Intel, Microsoft and Dell and traditional American companies such as IBM and GE is eye-catching, though the characteristic points about these rapidly growing companies are that they are simultaneously pressing for and attaining inconsistencies in economies of scale, economies of scope, and economies of speed in their individual industries. Together with the development of ICT, when transaction costs and interaction costs are lowered, it becomes difficult to pursue three different economies at the same time, and the company is forced to specialize its business domain by ‘concentration and selection’ (Hagel and Singer, 1999). This is the proper argument for implementing strategy under established conditions.