Leading Without Followers: How Politics and Market Dynamics Trapped Innovations in Japan’s Domestic 'Galapagos' Telecommunications Sector

29 Pages Posted: 11 Jun 2011

See all articles by Kenji E. Kushida

Kenji E. Kushida

Stanford University Shorenstein Asia-Pacific Research Center

Date Written: March 25, 2011

Abstract

While globally successful Japanese industries were able to use their domestic market as a springboard into international markets, Japan’s telecommunications sector became decoupled from global markets, trapping Japanese ICT firms in the domestic market. This persistent pattern of leading without followers was not simply the result of misguided technological choices, ill-informed corporate strategies, or insular government standard-setting processes. Rather, the dynamics of competition, shaped and reshaped by political dynamics and regulatory structures, decoupled it from global markets. These dynamics created a "Galapagos effect," in which winning in an isolated domestic market led to losing in global markets. Major regulatory shifts transformed the dynamics of competition since the late 1990s, decreasing the isolation of Japan’s telecommunications sector, but some factors pulling it along a proprietary trajectory persist. This paper highlights the dilemma of how to develop beyond a follower status, but avoid becoming a leader without followers.

Keywords: telecommunications, ICT, Japan, information technology, political economy

Suggested Citation

Kushida, Kenji E., Leading Without Followers: How Politics and Market Dynamics Trapped Innovations in Japan’s Domestic 'Galapagos' Telecommunications Sector (March 25, 2011). Journal of Industry, Competition and Trade, 2011, Available at SSRN: https://ssrn.com/abstract=1861208

Kenji E. Kushida (Contact Author)

Stanford University Shorenstein Asia-Pacific Research Center ( email )

Stanford, CA 94305
United States

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