Inside the learning dynamism inducing the resonance between innovation and high-demand consumption: A case of Japan's high-functional mobile phones

Abstract

Confronting the simultaneous global economic stagnation that has resulted in diminishing consumption, a new driver which can instill in customers an exciting story with their own initiative and thrills them with gratification of consumption is essential. Japan's mobile phone driven innovation may provide a constructive suggestion to this requirement.

On the basis of an empirical analysis focusing on the learning dynamism for innovative products in Japan's digital industry, this paper demonstrates the foregoing hypothetical anticipation. Based on measurement of dynamic learning coefficients for seven leading innovative products centered on mobile phones, the Granger causal test, Chow forecast test and wavelet analysis were conducted, and the significant role of mobile phones in leveraging broad dissemination, learning and absorption of core technologies essential to the advancement of digital industry was identified. Furthermore, significant role of demanding customers in inducing resonance between mobile phones learning and that of innovative products was demonstrated.

Introduction

Contrary to the high technology miracle of the 1980s, Japan experienced long-lasting economic stagnation in the 1990s. This dramatic shift can be attributed to co-evolution between innovation and institutions in an industrial society and its disengagement in an information society [15]. However, a swell of new recovery emerged in the early 2000s [19]. Mobile phone driven innovation triggered a surge in co-evolution [16], [19] as the number of mobile phone subscribers grew rapidly and exceeded those for fixed phones from 1998 as illustrated in Fig. 1. Furthermore, the introduction of i-mode service in February 1999 accelerated IP mobile diffusion which stimulated interaction with institutions [11]. Extensive interaction with institutions increased the learning coefficient [3] which enhanced functionality development from talk to see, see and talk, listen, take a picture, pay, and then watch [17]. Thus, self-propagating dynamism during the course of diffusion has been constructed as shown on the right side of Fig. 1 [2].

Such a high-functionality requirement is unique in Japan's institutions with abundant curiosity, assimilation proficiency, thoroughness in learning and absorption [16], [19]. This can be satisfied by a tight operator–vendor relationship that leads to co-evolution between them [3], [21]. This co-evolution is similar to the closed system of Japan's automobile manufacturers and their parts suppliers as well as printer and personal computer companies [18] in that it involves leading electrical machinery firms engaging in severe competition to satisfy institutional technology spillover requirements raised by demanding customers in a self-propagating way [17]. Thus, dual co-evolution through (i) market learning and (ii) operator–vendor interaction has been constructed in Japan's mobile phone development as illustrated in Fig. 2 [3], [20]. This dual co-evolution induced the mobile phone driven innovation that emerged at the beginning of the 2000s and stimulated reactivation of Japan's economy [16], [19]. Japan's leading Information and Communication Technology (ICT) think tank firm ICR [9] demonstrated that while the share of Japan's ICT industry in its GDP remained 2.2% in 1995 and 2/3 of that of automobile industry (AI: 3.3%), it increased to 3.5% in 2000 exceeding the share of AI (3.2%) and 4.3% in 2004 while that of AI was 3.5%. ICR stressed that significant driver leading ICT industry's conspicuous jump can be attributed to dramatic increase in mobile industry sharing 20.8% and 30.7% in IT in 2000 and 2004, respectively.

Mobile phone driven innovation can be attributed to both indigenous strength in manufacturing technology and the effects of cumulative learning from digital technology [11]. Watanabe et al. [17] demonstrated that effective utilization of learning effects can be the sources of its self-propagating development. It acquired new functionality from digital industry during the course of the dual co-evolutionary development process as demonstrated in Table 1.

Table 1 suggests that new functionalities have steadily been assimilated into mobile phones through mutual learning [1] with such innovative products as televisions, video record/reproducers, digital cameras, video cameras, car navigation, and audio [4], [5], [8].

To date, while not a few studies have analyzed the dynamism inducing learning [14], effects of learning both by learning by doing and learning by searching [6], [9], [10], [13], and also stimulating assimilation of technology [4], [5], they have concentrated on macro aspects and are hardly satisfactory for analyzing co-evolutionary dynamism (a mutually inspiring virtuous cycle) as a consequence of learning between digital technologies. Williams et al. [22] postulated a concept of domestication which tames assimilated spillover technology for a whole institutional system in a co-evolutionary way. Watanabe et al. based on their analyses on dynamic learning coefficient [14], [16] and also resonance [11], attempted to apply this concept in identifying the functionality development dynamism in mobile phones [17]. It was postulated that mobile phones attract a broad range of users by incorporating super-functionality, and users are not passive but producers of an exciting story with their own initiative that then thrills them with gratification of consumption. Therefore, upon being influenced by the excitement of mobile phones, users are transformed into explorers in search of further exciting stories based on their own initiative and this then thrills them with gratification of such exploration. Fig. 3 demonstrates the functionality development dynamism in mobile phones.

This postulate may lead to constructive insight for identifying a possible new driver that will shape the new consumption structure in a post-global economic stagnation. However, details concerning the learning dynamism still remain a black box. This paper, on the basis of an empirical analysis of the learning dynamism for innovative products in Japan's digital industry, attempts to elucidate this dynamism.

Section 2 outlines the analytical framework. Empirical analysis on the learning dynamics of digital technology is presented in Section 3. Section 4 briefly summarizes new findings and policy implications.