Information Networks and Corporate Competitiveness

No.20
November 1997
Research Fellow Hidetaka Yoneyama

1. Two representative examples of the new trend in business management are competence specialization and outsourcing. This trend dates back to the latter half of the 1980s when the process of reengineering management systems spread throughout the U.S. This was characterized by external cooperation via the sharing of information over information networks.
2. Information sharing and external cooperation have long been characteristics of the Japanese-style system, but the current U.S.-style system seeks to use information networks as a tool to actualize sharing and cooperation. The difference between the Japanese and U.S. systems, then, lies in the breadth of sharing and cooperation-in other words, whether or not information sharing and external cooperation in Japan is limited to the narrow confines of keiretsu (industrial groups).
3. 3. Whereas the Japanese system boasts superiority in an environment of continuous change, the U.S. system's superiority lies in discontinuous environmental change and large-scale operations. For example, in the information industry of recent years, the speed of environmental change and technological innovation has accelerated, and responding to these changes solely with internal management resources poses difficulty. To respond to this environment it is thus necessary to broaden the scope of and possibilities for information sharing and cooperation outside of the company, and it is here that the U.S. system enjoys an advantage.
4. In contrast to the U.S. system, Japanese companies up until now have been able to forge a flexibility to environmental change through information sharing between divisions and companies within keiretsu, and by accumulating improvements in various processes and product functions. This system does not adapt well to discontinuous change, but it has brought about the high-level manufacturing techniques that have been the basis of Japanese companies' competitive advantage. In fields such as this, the same system still has the potential to protect Japan's competitive advantage.
5. In order for this system to continue to succeed, however, the use of information networks is vital. This is because as production continues to move overseas, if information networks are not used it will become difficult to maintain the close information sharing of the past. At the same time, in order for Japan to catch up to the U.S. in cutting-edge fields like the information industry, it is crucial to learn from the U.S.'s management style.

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