Structural change in techno‐production of Japan’s automotive industry

While Japan’s automotive industry increased its production during the bubble economy period in the late 1980s, it changed to dramatic decrease due to the bursting of the bubble economy in 1991 resulted in substantial decrease in its international competitiveness. Such dramatic change has urged Japan’s automotive industry to increasing expectation to agile product development (APD) technology implementation. At the same time, dramatic increase in global technology spillover in a globalizing economy has also urged Japan’s automotive industry to effectively utilize technology from the global marketplace. These complicated circumstances highlighted the significance of the effective utilization of potential resources in innovation and require Japan’s automotive industry to restructure its business strategy. These streams prompt us the following hypotheses with respect to the key direction of Japan’s automotive industry restructuring: (i) Increasing expectation to APD technology implementation urges further increase in technology stock; (ii) Challenge to APD technology implementation leads to increasing dependency on spillover technology in the world market; (iii) A disruption of the optimal balance between indigenous technology and effective utilization of assimilated spillover technology leads to decreasing the productivity of technology stock. On the basis of the empirical analysis of techno‐production structure of Japan’s automotive industry over the period 1982‐2000, this paper attempts to demonstrate these hypotheses. Consequently, the optimal trajectory of Japan’s automotive industry in maximizing the effective utilization of potential resources of innovation in an unbounded global economy is suggested.