Innovation-Mediated Production and the Role of Knowledge

One possible framework for comprehending the emerging patterns in the process of the globalization of innovation is the concept of innovation-mediated production, which highlights the increasing role of knowledge and ideas as a source of value across the production chain from the R&D laboratory to the factory floor.9 This model for post-mass production industry has five key aspects: (1) a shift in the main source of value creation from physical labor to intellectual capabilities, (2) the increasing importance of collective intelligence as opposed to individual knowledge, (3) accelerated technological innovation, (4) the increasing importance of continuous improvement at the point of production, and (5) the blurring of the lines between the R&D laboratory and the factory. The Toyota Production System, which is based on continuous improvement and the active participation by workers in problem-solving, is an example of the new paradigm.

Others have advanced concepts of the knowledge-based economy and the knowledge-creating company to capture aspects of this transformation. 10 This shift to innovation-mediated production and knowledge-based economic activity can be clearly seen in the globalizing patterns of Japanese companies.11 These shifts have important implications. On the one hand, on an international scale, there is the growing decentralization of R&D activity, referred to as global localization, to support global production operations and harness off-shore sources of knowledge and ideas. On the other hand, on a regional scale, knowledge is often concentrated in regional networks or complexes of human talent and expertise.

Notes and References


Nelson, op. cit.


Lynn, op. cit., observes that most writing on Japanese innovation by both Japanese and foreign scholars has been more concerned about what is good or bad about the system than with accurate descriptions. Also, evidence linking some attribute to a Japanese national innovation system is more often a result of deduction rather than of demonstrated causal relationships. Often such deductive reasoning leads to opposite conclusions depending on the evidence cited. He calls for developing a theoretical framework to understand Japan's system of innovation.


According to the more formal definition, demand articulation is "a dynamic interaction of technological activities that involves integrating potential demands into a product concept and decomposing this product concept into development agendas for its individual component technologies." Fumio Kodama, "National System of Demand Articulation and its International Implications," a presentation made at the bilateral meeting of the Task Force on Corporate Innovation, Makuhari, Japan, September 12-13, 1994. A fuller discussion of demand articulation may be found in Fumio Kodama, Emerging Patterns of Innovation: Sources of Japan's Technological Edge (Boston, Massachusetts: Harvard Business School Press, 1995).


For example, see Eric A. von Hippel, "Has a Customer Already Developed Your Next Product?" in Edward B. Roberts, ed., Generating Technological Innovation (New York: Oxford University Press, 1987).


OECD, "Case Study of Electronics with Particular Reference to the Semiconductor Industry, Joint Working Paper of the Committee for Science and Technological Policy and the Industry Committee on Technology and the Structural Adaptation of Industry, Pads, 1977, pp. 133-163.


Fumio Kodama, Analyzing Japanese High Technologies (London: Pinter Publishers, 1991).

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