The IT industry in Japan: Entrepreneurship and servicization

Document Type

Book Chapter


What are the challenges in developing an internationally competitive IT sector for the economies in Asia Pacific? Answers to this question demand a clearer conceptualization of the nature of the IT industry, its contributions to economic growth and the necessary conditions in which an IT industry may achieve competitiveness in the contemporary global economy. Literature suggests that the IT industry exhibits distinct trajectories of growth: one that is characterized by innovativeness, and the other by cost competitiveness. My aim is to illuminate how IT entrepreneurship and IT ‘servicization’ interact in the context of post-maturity Japan, where managed industrial capitalism combined with the developmental state no longer offer a promise for further growth. The case of the IT industry in Japan offers an opportunity to explore possibilities and limitations of IT-induced development by focusing on the combined role of entrepreneurship and servicization in the context of an advanced industrialized economy. On the one hand, the role of entrepreneurship is critical for an existing industry to leap to the next generation of technologies (Bower and Christensen 1995). On the other hand, literature suggests that servicization and service innovation are increasingly viewed as one trajectory of further growth in the IT industry. Evidence from IT entrepreneurs in Japan shows that strong bias against IT servicization exists, which in turn shapes the behaviour, orientations, and in some instances even geography of IT entrepreneurs. In one perspective, given its relatively newer status as an economic sector, IT entrepreneurs are assumed to be relatively free from historical legacy binding entrepreneurial rationality. In another, the region’s ability to attract and retain IT entrepreneurs is considered an important indicator for the future of the regional economy (Saxenian 1994; Malecki 1997; McQuaid 2002). The economic environment for Japan’s entrepreneurship is particularly tenuous

today as regions are undergoing deindustrialization, depopulation and associated structural transformations. The maturity of the Japanese economy in fact presents a experience distinct from other regions of Asia (Coe et al. 2004; Yeung and Lin 2003), yet with rapidly rising wages it is highly likely that its

experience will become relevant for other Asia Pacific economies in the near future. Through this analysis, I show how IT servicization is shaped by regional norms, cultures and past industrial strengths, and how regional culture is still relevant for the next generation of entrepreneurs in new industrial sectors.

Publication Title

The Economic Geography of the IT Industry in the Asia Pacific Region

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IT industry, Japan, entrepreneurship