Modular Production's Impact on Japan's Electronics Industry

Abstract

This paper examines the notion that national industrial models evolve with time, and provides evidence of transformation when elements are transferred from one society to another. The Japanese Production System, itself an adaptation of American-style mass production to the constraints of the post World War Two Japanese economy, in turn had a profound impact on the organization of industrial production in the United States, especially during the 1990s. I characterize the new model that emerged in the United States as the “Modular Production System.” This paper examines the response of Japanese electronics firms to Modular Production in the period 2000-2004. It is based on forty-three interviews with top managers at Japan’s largest electronics firms, conducted during the calendar years 1999-2004, as well as insights gained from more than 600 field interviews conducted between 1999 and 2005 for the MIT Industrial Performance Center’s Globalization Study. I argue that Japanese electronics firms have been strongly influenced by Modular Production but that they have, unsurprisingly, adapted it to their current environment and in the process may have begun to transform both the Japanese and Modular Production Systems. While it is too early to determine if these changes amount to the emergence of a distinct industrial model, the chapter concludes by laying out the challenges and opportunities that now face Japanese electronics firms given their recent experiments with joint technology development, production alliances, and global outsourcing.