63

Innovation： The　Black　Box

DisseminationTheory　vs．

イノベイションのブラック・ボックス理論と伝播性

Eri　Shiozawa

　　　塩澤　恵理

　　　　　　　　　　　　　　　　Contents

Introduction　and　Brief　Overview

The　Role　of　Innovation

Why　Oligopoly？

Dissemination　of　Knowledge　vs．　the　Black　Box　Theory

Demand　Aspect　of　Innovation

Conclusion

Introduction　and　Brief　Overview

　　　New　products　are　constantly　being　researched，　developed，　produced　and　innovated．

This　process　of　looking　for　better　solutions　or　tools　for　improvement　is　innovation．　For－

mally，　innovation　is　defined　and　explained　in　the　dictionary　as，“The　application　of　an

invention　to　a　process　of　production　or　the　introduction　of　a　new　product．　A　method　of

measuring　an　innovation　is　by　estimating　the　extent　to　which　an　industry　uses　the　new

process　or　product．　Innovations　occur　more　in　concentrated　industries　as　product　differen－

tiation，　necessitating　frequent　product　changes，　is　a　major　market　strategy　of　oligopolies”且．

Commonly，　inventions　are　thought　to　be　product　innovations．　However，　in　economics，

innovation，　not　invention，　is　a　preferred　competitive　tool．　Inventions　are　considered　to　b．e

the　result　of　a　coincidence　by　lone　inventors　who　happened　to　have　stumbled　on　some

miracle　product　worth　marketing，　In　firms，　routine　innovation　processes　are　keys　to　com－

petitiveness．　There　are　of　course　counter　examples　such　as　the　turbojet　engine，　the　dial

telephone，　the　electronic　calculator，　radio　telegraph，　etc2。　These　inventions　were　introduced

by　newly　created　firms　whose　personnel　were　presumably　not　subject　to　the　pressures　for

l　Donald　Rutherford．1～outledge　Dictiona7　y（）f　Economics，2d　ed．（London　and　New　York：Routledge，

　　2002），141．

2　See　F．　M．　Scherer，　Jndustn’al　Market　Structure　and　Economic　j％吻rmαnce，2d　ed．（Chicago：Rand

　　McNally，1980），438．

64 「明大商学論叢』第86巻第1号 （64）

routinization　as　may　be　expected　in　large，　established　enterprises．

　　　The　term　innovation　or　invention　is　often　associated　with　a　stroke　of　genius，　or　luck．

However，　if　innov3tion　is　to　be　used　as　a　tool　for　continued　profit　in　business，　it　must　be

organized　and　systematized　as　a　rigorous　discipline．　The　opportunity　lies　everywhere；but

the　discipline　of　innovation　must　be　utilized　by　firms　to　seek　out　new　opportunities　in　new

technology　or　in　values，　trends　in　a　market．　Therefore，　there　is　complementarity　betWeen

the　roles　of　innovation　and　inヤention。　The　entrepreneurs　come　up　with　the　breakthrough

inventions　while　lhe　R＆Destablishments　of　the　larger　firms　provide　the　enhancing　or

finishing　touches．　After　a　new　technology　is　developed，　the　next　issue　is　how　to　protect　it

from　being　copied；thus，　patents　and　licensing　to　protect　the　original　idea　or　model　plays　an

lmportant　role　as　incentive　to　insure　that　other　innovations　will　follow．

　　　In　addition，　how　to　make　the　idea　into　a　product　is　one　of　the　main　issues　surrounding

anewly　developed　product．　That　is，　many　products　do　not　make　it　as　a　marketable　product

and　end　up　being　shelved　at　the　project　stage．　Many　new　innovations　that　are　being　re－

searched　and　developed　do　not　make　it　out　to　the　market　for　various　reasons．　According　to

astudy　in　the　Tsushohakusho：i　2003　in　Japan，　profit　sustainability　due　to　the　small　scale　of

the　perceived　market，　is　at　the　top　as　a　reason．　With　this　problem　in　mind，　it　is　worth

examining　how　oligopolies　are　the　key　to　prevent　inventions　from　being　stuck　in　the　re－

search　facilities．　As　already　mentioned　above，　it　is　necessary　to　make　both　the　inventive

activity　and　innovation　process　a　routine　which　are　built　into　the　firm．

　　　The　desire　or　need　to　want　better　and　more　goods　is　the　essence　of　free　market　capital－

ism，　and　moral　judgment　set　aside，　is　only　natural．　This　endeavor　should　be　never　ending

and　is　no　doubt　essential　for　economic　growth．　It　is　only　human　nature　to　demand　better，

more　convenient　products　and／or　ways　to　make　life　easier，　more　enjoyable．　Everyday，　we

strive　to　achieve　progress　in　some　form　or　another　to　improve　ourselves，　raise　our　standard

of　living　or　expand　our　business　opPortunities．　Whatever　the　motive，　product　and　process

innovations　linked　with　technology　are　two　key　factors　in　economic　development．　Trade

or　direct　investment　then　comes　into　the　picture；after　a　product　has　reached　its　maturity，

parts　or　the　entire　manufacturing　process　of　the　product　is　then　exported　to，　or　directly

invested　in　another　country．　By　doing　so，　the　product　may　be　sold　at　a　much　lower　cost

than　producing　it　at　the　originating　country．

　　　The　flying　geese　theory　or　the　product　cycle　theory　was　taken　up　in　Shiozawa

［2002］4and［2003］5．　In　2003，　we　coined　a　name，　the　black　box　theory，　to　suggest　how，　in

00」4

5

Ministry　of　Economy，　Trade　and　lndustry，　Tsushohakusho，2003，144．

Eri　Shiozawa．“The　Flexible　Exchange　Rate　System　and　Standard　of　Living－The　Influence　on

Export／lmport　of　Tradable　Goods，”Memoirs　of　Jnstitute　of　Social　Sciences，　Vo1．41　No，1．（Tokyo：

Meiji　University，2002），227－258．

　　　　　　．“Application　of　the　Product　Cycle　Theory：The　Revitalizatjon　Policy　of　t．he　Japanese

Industry，”　Meidαi　Sh（～gaku　Ronso，　No．85－3．（Tokyo：Meiji　University　School　of　Commerce，2003），

89－99．

（65） Innovation：The　Black　Box　Theory　vs．　Dissemination 65

many　instances，　Japanese　technology　should　not　easily　be　disseminated　abroad　through

direct　investment．　In　this　paper　we　will　examine　innpvation　from　a　broader　spectrum　and

also　look　at　situations　in　which　dissemination　of　technological　knowledge　is　in　some　in－

stances，　more　beneficial　not　only　for　the　overall　welfare　of　society，　but　also　for　the　originat－

ing　firm．

The　Role　of　Innovation

　　　　Let　us　turn　to　the　growth　creating　properties　of　innovation．　The　free　market　economy

is　an　amazingly　effective　machine　because　of　its　production　of　innovations　which　are　di－

rectly　related　to　output　and　economic　growth．　Innovations　which　are　related　to　growth

have　in　general　a　long－term，　cumulative，　or　additive　character；that　is，　innovation　does　not

simply　feplace　the　old　technology　instantaneously　to　make　it　obsolete，　but　innovation

should　create　knowledge　leading　to　an　overall　accumulation　of　technical　knowledge　for

．society．　Secondly，　innovation　should　accelerate　the　level　of　output．　Therefore，　output　or

overall　GDP　will　not　be　level　but　constantly　growing．　In　addition，　innovation　as　a　public

good　property　of　information　signifies　that　improved　technology　is　beneficial　not　only　for

the　firm　directly　involved　in　the　breakthrough，　but　also　for　other　rival　firms；the　benefits

are　economies　of　scope　in　the　flow　of　technological　improvements．　Therefore，　the　growth

creating　properties　of　innovation　lead　to　overall　improved　standard　of　living　and　increased

welfare　for　society．

Process　Innovation　and　Product　Innovation

　　　First　let　us　examine　the　definitions　of　process　and　product　innovations．　Although　in

everyday　life，　we　think　of　innovation　to　be　a　single　process　of　improvement，　formally　in

economic　analysis　there　are　mainly　two　types　of　innovation，　product　innovation　and　proc－

ess　innovation．　Let　us　assume　a　pure　monopoly　situation　in　which　a　single　firm’s　decision－

making　is　independent　of　the　actions　and　decisions　of　other　enterprises．　Unlike　product

innovation，　process　innovation　analysis　is　straightforward．　A　successful　process　innova－

tion　increases　output　and　product　price　is　reduced．　By　definition，　since　the　innovation　is

successful，　the　producer’s　surplus　will　not　fall；and　because　of　the　fall　in　price，　consumer

surplus　must　rise　and　welfare　rises．　Therefore，　the　economic　benefits　accrued　from　process

innovation　are　undeniable　as　we　can　see　from　the　great　prosperity　experienced　in　the　post－

war　Japanese　economic　growth．

　　　On　the　other　hand，　a　product　innovation　analysis　is　not　as　clear　cut　as　that　of　process

innovation．　A　successful　product　innovation　is　defined　as　one　that　will　increase　final－

product　output，　but　its　effects　on　price　and　welfare　can　either　be　positive　or　negative．

Output　will　rise　but　price　may　either　rise　or　fall　because　price　is　affected　by　two　influences

working　in　opposite　directions；the　upward　shift　in　the　demand　curve　will　pull　price　but　the

66 『明大商学論叢』第86巻第1号 （66）

lncrease　ln　output　and　the　negative　slope　of　the　demand　curve　will　have　the　opposite　effect．

If　innovation　substantially　increases　the　elasticity　of　the　demand　curve，　the　increased　reve－

nue　contribution　of　a　rise　in　price　is　more　than　offset　by　the　loss　in　quantity　sold　resulting

from　the　price　increase．　Depending　on　demand　elasticity　changes，　as　well　as　sunk　costs　of

the　innovation，　the　welfare　effect　is　no　longer　clear．　Also　depending　on　the　real　cost　of

lnnovatlon，　other　things　being　equal，　a　large　sunk　cost　can　obviously　cause　a　net　loss　in

welfare．　Even　if　the　producer’s　surplus　is　increased　slightly，　total　consumer　surplus　will　not

necessarily　rise；thus，　it　is　possible　for　a　product　innovation　to　reduce　welfare．　Unlike　a

process　innovation　which　is　assumed　to　affect　only中e　cost　side，　a　product　innovation　can

shift　cost　curves　as　well　as　revenue　curves，　Therefore，　when　the　product　innovation　in－

creases　price　considerably　and　when　consumer　surplus　brought　on　by　an　increase　in　sales

ls　small，　this　results　in　a　welfare　Ioss．

Why　Oligopoly？

　　　　Joseph　Schumpeter　in　1942　and［1947コ6states，“＿the　price　variable　is　ousted　from　its

dominant　position＿it　is　not　that　kind　of　competition　which　counts　but　the　competition

from　the　new　commodity，　the　new　technology．．．”This　quotation　essentially　signifies　the

importance　of　the　role　of　innovation　in　capitalistic　economic　growth　for　Schumpeter．　He

emphasizes　that　innovation，　not　price，　is　the　key　factor　in　determining　output　and　profitfor

firms．　For　Schumpeter，　innovation　is　increasingly　becoming　an　accustomed　and　predict－

『able　procedure．　Instead　of　relying　on　the　elements　of　chance　with　private　inventors，　who

may　not　be　able　to　deliver　their　invention　as　promised　and　as　required　in　the　business

strategy，　firms　systematically　determine　how　much　should　be　allocated　for　investments　in

R＆D．In　addition，　these　firms　not　only　calculate　their　possible　interactions　with　their

fellow　rivals，　but　also　through　careful　market　analysis，　they　determine　what　sort　of　innova－

tion　their　laboratories　should　work　on　and　invent．

　　　　Like　Schumpeter，　many　ec6nomists　also　address　the　importance　of　innovation　as　a

weapon　of　competition．　Economists　such　as　Baumol　are　dissatisfied　how　prices　and　directly

related　variables　lie．in　the　core　of　microeconomic　analysis　while　innovation　analysis　is

taken　up　as　a“sideshow”．　Through　oligopolies，　price　is　no　longer　a　factor　in　competition；in

oligopoly，　innovation　is　the　main　determinant　in　competition．　Along　with　the　inventive

entrepreneurs，　other　forms　of　technological　breakthroughs　being　carried　out　within　the

innovative　oligopolistic　corporations　make　the　entire　growth　process　highly　efficient　as

well　as　quite　riskless．　We　can　understand　Baumors　basic　attitude’toward　oligopolies　when

he　states，“In　substantial　portions　of　the　oligopolistic　sectors　of　the　economy，　where　huge

6　Joseph　Schumpeter．　Capitalism，　Socialism，αnd　Democracy，2d　ed．（New　York：Harper＆Brothers，

　　1947　［1942］），84．

（67） Innovation：The　Black　Box　Theory　vs．　Dissemination 67

firms　dominate　markets，　innovation　has　become　the　preferred　competitive　weapon”．　In－

deed，　the　contest　for　better　new　products　and　processes　becomes　and　arms　race，　with　failure

to　keep　up　constituting　a　threat　to　the　firm’s　survival．　This　is　the　force　that　contributes

substantially　to　capitalist　growth．　Competition　makes　it　too　risky　for　firms　to　depend

primarily　for　their　new　products　and　processes　on　the　unpredictable　efforts　of　independent

inventors．　Instead　they　have　changed　much　of　the　economy’s　R＆Dinto　an　internal，　bu－

reaucratically　controlled　process，　as　for　example，　in　pharmaceuticals，　computers，　and　even

photography．　They　have　routinized　it”7．

　　　Therefore，　as　previously　pointed　out，　invention　and　innovation　are　clearly　distin－

guished　from　each　other　in　this　context．　We　can． 盾b唐?窒魔?@how　through　careful　planning，

oligopolies　evade　cut　throat　price　competition．　Competition　takes　on　a　totally　new　dimen－

sion；firms　strive　for　quality　competition，　not　price　competition．

1）issemination　of　Knowledge　vs．　the　Black　Box　Theory

　　　In　Shiozawa［2003］we　examined　possible　ways　to　revitalize　the　Japanese　industry；we

prescribed　the　black　box　theory　of　production　in　order　to　prevent　or　to　delay　imitation

products　by　companies　in　developing　countries　with　relatively　cheaper　cost　of　labor．　In　our

new　model，　we　assumed　investment　in　technology　hy　Japanese　firms　or　organlzatlons

without　directly　investment　abroad　where　wages　and　other　costs　may　be　cheaper　compared

to　Japan．　What　kind　of　economic　growth　is　possible　without　relying　on　direct　investment

to　the　so－called　cost　reducing　countries；that　is，　what　will　happen　if　we　deliberately　keep

everything　domestic（no　direct　irivestment　abroad）up　to　the　stage　i口which　the　product　is

fully　completed．　This　is　th． ?@so－called　domestic“cut－off　version”of　the　product　cycle．　We

cited　examples　of　the　black　box　theory　through　case　studies：Sharp　Corporation’s　liquid－

crystal　screen　television　plants　in　Mie　and　Nara　prefecture　and　Tohoku　University’s　re－

search　consortia　in　which　semiconductors　are　being　researched／designed　and　manufac－

tured　entirely　in　Japan　by　Japanese　firms　and　research　groups．

　　　With　the　above　notion　in　mind，　let　us　consider　dissemination　of　knowledge　or　technol－

ogy．　Is　the　black　box　theory　exactly　on　the　opposite　spectrum　or　is　it　in　a　different　dimen－

sion　as　dissemination　of　knowledge？What　shall　we　do　to　be　able　to　produce　goods　which

will　earn　high　returns　as　exports　in　some　future　date？We　cannot　ignore　the　competitive

pressures　to　disseminate　proprietary　technology　voluntarily．　Also　it　may　be　more　profit－

able　if　we　make　it　available　even　to　direct　rivals　if　the　price　is　high　enough．　In　this　section

we　will　look　into　the　alternatives　to　the　black　box　theory　of　production；that　is，　we　may

support　dissemination　for　reasons　such　as　the　following：

7William　Baumol．　　2002），ll，

The　Free－、Vaγleet　Innovation　Machine．（Princeton：Princeton　University　Press，

68

1

2

「明大商学論叢』第86巻第1号 （68）

Rent　or　licensing　of　technology

Technology　consortia　or　technQlogy　trading－in　order　for　two　firms　to　compete

against　a　third　party．

L　Rent　or　licensing　of　tecllnology

　　　　As　already　mentioned　above　in　the　analysis　of　innovation，　innovation　has　become　a

routine　in　many　firms　even　to　th6　extent　that　strategies　include　long－term　investmerlt．　In

terrns　of　the　overall　growth　of　the　economy，　like　innovation，　quick　dissemination　of　tech－

nology　is　also　a　critical　factor　in　promoting　economic　growth　through　increased　productiv－

ity．　For　the　increased　overall　welfare　of　society，　every　firm　in　the　industry　using　the　new

technology　will　no　doubt　be　able　to　produce　superior　output　than　if　only　an　exclusive　firm

has　access　to　the　superior　technology　while，other　firms　are　stuck　with　the　obsolete　means

of　production．　However，　from　the　perspective　of　the　firms　holding　the　superior　knowledge，

most　envision　dissemination　to　be　their“arch　enemy”；thus，　wβ　see　the　struggles　of　firms　to

guard　their　knowledge　through　licenses　or　patents．

　　　In　order　to　facilitate　analysis，　let　us　assume　here　that　the　new　technology　is　a“bottle－

neck　input”；that　is，　this　input　can　be　obtained　only　through　a　monopolist　supplier．　There－

fore，　the　input　can　be　rented　or　licens6d　out　for　the　use　of　another　willing　to　pay　the　price．

W6　can　understand　that　if　the　innovative　technology　is　considered　to　be　simply　a　bottle－

neck　input，　active　transaction　of　the　license，　patent，　or　exchange　to　use　the　input　may　be

socially　beneficial　by　stimulating　innovation　through　internalizing　some　of　its　externalities．

　　　If　the　owner　firm（licensor）can　make　a　greater　profit　by　selling　its　technology　to

another　firm（licensee）at　a　very　high　price　than　using　the　technology　only　for　itself，　then

the　transactiop　will　be　attractive　for　the　owner　firm　as　well　as　for　the　firm　acquiring　the

license；we　can　also　presume　that　the　licensee　firm．will　tend　to　use　the　technology　most

efficiently　for　production．　Since　only　a　firm　which　is　able　to　uti正ize　the　technology　most

efficiently　will　be　able　to　afford　the　high　price　of　the　license　fee．　In　addition，　through　legal

rather　than　illegal　means，　the　licensee　will　be　able　to　enjoy　the　fruits　from　the　technology

much　more　quickly　and　efficiently．　In　high－tech　indhstries，　timing　is　everything；thus，　the

price　paid　for　a　license　fee　is　worth　much　more　in　terms　of　time　saved　to　provide　the　latest

model　in　demand　in　the　market。

　　　Meanwhile，　the　licensor　can　enjoy　twice　the　benefits．　It　can　earning　high　revenue　from

royalties　by　selling　the　license　at　an　attractive　price　to　the　licensee　as　well　as　continue

making　monopoly　profits　from　the　innovation　due　to　early－entry；this　is　due　to　a　time　lag

which　is　unavoidable　even　for　the　licensee．　It　is　obvious　that　the　licensee，　even　with　all　the

aid　from　the　licensor，　may　take　several　months　to　several　years　to　get　the　technology　work－

ing　to　its　full　capacity　for　production．　By　utilizing　this　time　lag，　indeed　the　licensing　of

technology　may　prove　to　be　quite　a　profitable　business　arrangement　which　cannot　be

ignored．　Furthermore，　the　high　rates　of　profit　serve　as　an　incentive　for　further　investment

（69）

35

30

25

20

15

10

（の

x邸①』）8嘱ヨ巴日8も8羅お①＆邸εbo5

5

0

Innovation：The　Black　Box　Theory　vs．　Dissemination 69

　　　　　　　　　1887－1906　　　　　　　　　1907－1926　　　　　　　　　1927－1946　　　　　　　　　1947－1966　　　　　　　　　1967－1986

Source：Agarwal　and　Gort（2001）；Baumol（2002）

Figure　l．　Interval　between　the　introduction　of　an　innovation　and　competitive　entry，1887－1986

in　innovation．　We　can　see　this　as　a　general　trend　in　Figure　l8．　The　speed　of　dissemination

has　increased　in　the　last　hundred　years．　Profitability　is　most　likely　the　reason．　More　and

more　firms，　such　as　IBM，　are　realizing　the　business　opportunity　involved　in　technology

dissemination；some　firms　which　have　private　industrial　laboratories　in　the　US．　are　actively

looking　for　clients　to　sell　their　technology　rights　in　the　form　of　patents　or　cross－licensing

contracts．

2．　Technology　consortia　or　technology　trading

　　　In　rent　or　licensing　of　technology，　the　incentive　was　profit；however　in　this　section，　the

reciprocation　is　not　monetary　but　in“kind”，　or　the　right　to　use　the　information．　Thus，

dissemination　of　technology　may　be　for　sharing　or　trading　valuable　innovative　information

in　order　to　win　against　a　third　competitor．　This　sharing　may　be　with　direct　rivals，　horizon－

tal　competitors　and　may　be　quite　extensive　involving　the　exchanging　of　information　or

data　at　conferences，　revealing　plant　visits　by　engineers　and　technicians　from　other　compa－

nies，　training　workers　of　competing　companies（free　of　charge），and　aiding　with　the　install－

ment　of　equipment，　etc．　Meanwhile　there　are　more　formal　types　of　agreements　which　are

81bid．，76．　The　data　was　originally　from　a　study　by　R．　Agarwa1，　and　M，　Gort．2001．“First　Mover

　　Advantage　and　the　Speed　of　Competitlve　Entry，1887－1986”．ノburnal　of　Lawαnd　Economics　44．

　　（Chicago：Chicago　Law　School，　April　2001），161－77．

70 『明大商学論叢』第86巻第1号 （70）

carefully　drawn　up　such　as　contracts　and　cross－hcensing　of　patents．

　　　In　technology　sharing　or　consortia，　the　products　are　assumed　to　be　heterogeneous　and

complementary．　Since　the　product　is　a　slightly　improved　or　an　evolved　model，　the　circum－

stances　are　quite　different　from　Schumpeter’s　in　which　the　product　was　a　substitute，　Com－

petition　is　fierce　and　game　models　come　into　play　when　the　product　is　a　substitute．　For

example　for　the　computer，　improved　screen　and　keyboard　in　which　incremental　improve－

ments　were　added　are　complemehtary　not　substitute　inventions．　Well　known　examples　of

technology　sharing　arrange．ments　in　the　U．S，　are　in　the　manufacturing　of　semiconductors，

aircraft　jet　engines，　California’s　wineries，　and　high　definitiorl　television　technologY．　In

Japan　the　car　navigation．　system　and　the　widely　known　semiconductor　research　consortia

are　examples　of　technology　sharing．

　　　It　is　interesting　to　note　that　the　implicit　agreement　is　ex　ante　in　that　the　involved

parties　are　willing　to　reveal　valuable　information　to　the　others　with　the　implied　under－

standing　that　the　others　will　reciprocate　by　giving　back　some　other　form　of　new　informa－

tion　in　the　future．　In　some　instances，　negotiations　and　agreelnents　about　what　type　of　new

information　on　an　innovation　is　expected　to　be　provided　in　the　future　also　exist；two　firms

may　have　negotiating　sessions　to　discuss　the“value”of　the　innovation（s）already　provided

and　then　agree　on　the　terms　concerning　future　information　of　innovation．　These　ex　ante

type　of　arrangements　may　disdourage　cheating　since　in　the　arrangement，　a　firm　may　have

to　pay　to　the　other　firm　monetary　compensation　for　any　lack　of　value　in　innovative　infor－

’mation　within　a　given　period。　In　order　to　avoid　paying　the　fine，　the　firm　will　give　away　or

expose　as　much　of　their　innovative　information　as　possible；this　is　monetary　incentive　not

to　cheat．

　　　Compared　to　price　cartels，　several　characteristics　make　the　technology　consortium

more　stable．　Although　in　the　short　run，　cheating　by　a　member　by　retaining　infQrmation

while　obtaining　as　much　information　from　6ther　members　to　earn　a　profit　may　be　possible，

if　suspected　of　such　an　act，　other　members　can　easily　retaliate　by　not　passing　on　informa－

tion　in　the　future．　Since　the　technology　consortium　relationship　is　long　term，　involving

much　exchanges　in　technology　and　repeated　games（of　negotiations），asingle　betrayal　may

be　difficult；at　the　same　time　it　may　prove　to　be　quite　devastatihg．　Reputations　must　be

built　up　and　integrity　kept　by　the　members；otherwise，　exclusion　from　the　consortium　may

be　unavoidable．　With　large　sums　already　invested，　the　exclusion　may　even　result　in　pro－

longed　losses　eventual　leading　to　bankruptcy　of　the　cheating　firm．

　　　The　third　characteristic　that　is　different　from　the　price　cartel　is　the　remaining　members

can　still　enjoy　the　benefits　of　membership　even　if　one　firm　cheats．　In　a　price　cartel，　since

cheating　signifies　cheaper　prices　to　attract　customers，　the　remaining　members　suffer　the

consequences　by　the　price　cartel　breaking　down．　However，　if　the　innovation　turned　out　to

be　a　great　sensation　with　windfall　profits，　then　on　rare　ocCasions，　cheating　may　indeed　be

tempting．　The　gains　must　exceed　the　cost　of　the　negativさconsequences　of　cheating　since

（71） Innovation：The　Black　Box　Theory　vs．　Dissemination 71

it　will　result　in　l 垂?窒高≠獅?獅煤@exclusion　from　the　membership．

　　　Although　the　management　side　may　not　necessarily　be　willing　to　give　out　valuable

information　at　the　company’s　expense，　in　most　cases，　the　more　competitive，　or　top　rate　the

researchers　and　scientists　directly　involved　with　the　innovation　are，　the　more　demanding

they　are　concerning　cooperation　or　communication　with　fellow　researchers　in　other　institu－

tions．　In　other　words，　these　competitive　scientists　would　not　be　willing　to　work　for　firms

which　seek　total　confidentiality　in　their　research　staff　about　their　projects．　In　order　to　keep

the　cornpetitive　edge，　the　management　side　must　compromise　and　attempt　to　optimize

these　inter－firm　exchanges．　On　the　other　hand，　a　fi’rm　may　sometimes　prevent　dissemina－

tion　of　technology　in　order　to　maintain　monopoly　profit．　If　this　flrm　is　confident　that　its

product　is　different　enough　from　that　of　other　firms　to　be　able　to　charge　a　higher　price

exceeding　the　competitive　one，　the　firm　will　not　join　a　technology　consortium　A　famous

example　is　the　patent　infringement　lawsuit　of　Polaroid　vs．　Kodak．

　　　In　Shiozawa［2002］，in　which　there　is　a　deliberate　transfer　of　technology　through　direct

investment　even　before　the　product　cycle　has　reached　its　maturity　stage，　the　firm　holding

the　original　technology　should　have　anticipated　the　betrayal　of　local　employees；it　should

have　sold　the　license　of　the　technological　know－how　at　a　considerable　price；or　it　should

have　signed　a　legal　agreement　of　some　sort　in　order　to　prevent　the　leakage　of　information

for　some　pre－assigned　years．　All　of　these　risk　factors　should　have　been　calculated　before

going　ahead　with　the　actual　direct　investment　and　before　falling　victim　to　reverse　engineer－

ing　or　industrial　espionage　by　local　employees．

Demand　Aspect　of　Innovation

　　　Up　to　this　point，　it　has　been　argued　that　the　degree　of　dissemination　depends　on　vari－

ous　forms　of　institutional　patterns　such　as　licensing，　transferring　and　the　black　box　ap－

proach，　etc．　Implicitly，　it　has　been　assumed　that　whenever　new　knowledge　is　created，　it　has

been　immediately　used　or　demanded．　It　is　important　however，　that　in　many　instances，

although　new　knowledge　is　available　at　no　charge，　it　deliberately　has　never　been　adopted．

The　well　known　example　of　this　is　post　WWII　supply　of　the　U．S．　technologies．　New　Ameri－

can　product　innovations　were　available　to　every　firm，　industry　or　country　at　almost　no　cost

（perhaps　reverse　engineering）．　By　the　end　of　the　war，　Japan　was　in　desperate　need　of　the

U．S．　technologies；these　new　technologies　were　adopted　and　helped　Japan　develop　into　a

first　rate　technology　country．　Then　why　didn’t　other　Asian，　African　or　even　European

countries　utilize　the　easily　available　American　technology　in　the　same　fashion？In　other

words，　sorne　countries　are　eager　to　utilize　the　available　technology，　while　others　are　not．

These　questions　should　be　analyzed　in　more　detail．　Therefore，　we　must　consider　demand

aspects　of　innovations．

　　　There　are　several　factors　that　affect　demand　for　new　technologies．　First，　the　level　of

72 『明大商学論叢』第86巻第1号 （72）

existing　technologies　of　the　importing　countries　or　firms　will　determine　if　the　available

technology　can　be　utilized　to　create　a　new　product　or　process　innovation．　In　an　agrarian

soclety，　a　new　automobile　technology　may　not　be　demanded　since　the　level　of　the　general

scientific　technology　for　manufacturing　automobiles　may　not　be　advanced　enough　to　actu－

ally　start　manufacturing　cars．．This　depends　on　the　number　of　engineers　and　scientists　and

research　facilities　related　to　automobile　manufacturing．

　　　Secondly，　consumers　may　be　socially　hesitant　to　use　a　new　industrial　product．　In　some

European　countries　washing　machines　are　bought　but　are　kept　as　a　symbol　of．・luxury　and

wealth；and　those　households　which　can　afford　washing　machines　keep　them　simply　as

decoration．　Instead，　they　utilize　the　housekeepers’manual　labor　for　washing　clothes．　Also

some　housewives　in　these　countries　go　to　a　nearby　river　to　meet　their　neighbor　to　socialize

while　doing　the　laundry．

　　　The　third　important　aspect　in　regard　to　the　demand　side　of　innovative　activities　is

what　is　known　as　the　social　compatibility　of　new　t6chnology．　That　is　to　say，　the　problem

is　whether　a　new　technology　is　accepted　socially　as　well　as　politically　or　sometimes　psycho－

logically．　Here　one　can　provide　two　actual　examples．

　　　Japan’s　Shinkansen（high　speed　bullet　train）technology　was　available　for　export　to

China　a　couple　of　decades　ago．　Japan　tried　to　sell　it　to　China，　but　failed　to　reach　an　agree－

ment．　The　main　reason　was　that　the　Shinkansen　technology　was　not　socially　compatible　to

the　Chinese　lifestyle．　In　China　at　that　time　and　also　in　post　WWII　Japan，　the　railroad　tracks

were　used　as　a　pedestrian　walkway；that　is，　the　train　came　only　three　times　a　day　and　the

train　tracks　were　the　shortest　and　most　efficient　way　to　get　somewhere　compared　to　ill

conditioned　roads　which　were　unpaved　and　muddy．　If　the　Shinkansen　had　been　introduced

to　such　a　society，　people　may　have　been　killed．　In　order　to　prevent　such　social　casualties

from　occurring，　the　tracks　must　be　elevated　like　in　Japan　or　walls　must　be　installed．　Obvi－

ously，　Shinkans6n　technology　was　not　socially　compatible　to　China　twenty　years　ago　or

Japan　immediately　after　WWII．

　　　Another　aspect　of　social　compatibility　is　that　a　new　technology　developed　in　one　coun－

try　may　not　necessarily　be　politically　accepted　by　another　country．　A　good　example　of　this

ls　agaln　technology　transfer　of　the　Shinkansen　to　Korea．　The　Japanese　technology　was

available，　but　was　not　exported　to　Korea　possibly　because　there　were　strong　anti－Japanese

sentiments．　They　chose　instead　European　high－speed　technology　perhaps　at　higher　costs．

These　are　a　few　examples　of　the　factors　affecting　actual　use　of　innovations．

Conclusion

　　　In　this　paper　we　analyzed　innovation　and　its　relation　to　dissemination　of　knowledge．

We　looked　at　the　basic　differences　between　innovation　and　invention．　In　economics　there

is　a　clear　distinction　between　innovation　and　invention；that　is，　invention　is　more　a　result

（73） Innovation：The　Black　Box　Theory　vs．　Dissemination 73

of　chance　by　genius　inventors，　while　innovation　is　a　result　of　carefully　planned　research

and　investment　by　firms．　We　studied　how　oligopolies　play　an　important　role　in　innovation；

through　careful　planning，　oligopolies　evade　cut　throat　price　competition。　In　oligopolistic

competition，　firms　strive　for　quality　competition，　not　price　competition．

　　　We　looked　into　the　alternatives　to　the　black　box　theory　of　production　since　we　cannot

ignore　the　competitive　pressures　to　disseminate　proprietary　technology。　We　found　that

dissemination　may　be　supported　for　reasons　su6h　as　the　following：

　　1．Rent　or　licensing　of　technology

　　2．Technology　consortia　or　technology　trading－in　order　for　two　firms　to　compete

　　　　against　a　third　party．

　　　In　Shiozawa［2002］，the　firm　holding　the　original　technology　should　have　anticipated

the　betrayal　of　local　employees；it　should　have　sold　the　license　of　the　technological　know－

how　at　a　considerable　price；or　it　should　have　signed　a　legal　agreement　of　some　sort　in　order

to　prevent　the　leakage　of　information　for　some　pre－assigned　years．　The　firm　may　not　have

had　to　practice　the　drastic　black　box　theory；however　risk　factors　should　have　been　taken

into　consideratiorl　before　investing　directly　and　before　falling　victim　to　reverse　engineering

or　industriai　espionage　by　local　employees．

　　　Up　to　this　point　we　have　dealt　wi．th　only　the　supply　factors　of　dissemination　or　nonL

dissemination　of　technology．　The　argument　often　lacking　in　the　literature　is　the　demand

factors　affecting　the　degree　of　dissemination．　In　the　traditional　literatures，　dissemination

and　transfer　of　technology　is　assumed　to　take　place　within　the　industry　or　within　similar

countries．　However，　if　asymmetry　of　social　and　technological　structures　between　exporting

and　importing　countries　actually　exists，　it　makes　no　difference　whether　the　creators　of　new

technologies　follow　the　black　box　theory　or　full　dissemination　theory；the　same　logic　holds

for　asymmetry　among　different　firms．　To　a　certain　degree，　this　problem　is　more　serious

when　dealing　with　small　or　medium－sized　firms’capabilities　of　using　the　new　type　of　inno－

vation．　In　other　words，　even　though　a　large　foreign　company　can　freely　supply　a　new

product　or　new　procesS　innovation，　smaller　companies　cannot，　and　would　not　adopt　it

simply　because　smaller　companies　usually　lack　financial　and　technological　capabilities　of

utilizing　them．

　　　One　last　point　we　should　not　be　neglecting　is　the　fact　that　there　is　always　a　group　of

consumers　who　will　benefit　from　the　use　of　new　technology．　Even　in　the　examples　cited

earlier　regarding　the　Shinkansen　technology　export　to　China，　eventually　in　the　l6ng　run，

Chinese　people　would　benefit　by　new　technology　as　her　economy　develops．　In　fact，　China

in　the　21st　century　is　eager　to　import　new　high　speed　railway　technology　either　from

Europe　or　Japan．　This　means　that　demand　factors　in　the　long　run　will　change　or　develop

to　accommodate　new　and士evolutionary　methods　for　the　benefit　of　the　users　of　the　final

product．　Indeed　the　growth　creating　properties　of　innovation　which　lead　to　improved

standard　of　living　and　increased　welfare　for　overall　society　are　quite　considerable．

74 「明大商学論叢』第86巻第1号 （74）

　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　References

Agarwal，　R，　and　M．　Gort．‘‘First　Mover　Advantage　and　the　Speed　of　Competitive　Entry，1887－1986”．

　　　ノbumal　of　Lαtv　an（i　Economics　44　Chicago：Chicago　Law　School（April　2001）：161－77．

Akamatsu，　Kaname．　Sekαi　Keizai　Ron．　Tokyo：Kunimoto　Shobo，1965．

Baumol，　Wi】1iam．　The　Free一ルlarket　lnnovation　Machine．　Princeton：Princeton　University　Press，2002．

Dollar，　David．“Technological　Innovation，　Capital　Mobility，　and　the　Product　Cycle　in　North－South

　　　Trade，”The／1meηican　Economic　Revietv（March　l986）：177－190．

Kojima，　Kiyoshi．“The‘Flying　Geese’Model　of　Asian　Economic　Development：Origin，　Theor6tical

　　　Extension，　and　Regional　Policy　Implications，”／（）umαt、of　4sian　Economics　11（2000）：375－401．

Krugman，　PauL”Increasing　Returns，　Monopolistic　Competition　and　International　Trade，”ノburnα1（ゾ

　　　Intemα彦ional　Economics　9（1979）：469－79，

Ministry　of　Economy，　Trade　and　Industry，　Tsushohαleusho，2002，

　　　　　　．Tsushohakusho，2003．

Rutherford，　Donald．≠～outledgeヱ）ictiona7　y　of　Economics，2d　ed，　London　and　New　York；Routledge，

　　　2002．

Scherer，　Frederic・Industriα1ル1αrket　S彦ructureαnd　Economic　Performαnce，2d　ed．　Chicago：Rand

　　　McNally，1980．　　　　　　　　　　　　　　　　・

SchumpeterJoseph．　Capi彦alism，　Socialism，αnd　1）emocra（ッ，2d　ed．　New　York：Harper＆Brothers，1947

　　　［1942］．

Shiozawa，　Eri．“lnternational　Trade，　Price　Differentials　and　Purchasing　Power　Parity，”Meidai

　　　Shogaleu　Ronso，　No．80－1＆2．　Tokyo：Meiji　University　School　of　Commerce，1998，（February）：

　　　155－173．

　　　　　　．“Intra－industry　Trade　and　International　Technology　Competition，”Meidai　Shogαha　Ronso，

　　　・No．82－1．　Tokyo：Meiji　University　School　of　Commerce，2000，（March）：253－265．

　　　　　　．“The　Flexible　Exchange　Rate　System　and　Standard　of　Living－The　Influence　on　Ex－

　　　port／Import　of　Tradable　Goods，”Memoirs（）f　lnstitute　of　Sociat　Sciences，　Vol．41　No．1，　Tokyo：

　　　Mejji　University，2002，（October）：227－258，

　　　　　　．“Application　of　the　Product　Cycle　Theory：The　Revitalization　Policy　of　the　Japanese

　　　Industry，”Meidai　Shogaleu　1～onso，　No．85－3．　Tokyo：Meiji　Univefsity　School　of　Commerce，2003，

　　　（March）：89－99．

Vernon，　Raymond．“International　Investment　and　International　Trade　in　the　Product　Cycle，”Quar－

　　　terly／Oumα1（）f　Economics，1966，（May）：190－207，

　　　　　　．“The　Product　Cycle　Hypothesis　in　a　New　International　Environment，”Oxford　Bulletin（～プ

　　　Economics　and　S彦atistics　41，1979：253－267．