Boundaries Innovation and Knowledge Integration

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At this stage of the 21st century, Japanese firms are endeavouring to discover what is
important in order to compete in global markets and revitalise their organisations. This
paper draws on in-depth case studies of Japan’s consumer electronics, communications
device, semiconductor and mobile phone services to clarify the origins of the competences
of outstanding Japanese firms. It also considers the ‘knowledge integration firm,’ which is
a new corporate model differing from that of Western management. Skilful coordination
and collaboration around Japanese firms’ organisational boundaries, aimed at technological
and marketing innovation, renews accumulated path-dependent knowledge while
dynamically integrating diverse knowledge inside and outside the firm. The paper presents
a new business model and Japanese leadership style to create an independent knowledge
integration model. Finally, it examines the key lessons that Asian firms have come to learn
from their Japanese counterparts, based on the core concepts of Japanese management.
2009 Elsevier Ltd. All rights reserved.
This paper’s objective
At this stage of the 21st century, Japanese firms are homing in on what is important if they are to
survive in global markets and revitalise their organisations. Outstanding Japanese firms maintain
and develop organisational cultures rooted in the shared values of teamwork, commitment and
community spirit for activities creating organisational knowledge based on accumulated tacit
knowledge.1 Following Japan’s economic crises in the 1990s, some scholars are now witnessing
the phenomenon of Japanese firms looking to revitalise their innovative capacity through Western
knowledge management practices.2
Long Range Planning 42 (2009) 463e494 http://www.elsevier.com/locate/lrp
0024-6301/$ – see front matter 2009 Elsevier Ltd. All rights reserved.
doi:10.1016/j.lrp.2009.08.001
Today, Japanese firms are maintaining market share and innovations in technology and services
at the highest global levels, in the fiercely competitive environments of digital consumer electronics,
automobiles, communications devices, factory automation (FA), mobile phone services and game
machines.3 The world has many lessons to learn from successful examples of Japanese firms in hightech
fields. Samsung Electronics of South Korea, for example, learned development and production
techniques from Japanese manufacturers (including Sanyo Electric and NEC), and has now grown
into a global high-tech corporation. In the telecom field, the business models of Japanese mobile
internet services have greatly influenced South Korean, Taiwanese and Chinese telecommunications.
These Asian firms are still learning a great deal from Japanese management. This paper clarifies
sources of competences at Japan’s outstanding firms through in-depth case studies of the
consumer electronics, communications device, semiconductor and mobile phone businesses, and
demonstrates practical implications for new leadership models and other Asian countries. It then
presents a new viewpoint regarding the management elements that Asian firms have learned
(and are still learning) from the core concepts of Japanese management.
The paper is structured as follows. First, the theoretical framework at the core of this paper, derived
from existing literature and longitudinal qualitative research, is summarised. Second, a new
framework of Japanese management is discussed in depth. Third comes an examination of the management
elements that Japanese management has imparted to Asian firms.
Theoretical background and new frameworks e knowledge integration
model
I have developed the model for knowledge integration (the ‘knowledge integration firm’ e see
Figure 1), which is a corporate model distinctive to Japanese firms, from long-term ethnographic
The world has many lessons to learn from successful examples of
Japanese firms in high-tech fields
Figure 1. The Knowledge Integration Model (knowledge integration firm)
464 Boundaries Innovation and Knowledge Integration
and participant observation, as well as analysis of in-depth interviews (272 top and middle managers)
at 54 firms in the consumer electronics, telecommunications equipment, semiconductor
and mobile phone business fields (see Appendix 1). I have also drawn on my own practical experience
at major Japanese communications carriers, comprising 15 years at NTT (Japan’s largest telecommunication
carrier), three years at NTT DoCoMo (Japan’s largest mobile carrier), and three
years at KDDI (Japan’s second-largest telecommunication carrier).
The ‘knowledge integration model’ integrates heterogeneous knowledge inside and outside the
firm, arising from dynamic changes to vertical and horizontal corporate boundaries. It delivers
two new insights regarding ‘new knowledge creation’: (i) the vertical value chain model distinctive
to Japanese firms realising new products, services and business models, and (ii) the co-evolution
model realising new win-win business models.
Insight 1: The value chain model arising from the vertical integration of Japanese firms promotes
the creation of competitive new products and services as well as innovative business models.
Insight 2: The co-evolution model spanning Japan’s various industries promotes the creation of
win-win business models.
With the knowledge integration model, the knowledge integration process takes place through
networks inside and outside the firms. Specifically, internal knowledge is integrated through internal
networks and external knowledge through external networks. The knowledge integration process
creates new knowledge through these networks transcending the corporate boundaries. In this
paper, the term ‘boundaries innovation’ is used for innovation resulting from this kind of knowledge
integration process. Two aspects are derived for new knowledge creation in the knowledge integration
model: (i) new boundary conceptions; (ii) dynamic human networks and the architecture
of knowledge integration process.
Literature review
New boundary conceptions
A firm’s inherent conception of boundaries forms our first core framework for corporate strategy.
One strategy driver is the industry value chain4 set up to realise the objectives of corporate-determined
strategy. This driver comprises business activities carried out in order to form industry value
chains, and is an element determining a firm’s vertical boundaries.
A second strategy driver comprises elements fixing a firm’s horizontal boundaries, which create
new business domains by expanding and diversifying the firm’s existing business domains (or reduce
those domains by selecting and concentrating), or by integrating different technologies.
Firms must always transform their own corporate governance structure and corporate boundaries
to strengthen their strategic positioning under a constantly changing environment. According
The co-evolution model spanning Japan’s various industries promotes
the creation of win-win business models
The knowledge integration process creates new knowledge through
these networks transcending the corporate boundaries
Long Range Planning, vol 42 2009 465
to previous research on the theory of firm boundaries, decision-making on corporate governance
structure and boundaries relies on various elements including the identification, efficiency, power
and competence views (this paper refers to factors determining corporate boundaries as ‘management
drivers’).5 Then decision-making over which type of activities to implement within the company
with regard to the innovation value chain, and whether to access external resources through
contractual arrangements with the markets, becomes an element centred on the technology strategies
of both large corporations and venture companies.6
Firms adopting a vertical integration strategy must apply a closed, hierarchical, vertically integrated
governance structure within the firm in order to implement each one of a series of business
activities (from R&D to production, sales and support) in-house. As is the case in Japan’s automobile
industry, it becomes strategically important for a firm to maximise its power by building vertically
integrated hierarchies of keiretsu networks (keiretsu is a group of interlocking and mutually
supportive firms). Meanwhile, firms in the IT and digital industries adopting horizontal specialisation
must focus their activities in specific domains, and adopt governance structures exhibiting
open, flat relationships with other firms in order to provide licensing and receive outsourcing business.
Vertically integrated firms also exhibit intermediate forms of governance falling between vertical
integration and horizontal specialisation.7 Depending on the environment, these firms might
collaborate with others in a vertical value chain for part of their business activities through partnering,
or partially outsource their business activities. The governance structure that a firm applies
strongly depends on the environments it faces and its targeted strategies. Accordingly, the dynamic
transformation of corporate boundaries becomes an important theme for firms when choosing and
determining the appropriate corporate governance structure in response to the environment and
situation. The firm must then define the strategic objectives of constantly competitive products,
services and business models, and implement optimal design (architecture) of the strategy drivers’
vertical and horizontal boundary elements to accomplish these objectives.
The ‘efficiency view’ perspective of corporate boundaries draws on transaction cost economics
and related exchange efficiency perspectives, and argues that the ‘make or buy’ decision to minimise
governance costs is an issue of organisation and the market’s vertical boundaries.8
While the ‘efficiency view’ accounts for much of the decision-making that fixes corporate boundaries,
our surveys revealed different aspects of decision-making elements at Japanese firms. Santos
and Eisenhardt (2005, p. 503), who identified the four management drivers determining corporate
boundaries, proposed ‘non-efficiency conceptions’ as a new agenda for boundaries research. This
paper suggests new creativity and dialectic views for these non-efficiency conceptions.
The creativity view
The model applied by Japanese consumer electronics, telecommunications equipment, and semiconductor
manufacturers differs from the western model of horizontal specialisation (see Appendix
2), in that Japanese firms realise original new products from business activities exploiting vertically
integrated internal networks (see Appendix 3). In recent years, moreover, these firms have been
driving the integration of core knowledge outside the firm through joint development (including
initiatives with competitors), based on building external networks. Indeed, the mobile phone business,
led by NTT DoCoMo’s i-mode, is creating original business models from vertically integrated
value chains of external networks comprising content providers, communications carriers and
While the ‘efficiency view’ accounts for much of the decision-making
that fixes corporate boundaries, our surveys revealed different aspects
of decision-making elements at Japanese firms
466 Boundaries Innovation and Knowledge Integration
vendors, and the market is still growing dramatically today (see Appendix 3). Japan’s mobile phone
carriers are making strategic alliances with industries in other fields through collaboration and investment
aimed at expanding horizontal boundaries, and are creating new products, services and
business models. Such cases involve the corporate ‘strategy view’ of creatively, flexibly and autonomously
creating new knowledge by embracing the concepts of flexibility and the capacity to inspire.
In this paper such cases are referred to as the ‘creativity view.’
The creativity view, described in detail in section 3.1, is a key factor in promoting a firm’s vertical
integration. Japanese firms are using the creativity view to upgrade their own path-dependent
knowledge through vertical integration, while absorbing new knowledge and accelerating knowledge
integration within their own firm through collaboration (arising from the construction of external
networks with external partner firms). Japanese firms exploit vertical integration strategy to
assess other firms’ knowledge and business models, with a view to absorbing ideas and expertise,
and ‘connect and development’ strategy to enhance the independence of product, service, and business
models.9 Thus the creativity view determines a firm’s corporate boundaries, and becomes
a core concept leading to Insight 1: the vertically integrated value chain model promotes the creation
of ground-breaking business models and competitive new products and services.
The dialectic view
‘Coherence’ as mentioned by Santos and Eisenhardt (2005) possesses the meanings of ‘harmony’
and ‘unity,’ and signifies coordination and collaboration among stakeholders. This paper uses
the term ‘dialectic view’ to indicate corporate strategy behaviour creating co-evolution models
based on this kind of coherence.
Peng and Nisbett (1999) analysed the psychological reactions that could easily result from two
apparently contradictory propositions and proposed ‘dialectical thinking in a broad sense’ that
judged parts of both propositions to be correct. This sort of dialectical thought has also been reported
in literature on institutional theory, strategic alliances and corporate management.10
The dialectic view promotes the building of co-evolution models among stakeholders who construct
vertical value chains. i-mode, for example, built win-win business model structures for vertical
value chains comprising content providers, communications carriers, and machinery and tool
vendors, and created network externality effects. Sony’s and Nintendo’s game businesses also built
win-win business models for the vertical value chains comprising software manufacturers, device
manufacturers, and machinery and tool vendors.11
The dialectic view, moreover, enables co-evolution models crossing heterogeneous industries to
create new product, service and business models, while expanding horizontal boundaries. Japan’s
mobile phone carriers, for example, are building business models exhibiting mutual synergy effects
from their alliance with portal sites such as Google and record firms in the music distribution business
e alliance strategies and investment cooperation aimed at nurturing collaborative relationships
and merging broadcasting and communications. Moreover, as mobile phones loaded with e-money
and IC cards grow more popular in Japan and other Asian countries, Japan’s carriers are maximising
the value of individual stakeholder business models through partnership and collaboration at
horizontal boundaries in different industry fields (such as finance, cards, retail and railways).
The strategic behaviour of firms that results from their dialectic and strategy views is the starting
point for the creation of new business models arising from the co-evolution model of co-existence
i-mode built win-win business model structures for vertical value chains
comprising content providers, communications carriers and machinery
vendors
Long Range Planning, vol 42 2009 467
and co-prosperity among stakeholders (see section 3.1 for details). The dialectic view determines
a firm’s corporate boundaries, and becomes a core concept leading to Insight 2: industry-transcending
co-evolution models promote the creation of win-win business models.
Dynamic human networks and the architecture of the knowledge integration process
Our second core framework comprises the mechanisms and patterns of the knowledge integration
process, which realises the vertically integrated value-chain and industry-spanning co-evolution
models existing as a backdrop to the knowledge integration model insights. The shared understanding
of this knowledge integration process leads to the formation of dynamic human networks transcending
practitioners’ formal organisations. One aspect of the knowledge integration process is
new knowledge from network theory12 relating to the formation of human networks at a microlevel,
which is an important organisational platform of knowledge integration. Networks among
people, groups, organisations, and firms form complementary relationships with formal organisations,
and practitioners become an important platform for facilitating knowledge-based activities.
The form of the practitioner, group, organisation, and firm networks has a great impact on the integration
of information and knowledge.13 Moreover, firms must dynamically form networks to
continually acquire new competences, and dynamically rebuild these networks in response to
changes in environment and strategy behaviour.
Network theories of nodes (such as individuals, groups of people, and organisations of groups),
network ties, and several network topologies (such as small-world and scale-free structures) impart
important knowledge and insight into relationships between practitioners and the behavior of practitioners
crossing boundaries inside and outside a firm.14 Furthermore, the thought processes and
behaviour of practitioners forming human networks are important triggers to initiate management
drivers and implement the knowledge integration process.
This paper focuses attention on ’small-world structures’ (small-world networks)15 as one of the
leading network topology clusters, and shows how networks among clusters of small-world structures
inside and outside firms mobilise management drivers and form key infrastructure to enable
the knowledge integration process.
Small-world structures, in which there is a high degree of local clustering and only a few links
exist between any two nodes, were found to enhance mutual dependence among cluster nodes
and facilitate communication, coordination and collaboration among practitioners, especially
when tight collaboration is required to connect value chains within the organisation. The availability
of such short paths for ‘bridging’ nodes enhances network coordination and collaboration, particularly
during interaction within organisations. Such network properties are also effective when
creating new ideas and innovation in complex and heterogeneous organisations.16
Small-world structures have come to provide organisations with robust network forms capable of
responding to dramatic environmental change and destruction, including heavy information traffic,
overload, bottlenecks, and sudden accidents. In 1997, for instance, Toyota and affiliated suppliers
managed to evade a destructive crisis facing a leading supplier, Aisin, by building mutually cooperative
and emergent inter-organisational networks. This led to the formation of genuine smallworld
structures among suppliers, focused on Toyota.17
Practitioners also form cross-functional strategic communities (SCs)18 among heterogeneous organisations
and firms, and these SCs form small-world structures (see Figure 2). Considered from the
viewpoint of social network theory, SCs correspond to clusters and cliques accumulated as small
This paper shows how networks among clusters of small-world
structures inside and outside firms form key infrastructure to enable the
knowledge integration process
468 Boundaries Innovation and Knowledge Integration
human nodes.19 Whereas cliques are assemblies where practitioners exchange and share closely connected
information, context and knowledge, however, SCs are teams and projects that go beyond this
stage to dynamically produce new contexts and knowledge in response to environmental change.
SCs are groups forming small-world structures where practitioners in diverse specialisations realise
innovations aimed at solving the issues facing them and implement problem-searching and creative
strategies. Short connections between nodes (people are the first unit nodes) and local
clustering are features of small-world structures. For example, short paths among nodes of practitioners
belonging to heterogeneous organisations enable easier access to other practitioners within
a firm or based in other firms, including customers. Each node in a small-world structure is embedded
in a local cluster. This clustering then enhances the possibility of fostering reliable accessibility.
A small-world structure can be formed by either randomly rewiring a portion of an existing
regular network or attaching each new node to a ‘neighbourhood’ that already exists.20
Figure 2 also corresponds to what are known in social network theory as two-mode (bipartite)
and affiliation networks.21 I’d especially like to call attention to dynamically changing SC and networked
SC formations that Watts (2003) called ‘group interlock networks.’ Watts (2003) described
actors linked to specific contexts, but in the present business world practitioners subjectively form
groups involving specific contexts and simultaneously incorporate other practitioners into this
group, thus extending links to them. Accordingly, these SC groups change dynamically in response
to context, and at the same time dynamically change the form of their network formations.
Figure 2. Knowledge integration through uniting boundaries (graphic): Group Interlock Network
Multiple practitioners participate in multiple strategic communities
(SCs) and share information, context and knowledge, which they
transfer to other SCs they are participating in
Long Range Planning, vol 42 2009 469
SCs are dynamically rebuilt as a result of practitioners’ day-to-day practical activities. Multiple
practitioners participate in multiple SCs and share information, context and knowledge, which
they transfer to other SCs they are participating in. Thus sharing takes place among practitioners,
and this sharing process forms networked SCs comprising the group interlock network. Within the
framework of this network, SCs can be seen as corresponding to nodes and hubs. The practitioners
belonging to the hub and node SCs inside and outside the firm dynamically bridge the multiple,
heterogeneous SCs and create (or consolidate) networks among the SCs. As a result, SCs create
new contexts and knowledge that is integrated by the networks. Practitioners deliberately create networks
of multiple SCs among the various organisations inside and outside the firm and make close
connections with these SCs, aiming to develop new products and services and build new business
processes (see Figure 2). The dynamic networks of these SCs and networked SCs enable the knowledge
integration process.
Yet another key aspect of the knowledge integration process is the architectural thought behind
these knowledge integration processes, in which robust ‘network architectures’ reside (see section
3.2 for details).22 One type of network architecture is vertically integrated architecture (see Table 1).
This is the process of knowledge integration through internal corporate networks at internal vertical
boundaries and external corporate networks at external vertical boundaries. These networks can be
divided into the vertical value chain and multi-layered models.
The vertical value chain model involves forming small-world structures (SCs) to coordinate and
collaborate on individual tasks, and networked SCs as a vertical integration of SCs, with the aim of
realising vertical integration of each in-house task involving R&D, production technology, manufacture
and marketing. Empirical cases of networked SCs realising vertical integration in-house have
already been reported among Japanese manufacturers (see Table 1). The SC networks among heterogeneous
organisations and specialisations of the consumer electronics and telecommunications
equipment manufacturers detailed in these case studies integrate internal knowledge and create
a distinctively Japanese type of vertically integrated business model.
These vertical value chain models also function as inter-corporate networks that link Japan’s mobile
phone and automobile industries with strong ties. With networked SCs building vertical value chain
models that share a high degree of the information and knowledge visible in these industries, leader
corporations such as DoCoMo and Toyota gain leadership and bargaining power in technologies
and markets. Corporate networks among Japan’s automakers and parts manufacturers are leading examples
of such SCs. The above-mentioned i-mode business model, moreover, comprises vertically integrated
value chains among DoCoMo, mobile handset manufacturers and content providers (CPs).
Meanwhile, the multi-layered model has small-world structure hierarchies. Practitioners from
various sections within the firm form cross-functional, multiple SCs comprising layered networks
at management levels. Multi-layered models are frequently observed in cases of large-scale new
product development (NPD) and major projects, such as DoCoMo’s i-mode project. Strategic behaviour
resulting from the above-mentioned creativity view promotes the knowledge integration
model arising from vertically integrated architecture, builds multi-layered and vertical value chain
models within and among firms, and goes on to create new product, service and business models.
Another type of network architecture is horizontally integrated architecture (see Table 2). This is
a process that integrates knowledge through external networks at a firm’s horizontal boundaries,
and divides into the horizontal value chain and complementary models. The horizontal value chain
Multi-layered models are frequently observed in cases of large-scale
new product development and major projects, such as DoCoMo’s
i-mode project
470 Boundaries Innovation and Knowledge Integration
Table 1. Vertical integrated architecture
Model Vertical value chain model Multi-layered model
Structure
Features – Accumulating technological strength and expertise with in-house activities
(including R&D and production) and other activities through the
formation of networked SCs
Building business platforms (such as i-mode and game businesses) as vertical
value chains through coordination and collaboration centred on leader companies
Forming layered, mixed teams spanning knowledge boundaries
among organisations and specialisations
Building collaborative networks spanning each management layer
Integrating knowledge in-house through the formation of
networked SCs
Empirical
cases
Building organisational and competitive capabilities through vertical
integration of digital consumer electronics
Matsushita Electric (Kodama, 2007a)
Sharp, Cannon (Kodama, 2007c)
Business platforms for vertical value chain
i-mode (Kodama, 2002), PlayStation (Kodama, 2007c)
Developing i-mode & 3G services
NTT DoCoMo (Kodama, 2007a)
Successful examples of new product development in the
communications device field
Fujitsu (See Figure 5) – Mitsubishi Electric (Kodama, 2007c)
Toyota’s TQM promotion activities (Kodama, 2007c)
Long Range Planning, vol 42 2009 471
Table 2. Horizontal integrated architecture
Model Horizontal value chain model Complementary model
Structure
Features – New knowledge integration through the formation of networked
SCs among companies in different industries
Formation of new business platforms (such as mobile-EC services and
telematics) among companies in different industry types
Knowledge integration through the formation of networked SCs
with externally distributed and in-house knowledge
New knowledge integration through collaborating in same or related
industries (neighbouring business domains)
Empirical cases 1. Mobile e-commerce
NTT DoCoMo (Kodama, 2007a)
Networks among companies in different industries
Network formation centered on NTT DoCoMo
and au (KDDI) (see Figure 6)
NTT DoCoMo’s international strategy
Global development of Conexus Mobile Alliance and i-mode (Kodama, 2007a)
Examples of successful new product development in communications
device and machine tool fields
Fujitsu (Kodama, 2005)(see Figure 5)
Fanuc, NEC (Shibata and Kodama, 2007)
Formation of supplier networks
Supplier’s learning networks (Dyer and Hatch, 2004)
The Toyota Group and the Aisin Fire (Nishiguchi et al. 1998)
472 Boundaries Innovation and Knowledge Integration
model involves firms expanding from existing to new business domains, and building networked
SCs to create new value chains. The horizontal value chain model determines the corporate horizontal
boundaries to answer the questions of what products and services a firm should retain and
what businesses it should diversify into for value creation. The formation of SCs with firms in different
industries, especially, promotes access to heterogeneous knowledge and dialogue at knowledge
boundaries. Creative abrasion and productive friction at knowledge boundaries inspires
new knowledge, and enhances creativity to achieve new business models.
The complementary model comprises collaborative and networked SCs, which have equal relationships
with external partners in the same or neighbouring business domains and few of the hierarchical
elements seen in vertically integrated architecture. Cases involve disseminating shared knowledge with
external partners and jointly developing new products and services on an equal footing. Strategic behaviour
resulting from the dialectic view (mentioned above) promotes the knowledge integration
model arising from horizontally integrated architecture, builds industry-spanning horizontal value
chain and complementary models, and goes on to create co-evolution models among firms.
These vertically and horizontally integrated network architectures promote dynamic knowledge
integration processes through a firm’s internal and external networks, and become enablers for the
two Insights mentioned above: the creation of new products, services and business models through
the vertical value chain model, and win-win business models through the co-evolution model (see
Figure 1). Then the knowledge integration firm perceives customers and external partners (in the
form of markets and environments) as precious ‘knowledge assets,’ seeks out and absorbs optimal
knowledge to realise strategy, and goes on to implement integration.
Discussion
This section discusses in detail the two core frameworks of the knowledge integration model described
in section 2.
Conceptual framework of the creativity and dialectic views
Theoretical background of the relationship between vertical integration and creativity
This paper considers why the creativity view promotes a value chain model through vertical integration
from the viewpoints of competitive technological excellence and knowledge integration.
Looking at the technology aspect, existing research emphasises that firms should not implement
vertical integration in industries where the rate of change is high.23 From the viewpoint of transaction
cost economics, the disadvantage of business processes operating through vertical integration
that adheres to unchanging and outdated technologies is clear.24 But vertical integration can also be
advantageous for firms wanting to lead the way in new technology markets. It functions as an ‘early
adoption’ advantage for firms that introduce the new technology, enabling them to respond to new
technological change or create their own. Vertical integration is an effective strategy for a firm
wanting to establish superiority over rivals through its original technology and early establishment
of de facto standards.25
According to Pisano’s technology strategy research in the pharmaceutical and biotechnology
fields, the vertical integration model should be adopted for highly innovative development in the
scientific and technological aspects of pharmaceutical products.26 R&D and manufacturing technology
for innovative products requires tacit knowledge comprising the creativity (new concepts and
advanced expertise and skills) of scientists and developers. Transfer of tacit knowledge among firms
Vertical integration is an effective strategy for a firm wanting to
establish superiority over rivals through its original technology
Long Range Planning, vol 42 2009 473
is especially difficult, and vertical disintegration conversely raises transaction costs and acts as a disincentive
to new innovation. Accordingly, vertical integration can be said to function advantageously
in realising high-tech products that require creativity. Japanese firms’ behaviour in
building vertically integrated value chains to obtain a competitive technological edge, with the
aim of realising new products and constantly exploiting creative new technologies by exercising creativity,
was observed from interview data related to the creativity view (see Figure 3).
Looking at the knowledge integration aspect of vertical integration, both interview data and existing
research have shown that Japanese firms possess natural features that make it easy to routinely
form mixed cross-divisional teams (possibly including external partners and customers),
oriented to achieving new targets and solving problems.27 In-house vertical integration systems
built from heterogeneous specialised fields and routine business also become knowledge capital
platforms (resources with value), forming mixed teams that elastically and flexibly cross divisional
boundaries without being seized by sectionalism, and they can also trigger action aimed at novelty
and uncertainty. The mixed teams that overcome organisational and knowledge boundaries among
practitioners can also trigger creativity and new knowledge inspiration.28
In high-tech fields, moreover, the interdependence among R&D and manufacturing functions is
strong, and tacit knowledge (including experience and expertise) among researchers, developers
and manufacturing engineers is shared and accumulated. This high degree of information stickiness
29 makes it difficult to transfer tacit knowledge to external firms, and for high-tech firms to separate
R&D and manufacturing. As mentioned above, building vertically integrated knowledge
capital platforms from accumulated experience and expertise works advantageously in responding
to technological change and resolving new issues which require speed and creativity. It follows that
the action of mixed teams with vertically integrated systems becomes the foundation for integrating
the knowledge of various practitioners.

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