The Suggestions to Chinese business Innovations based on Successful Japanese Practices
Table of contents
1.0 The Background of Business Innovation 3
1.1 The Characteristics of Business Innovation 3
1.2 The Framework of Business Innovation 5
2.0 The Success Japan in improving Business Innovation 5
2.1 The early stage of Japan in improving Business Innovation 6
2.2 The fast developing stage of Japanese business innovation 6
2.3 The recent actions of Japan in improving business innovations 7
3.0 The Suggestions to Chinese government 7
3.1 The role of enterprises in Business innovation 7
3.2 Provide fund and policy support to reduce risks in developing innovations 8
3.3 The cooperation of innovative bodies are also very important 8
4.0 Conclusions 9
Realizing the importance of innovation to increase the competitiveness of the companies at the global market, the Chinese government is advocating the companies to develop innovations for creating core competitive advantages. Only with such advantages, they can be different and win in the competition. And innovation is regarded as the pushing power of technical progress. But innovation is a costly process consuming a lot of resources and covering a lot of aspects including the production, operation, management, organization and so on. So the support of the government is necessary when the companies develop the innovations. Because the benefits of the business innovations are related with the progress of the whole society, the government should know how to raise levels of innovative activity in the country’s businesses.
In this short essay, we will not only discuss the literature knowledge related with innovation, but also introduce the case of Japanese government to promote the business innovations. Japanese government has done well with clear goal to guide and enlighten the innovative activities. At last, the recommendations to Chinese government will be proposed.
1.0 The Background of Business Innovation
At present, the Chinese government is encouraging the business innovation activities at the national level, because the traditional manufacturing industry is lack of competencies in the global competition. Only the innovations can help the companies to get real core competitive advantage.
Every successful company must have something different with its competitors and it is win the competition with its core competitive advantage. And most competitive advantages come from innovation. For example, companies can use their advantages of research and development to produce innovations in various aspects, including product variety, performance, quality and time; they can also reduce production costs and establish the advantage to produce the same quality products under low price through large-scale production by using their advanced technology and equipment; what’s more, the advantages in logistics can be sued to provide high quality after -sales services after to create a “differentiation.” No matter what kind of “differentiation”, the enterprises are likely to gain a competitive advantage, and any kind of “differentiation” are inseparable from innovation.
Commonly, innovation can be regarded as the creative integrations of production factors including fund, human resources, techniques and other contents. Because of innovation containing so many fields, we should have clear ideas to the characteristics and framework of business innovation.
1.1 The Characteristics of Business Innovation
But it is hard to improve the business innovations in a short time as innovation is an overall systematic activity. For example, Japan has taken more than 30 years to improve its business innovations and achieved good results. It is important to analyze the characteristics of Business Innovation, which will be helpful for our following research. In details, business innovation has the following characteristics:
(A) The innovative capability is born within the enterprises facing business competition.
At present, the intensified global economic competition lead to the increasing position of innovation ability that countries, regions and enterprises win the competition. At the same time, the world economy is shifting to knowledge-based economy driven mode; the contribution of knowledge and technology has been higher than the sum of the contribution of natural resources, capital and labor (Sun & Liang, 2009). The economic growth relies more than ever on scientific and technological progress. What’s more, the internationalization and globalization of research and development activities are more extensive and in-depth, the enterprise ultimately surviving must have one or several aspects of competitive advantages, and these competitive advantages always come from the internal business innovation ability (Zhang & Li, 2000).
(B) Business innovation is hierarchy. The high level of innovation is characterized by knowledge, mainly from the research and development of enterprise value chain and marketing aspect, and these innovations cannot easily be imitated by competitors, so there are differentiated advantages (Sun& Liang, 2009). Therefore, the enterprise can gain these competitive advantages in a longer period with high added value. Low levels of innovation are characterized by production factors, mainly from production processes of the enterprise value chain; these kinds of innovation abilities are easy to be imitated by competitors and usually only for enterprises to win low-cost advantage.
(C) Business innovation is both the stock and delta, and is the resources with characteristics of embodiment and non-embodiment ability (Zhang & Li, 2000). Business innovation is gained by learning and existing business innovation capability is the result of the accumulation of past learning, reflecting the stock level. In addition, the innovative capabilities directly increase the added value of products and increase the difficulty of competitors to imitate, so the enterprises should increase investment in research and development to further promote innovation capabilities.
With so many characteristics, innovation is a complicated progress covering a series of activities and fields. And the quantity of high-quality innovation can directly transferred to production is not too many. It is common that a lot of money and efforts are paid without satisfied results. So, only big companies can bear the risks to develop innovation, but most medium and small companies are lack of the incentives to develop innovation. And the encouragement of the government and proper policy guidance are also necessary to create the innovative environment of the whole nations. Then, the risks and funds to develop innovations can be shared by the public fund and low cost. The success of the Japanese companies in innovation is greatly related with the support of the government.
1.2 The Framework of Business Innovation
The structure of Innovation capacity is constituted by the basic elements and the mutual combinations of coupling methods. Elements combination of corporate innovation is multi-faceted and multi-level, but the basic elements play a decisive role and the other aspects of the elements are derived. According to innovation evolution theory and the national innovation system theory, innovative capability of enterprises can be decomposed into: technological innovation, institutional innovation and support innovation.
(A) Technological innovation capability is the core element in the enterprise innovation system. Technological innovation capability means the capability to acquire advanced technology and information, to absorb them combing with the internal knowledge of the organization, to reprocess these knowledge and technology and to achieve economic efficiency through the organization, production and diffusion (Zhang & Li, 2000). In order to win the competition, companies must strive to overcome the competition with the objective to improve competitiveness.
(B) Institutional innovation is another element in the businesses innovation capacity system. It means the new adjustment and reform to the existing original business relationships for adapting the requirements of knowledge-based economy, supplying the power and institutionalized mechanism to the continuous innovation and obtaining higher efficiency in the aspects of incentives, resource allocation and income distribution (Shu, 2003). In the enterprise architecture, the development of institutional innovation system is necessary to formulate the efficient operation mode to ensure that the elements of technological and supporting factors interact positively.
(C) Supporting innovation capability is one the basic elements in innovation architecture. In the process of business innovation, enterprises require a lot of intellectual resources, basic science and technology, information resources, environmental resources and other support; and the combination of these supporting elements can greatly influence the background elements in the enterprises innovation activities (Shu, 2003). These supporting background elements can not only provide resources for business innovation, but also deeply influence the combination and operation modes of enterprise innovation resources.
2.0 The Success Japan in improving Business Innovation
According to the different characteristics of Japanese economy and science and technology development worldwide, the Japanese Government has guided the direction of technological innovation in different periods for enterprises to reduce the uncertainty and risk in R&D.
2.1 The early stage of Japan in improving Business Innovation
Since the 1960s, the Japanese government has helped the enterprises finish the leap from technical introduction, digestion and absorption to achieve self-development through policy guidance. Through tax cuts and exemptions, the enterprises are encouraged to realize self-made the products after introducing the first one when promoting the introduction of advanced technology and equipment. At the same time, the European and American enterprises had to sell technology to Japanese enterprises by limiting direct investment and products imported way (Ma & Liang, 2009). In order to reduce the risks of enterprises to develop the most advanced technology, the government establishes the large-scale projects system to provide fund support for the strategic research of the transistor technology and civil aircraft. Thus, the base to formulate the independent brand and independent R & D capabilities for Japanese industrial and mining enterprises are created.
In 1970s, the government promoted the strategy to develop knowledge-intensive industries and to vigorously develop the energy-saving technology (Tian & Ping, 2008). To meet the strict government requirements for vehicle emissions, the auto companies performed a lot of technical input in reducing energy consumption and causing the technological competitiveness of enterprises in the car industry. Through such competition, the enterprises have stronger international competitiveness and the Japanese automobile industry got rapid development.
In 1977, the Japanese automobile industry replaced the steel industry to become Japan’s largest export industry. Until 1980s, Japan was evolved into the largest car producer in the world. In 1980s, the Japanese government explicitly states that the country was based on technology development and paid attention to basic research. In 1981, the “new generation of industry-based technology research and development system” was developed to promote the invention of individuality and originality (Tian & Ping, 2008).
2.2 The fast developing stage of Japanese business innovation
And in 1987, Japan developed the basic plan for science and technology research and development of a series of physical materials. Entering the 1990s, Japan begun to focus on how to solve environmental problems and paid more attention to develop the new technology and industry of information and communication. According to the characteristics of the growing integration of science and technology, three previous large-scale national R&D projects are combined to be the “industrial science and technology research and development system.”
When realizing its information technology and infrastructure far behind the United States, the Japanese government once again plays the wide range of bureaucracy coordination advantages to fully mobilize all forces to catch up. Japanese government has introduced e-Japan Strategy and u-Japan strategy and hope to solve economic and social problems through information and communication technology (Chen & Xie, 2008).In November 1995 the Japanese government formulated the “Basic Law of Science and Technology” and first introduced the “Science and Technology Basic Plan” in 1996 based on this law.
During the twenty years from 1980 to 2000, a lot of Japanese companies appeared in the market, such as Sony, Toyota, Nissan, Sharp and Yamaha. And a lot of innovations are developed to support their competition in the world market. The Japanese techniques are widely admitted in the world as advanced.
2.3 The recent actions of Japan in improving business innovations
In the new century, the Japanese government made it clear that science and technology in Japan has ended the so-called catch-up era, and it must develop its originality of science and technology in the future and create new industries with creativity. And the second and third phases of “Science and Technology Basic Plans” are developed to define that the basis foundation for the country was ”Science and Technology”, and the four fields of life sciences, information communication, environment and nanotechnology and new materials are regarded as very important ; the energy, manufacturing, social infrastructure and cutting-edge science are also included to the promoting industry; the cooperation of university, industry, research institutions and the government are strengthened. . According to the survey of Japanese Ministry of Economy in 2006, 52.4% of 305 listed manufacturing enterprises have launched the university-industry cooperation and achieved a lot (Wu, 2007). In the future, the Japanese government will continually highlight the need for selection and concentration of the investment in science and technology.
In short, to strengthen scientific and technological input to basic research, more clear direction, emphasizing the originality, introducing competition to the reform of science and technology system, scientific and technological transformation, and vigorously carry out industry-academia-government cooperation are the features of Japanese science and technology policy in the new century. Its purpose is to promote new industries through cutting-edge science and technology, and enhance industrial competitiveness, and thus re-create the Japanese economic miracle.
3.0 The Suggestions to Chinese government
The Chinese business innovation develops not so well recently, so the Chinese government should do more to raise levels of innovative activity in the country’s businesses. Based on the experience of Japan’s continual innovation success, the following suggestions are proposed for Chinese government.
3.1 The role of enterprises in Business innovation
The role of enterprises in the business innovation should be strengthened and enterprises should be regarded as the main bodies in developing such innovations. In China, it has reached a consensus that enterprises are the main bodies in technological innovation, but the dominant position of enterprise in technological innovation has not been established. As the main bodies of technological innovation and investment, the medium and big-sized companies are lack of investment in technological innovation. Most companies perform innovation in the way of mimic and are lack of independent innovation. The foreign companies entering the Chinese market are most production-based with clearly insufficient R & D activities. What’s more, there are not enough attentions to SMEs from the government, so they have weak technological innovation capability. So the government should attach great importance to production and technological innovation. Through establishing and improving the technological innovation and investment mechanism and implementing the series of policies of the government to promote the technological innovation, the dominant position of the enterprises will be established and play their role in technological innovation.
The government funds should play the guiding role to allow the enterprises become the protagonist in science and technology investment. To solve the problem of inadequate investment and technological innovation activities of the big and medium-sized companies, the guide of the government becomes very important. Learning from the experience of Japan, it is firstly required to establish the national and municipal engineering and technical centers, technological innovation centers and bases and experimental labs to increase the guide investment.
3.2 Provide fund and policy support to reduce risks in developing innovations
The government can set up the guarantee fund by cooperating with relevant agencies to provide loan guarantees technological innovation in seed and start-up periods. The tax incentives can also be used to guide the enterprises to increase investment in technological innovation, constantly enhance the power and capability of independent innovation, and promote enterprises have become the protagonist in science and technology.
The government should provide clear direction and reduce risks for business innovation through policy guidance (Sun & Liang, 2009). It is inefficient to promote technological innovation by using hands-on approach, but the government can strengthen the infrastructure and environment bases to promote technological innovation. And it is very useful to develop the phased targets for the development of technological innovation according to the development characteristics of different stages of national economy and Chinese overall economic development plan. Then the appropriate policies can be developed for realizing the goals. The right policy guide can help the enterprises understand the development trends of science and technology at home and abroad. With the help of the government, the enterprises will develop technological innovation towards clear direction and get support and motivation from the entire country or region’s industrial policy.
3.3 The cooperation of innovative bodies are also very important
It is important by the government to encourage the task division cooperation and coordination of production and research to increase the technological development resources. Government should break the regional barriers and encourages strengthening the division of labor, cooperation and links of technical innovation main bodies. The integration of various technological innovations resources can incorporate new forces to innovation. In the aspect of knowledge Innovation, the role of laboratories and research centers at all levels should be played; in technological innovation, the effects engineering and technical centers and enterprise technology centers at all levels should also be played; in high-tech industries and business incubation platform, the base of high-tech industry and business incubators should be played. In addition, the introduction of foreign advanced research results and technological innovation should be introduced. By absorbing the abroad technological resources and expanding the technical communication, the vitality and energy of business innovation will be strengthened.
In summary, the target of the government to raise levels of innovative activity in the country’s businesses should focus on the construction of the technological innovation capability to formulate the core capabilities. And the improvement of the entire business can’t lack the guidance and support of the government.
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