The Phase Variety of Product Systems and System-Based Differentiation: An Alternative View on Organizational Capabilities of the Japanese Firm for Product Innovation

Abstract

Literature on the Japanese organizational capabilities for product innovation emphasizes that the management of linkages and interfaces of different bodies of functional knowledge composing a particular product system lies at the heart of organizational capabilities. Therefore, such studies have assumed that Japanese firms have advantages in industries where a product shapes a complicated system composed of many subsystems with high interdependencies. However, this paper proposes that such understanding of the Japanese organizational capabilities for product innovation may be potentially misleading because it premises that a product can be grasped as a uni-phase system and an organization can be functionally differentiated and then integrated for approaching product innovation. Instead, this paper emphasizes two important concepts underlying organizational capabilities for product innovation: the phase variety of a product system and system-based differentiation of a product development organization. The aim of this paper is to develop an alternative view of the Japanese organizational capabilities for a better understanding of the Japanese model of product innovation.