A Design-Information-Flow View of Industries, Firms, and Sites

Abstract

This introductory chapter discusses the research scope, framework, and key concepts of this book. Regarding the scope of our empirical research, we focus on two main industrial phenomena occurring in the period between the 1990s and the 2010s, i.e., global competition and digitization, and apply certain evolutionary frameworks and concepts to explain them. As for the research framework to analyze the evolution of manufacturing industries and firms, we propose a capability-architecture-performance framework, which is derived from our broad concept of manufacturing as managing flows of value-carrying design information to customers, as well as that of manufacturing site ( genba , in Japanese) as the place where such flows exist. We adopt a genba-based view of the economy, in which the most basic units of industrial-economic analysis on the supply side are the manufacturing sites, where value flows exist, rather than the firm, which is composed of the former. In this context, manufacturing capability is a system of organizational routines that governs and improves the flows of value-carrying design information to customers. Product architecture, on the other hand, refers to the correspondence between a product’s functional and structural design elements. The concept of design-based comparative advantage derives from this framework, which predicts that certain dynamic fits between a manufacturing site’s capability and a product’s architecture result in higher productive performances and lower unit design costs. For example, a country whose manufacturing sites have higher coordination capabilities tends to have a design-based comparative advantage in products with coordination-intensive design, i.e., those with relatively integral architecture.

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