Architecture-based Advantage of Firms and Nations

Abstract

Competitive advantage of Japanese firms and of catch-up countries’ firms has been discussed through the case study on optical storage products. The dynamic change of product architecture from integral to modular mode has brought out the latent potential of catch-up countries. The more modular the architecture is, the larger the market shares of catch-up countries’ firms and the smaller the market share of Japanese firms are. The analysis shows that the competitive advantage/disadvantage of the catch-up countries’ firms depends not on the direct labor cost but on the overhead cost, in which the patent royalty accounts for the most portions. Based on the contrastive position in the product architecture and in the patent royalty, authors propose that Japan and the catch-up countries promote the architecture-based global alliance for symbiotic co-prosperity, in which the power of integral architecture and of modular architecture are combined into one joint venture company.

Keywords

• competitive advantage
• comparative advantage
• product architecture
• technology diffusion
• catch-up country
• chinese firm
• global alliance
• patent royalty
• intellectual property
• optical storage
• cd
• dvd