An Empirical Analysis Of Firm Revitalization Innovation – Lessons From Japan’s Lost Decade Towards A Service-Oriented Economy | Gentoku Yoshikawa & Chihiro Watanabe

During Japan?s ?lost decade? of the 1990s, many firms experienced business hardships such as a decline in operating income, bankruptcy or even liquidation. However, through intensive efforts, a number of firms have been able to rebuild their business operations in recent years. Indeed, certain firms demonstrate a clear revitalization trajectory in 2004. This paper attempts an empirical analysis to identify the structural source that has enabled firms to succeed in their revitalization efforts. Also, by defining revitalization processes supported by innovation as ?Revitalization Innovation,? the mechanism of dynamism is elucidated. On the basis of a comprehensive review of Japan?s leading 500 firms over the last 12 years, it was identified that there are two types of firm revitalization innovation: industry revitalization potency-dependent and firm indigenous revitalization potencydependent. Furthermore, this paper postulates that a technology driven shift to service-oriented manufacturing is particularly important for firm revitalization in the direction of a service-oriented economy.