Moving Beyond Organizational Inertia As A Survival Strategy For Resources-Based Industry In A Service-Oriented Economy: Lessons From Cross-Sector Technology Spillover In The Nonferrous Metal Industry | Masahiro Nakagawa & Chihiro Watanabe

Despite crucial constraints in securing resources, the nonferrous metal industry has made a significant contribution to Japan’s development as an industrial society. This can largely be attributed to the industry’s technological development efforts. However, marginal productivity of technology declined dramatically in the mid to late 1980s resulting in a dramatic decrease in operating income to sales in the 1990s. The sources of such a decline in marginal productivity of technology can be attributed to the nonferrous metal industry’s organizational inertia in clinging to a traditional business sector centered on wire and cable at a time when a new paradigm required a shift to new businesses such as electronics materials. As a consequence of the industry’s intensive efforts, however, the declining trend in marginal productivity of technology ended in the mid 1990s. While this can be attributed to technology spillover from a traditional business sector to a new business sector, the effects of technology spillover reached a crucial limit in the late 1990s as the assimilation capacity of the new business sector became exhausted, driving the industry to a broader trans-industrial technology spillover. The rise and fall of Japan’s nonferrous metal industry over the last two decades thus provides an informative suggestion regarding survival strategy for resource-based industry in a service-oriented economy, which is demonstrated in this paper by an empirical analysis of Japan’s leading nonferrous metal firms over the last two decades.