The Roots of Competitive Advantage in California and Japan

Abstract

This article examines from a comparative and historical perspective the roots of competitive advantage in two known regions of techno-economic advance, California and Japan. A comparison of processes in these two regions in the late nineteenth and early twentieth centuries reveals that indigenous factors, antecedent to later development, largely conditioned the rapid pace and progressive direction of techno-economic advances that have been observed in the post-World War II era. Isomorphic developmental milieux included the following enabling conditions of economic development: a well-developed and skilled human resource base, negligible dependent linkages with other states/territories, complementary strategies of import substitution and export promotion, coordinated public-private sector ventures, local generation of capital, entrepreneurialism, cooperative and yet competitive interfirm relations, and an industrial support system of financial intermediation that provided ready access to funds for small businesses. Factors that typically are cited as reasons for the relative “successes” of these two regions are post-World War II phenomena, which represent the effects, not the causes, of processes that fostered competitive advantage.

Key Words:

• economic development
• technological change
• competitive advantage
• comparative analysis
• historical conditions
• Japan
• California