Strategic capabilities of Japanese independent suppliers

Because of low profitability recently, large manufacturers in Japan have reduced R&D expenditure, and cannot afford to carry on long-term continuous trading with small manufacturers. This has resulted in an R&D shift from large manufacturers to suppliers, creating a new technological opportunity for the latter. Some of Japan´s hi-tech small suppliers tried to be independent, and created a new market by developing advanced high technologies. Using data on patents, this study analyzed the R&D shift from large manufacturers to suppliers and reviewed trading conditions and the innovations of Japanese small manufacturing companies. Moreover, three case studies were conducted on small hi-tech manufacturers located in Yao city, Osaka prefecture, Japan. The results show that these companies realized their competitive advantages by dynamic entrepreneurial management.