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Increasing Complexity and Limits of Organization in the Microlithography Industry: Implications for Japanese Science-based Industries

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  • Hiroyuki Chuma
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    Abstract

    The purpose of this paper is to identify characteristics of the complexities and organizational limits that science-based industries in Japan are facing, to clarify the causes and effects of those characteristics and to show how they are related to the recent decline in global competitiveness in these industries. The microlithography industry is used for this purpose as a typical example of science-based industries. In this industry, Nikon and Canon were quite dominant until around the mid 1990s, while ASML of the Netherlands began to increase its competitive strength rapidly in the mid 1990s. The paper introduces the new concept of "interim modularity" vis-a-vis "ex ante modularity" a la Baldwin and Clark (2000) to explain how ASML tries to cope effectively with the drastically increasing complexity of such a technology. The concept of interim modularity is defined as the communication benefits induced by the modular architecture during trial-and-error development processes, no matter how incomplete such architecture may be. The paper emphasizes that extremely complex tools like microlithography require interim modularity to effectively orchestrate the dispersion of specialized knowledge and know-how over a wide range of professionals inside and outside of corporations and that interim modularity is more effectively pursued by ASML than by Nikon or Canon. The paper also indicates that the insufficient cognition of the importance of interim modularity has been widely weakening the competitiveness especially in Japanese science-based industries.

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    File URL: http://www.rieti.go.jp/jp/publications/dp/05e007.pdf
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    Bibliographic Info

    Paper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 05007.

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    Length: 42 pages
    Date of creation: Mar 2005
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    Handle: RePEc:eti:dpaper:05007

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    1. Susan Helper, 2000. "Economists and Field Research: "You Can Observe a Lot Just by Watching."," American Economic Review, American Economic Association, vol. 90(2), pages 228-232, May.
    2. Richard N. Langlois, 2002. "The Vanishing Hand: the Changing Dynamics of Industrial Capitalism," Working papers 2002-21, University of Connecticut, Department of Economics.
    3. Naomi R. Lamoreaux & Daniel M.G. Raff & Peter Temin, 2002. "Beyond Markets and Hierarchies: Toward a New Synthesis of American Business History," NBER Working Papers 9029, National Bureau of Economic Research, Inc.
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