Industrial Environment, Institutional Changes, and Technological Innovations in the Japanese Telecommunications Industry

The Japanese telecommunications industry provides an interesting example by which we can understand the relationship between changes in the industrial environment, institutional changes, and technological innovations. Since the end of World War II, the environment surrounding Japanese telecommunications has changed drastically. Japan’s telephone network was heavily damaged by the war, and it became the government’s major goal to install a modern telephone network throughout Japan. This task was completed in the 1970s. By that time, however, a new competitive environment was being created by the deregulation of the worldwide industry. Moreover, as digitization of the telecommunication networks advanced, the telecom and computer industries started to merge, producing a new industrial environment. The governments of advanced countries were beginning to privatize and divest traditional public telephone and telegraph companies in order to adjust to this new environment. Deregulation and globalization of the industry were further advanced by the diffusion of the Internet in the 1990s. This so-called IT (information technology) revolution is now creating a totally new environment for the telecommunications industry