Acomparative and empirical study on establishing innovations by SMEs in industrial disticts

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The aim of this study is to reexamine several theories on establishing innovations by SMEs in industrial districts on the basis of a comparative and empirical research. We conducted intensive interviews with entrepreneurs including managers for technical development of SMEs at three industrial districts along the Chuo free way in Japan, namely Suwa-Okaya, Iida and Kofu. We arrive at the following conclusions.(1) SMEs of machine, metal, plastic and rubber goods manufacturing in Japan have established piecemeal innovations on process technology. (2) In our case study districts, there were SMEs which could establish product innovations as well. (3) Innovative SMEs often transact with customers which are located outside the industrial district where the SMEs are locatede. (4) In order to establish innovations, it is important to transform tacit knowledge into coded ones and vice versa. (5) This spiral transformation of tacit and coded knowledge is to be realized by means of endeavor to minister the needs of the customers. (6) Social networks of SMEs and supporting institutions within the district is useful for establishing innovations, especially when they try to develop a new market or to find new customers. (7) Innovative SMEs contribute to develop social networks within the district. (8) The discourse on innovative milieu has closer affinity with our case studies than the discourse on industrial cluster by Porter. (9) Hiring of retired engineers is important for establishing innovations by SMEs. (10) Location of innovative SMEs does not necessarily lead to the economic growth of the district as a whole. It is, therefore, necessary to innovate effective policies for the regional economies.