Searching Strategies for Survival through New Product Prototyping by Industrial Districts Under Recession : An Econo-geographic Field Research on Denim Jeans Production in Japan

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This research outlines an extensive field research of denim jeans production in the Setouchi district in Japan. A special emphasis is placed on how 'flexible specialization' functions in the district so that the agglomeration of small specialist companies can realize creative product prototyping, surrounded by uncertain environments on both supply and demand sides (Piore and Sable, 1984 ; Seki, 1993). There is a general belief that horizontal specialist networks provide more flexible production capabilities under high uncertainty, compared to traditional keiretsu networks where product prototyping and mass manufacturing processes are hierarchically coordinated by large flagship companies. However, our field research in the past years has found that hierarchical aspects amongst small specialist companies still remain facing ever fiercer environmental uncertainties. Such small companies, on the one hand, lose their former flagship companies which shift their production venues out of the … More district under the pressures from low-cost foreign manufacturers. Focused on less price-sensitive and more demanding consumers, domestic production networks are now in the trial and error process of transforming themselves into horizontal specialist networks and conduct creative product prototyping on their own. On the other hand, simply due to their inexperience in product prototyping, certain hierarchical aspects persist, since they make tremendous efforts to find new flagship companies who complement inadequate prototyping capabilities of the specialist companies. At the same time, however, such aspects seem to presume a certain range of variations facing high uncertainty, which seems to be adaptively rational from an evolutionary perspective. In order to formalize the functions which new flagship companies may play, this research employs Knight's distinction between 'uncertainty' and 'risk'. Further, traditional keiretsu systems and recent horizontal specialist networks are hypothesized as two distinctive ideal types which are good at handling 'risk' and 'uncertainty' respectively. Lastly, after reporting the difficulties which denim jeans specialist networks face in the Setouchi district, two brief case descriptions from our field research demonstrate different patterns of adaptive variations by trial and error under high uncertainty Less