have also favoured competitive advantage in these industries. In the 1950s and
1960s, while Japan’s home market was growing rapidly in sectors such as
sewing machines, ships and motorcycles, these same markets had begun to
level off in other countries. As a result, Japanese firms invested aggressively in
large, efficient facilities with the latest technology. US and European competi-
tors, on the other hand, simply added on to existing, less efficient older plants.
The result was higher productivity for Japanese firms. The rapid growth of
Japan’s industrial economy also aided supporting industries such as robotics,
copiers and semiconductors. Even more important than the size of the home
demand is the pressure from demanding and sophisticated buyers. Japanese
consumers insist on quality and superior service and will readily switch brands
if a quality difference is noticeable. Needless to say, this forces firms to contin-
ually upgrade their products. As to the third determinant, Japan has a strong
position in semiconductors, machine tools and robotics, which are essential
supporting industries to many other sectors. Regarding the fourth determinant,
firm strategy, structure and domestic rivalry, the strategy of Japanese firms is
geared largely towards standardization and mass production combined with
high quality. This approach has made it the leader in industries such as con-
sumer electronics and office machines. The commitment of both workers and
managers to their firm, and the firm’s investment in upgrading skills and
norms of cooperation have led to an unusual rate of success in industries in
which a cumulative learning effect is essential (consumer electronics, semi-
conductors, office machines). Finally, in almost every industry in which Japan
is internationally competitive, there are several and often a dozen or more
competitors; in shipbuilding and semiconductors there are as many as 33 and
34 respectively. (Porter, 1990: 384–421)
Now that we have provided a tool for answering why certain products are
produced in some nations and not in others, we will extend our analysis
further. In the next section we will take a look at the international division of
labour.
6 TRENDS IN THE INTERNATIONAL DIVISION OF LABOUR
The logical consequence of the theories discussed above is that a country
would do well to concentrate on the production of those goods and services in
which it has a competitive advantage. It can then export these goods and
import goods and services to those industries where it is less productive. In this
way, international competition helps to upgrade productivity over time. The
process implies, however, that market positions in some segments and indus-
tries must necessarily fall by the wayside if a national economy is to progress.
24 International Human Resource Management