Venture Review

Japan Ventures Review No.5 Abstract

Japan Ventures Review Japan Ventures Review No.5 Abstract
November 2004


Naotoshi Osada/Chihiro Watanabe
Correlations among New Firm Creation and Start-ups Activity, Change of Industrial Structure, and Economic Growth

 The influence on economic growth of new firm creation and start-up firm activities has attracted attention throughout the world. Fostering start-ups especially venture businesses, in emerging technology industries, has become an important policy objective at the national, as well as the regional, level in Japan.
 On the basis of analysis of correlations among 1) new firm creation and start-up activity, 2) change of industrial structure, and 3) economic growth, this paper shows that, with a 4-6 year time lag, each of these three elements was closely correlated to each of the others from the 1970s until the 1990s at the national level. However, throughout the 1990’s a vicious cycle has been observed among these elements. The stagnation of the Japanese economy throughout the 1990s is likely attributable in large part to this vicious cycle.
 This study also suggests an effect of firm and industry lifecycles on economic growth operating through the effects of the rise and decline of particular firms and industries on overall industry structure.
 In light of these dynamics, it is clear that new firm entry, start-up activities and new venture creation have an extremely important role to play in Japan’s search for sustainable growth. The importance of public support to foster new firm entry and new venture creation should be fully appreciated.

Key words:new firm creation, firm entry rate, start-ups, venture, industrial structure, economic growth

Hongzhou Li/Lau Sim Yee
A Study on Initial Conditions for Cluster Emerging

 Unused technology, market chance and the capacity of human resources that are not fully exploited could highly become initial conditions for the formation of clusters. “Economy Two,” which underpins the current success of Silicon Valley, on the basis of market mechanisms, could not become the initial condition for the formation of clusters. If government could influence the formation of clusters through policy planning, instead of relying on “Economy Two” that encompasses support of industry, then the government should focus on: deregulation of access to technology by the would-be entrepreneurs; increase mobility of human resources that are not fully exploited; to formulate policies that generate push or pull conditions that transform these human resources to entrepreneurs. In addition to the central focus of these supply-side policies, it is imperative to create policies which could provide or could enlarge market to enterprises’ products. If necessary, the government should procure newly developed products, for demonstrating confidence to the market, which eventually serves as a policy for expanding private demand.

Key words:clusters, economic effect, initial condition, supporting industry Zhangguancun

Kohei Koide/Hironori Higashide
Regional re-vitalization process

 Principle purpose of this research is to explore a possible path leading to the regional re-vitalization, where Small and Medium sized Enterprises’ owner-managers are expected to play important roles in their communities. This research is an explorative study in Fussa City, Tokyo. In this research, it was found propositions that the owner-managers could be categorized into four groups from the qualitative data such as the interviews. For example, the owner-managers in a group are actively involved in and co-operate with community activities and generating new businesses. Those in another, however, economically contribute to the region, but are indifferent to community activities. And it was found that the owner-managers of each group have various characteristics, as a result that it carried out questionnaire survey to owner-managers, to test the propositions. Furthermore, the analyses identified the factors that can attract the owner-managers in each group to the region. The factors, for instance, include such variables as the competitive environment, the level of infrastructure of the region, and the quality of life. The findings from this research clearly imply that policy makers are likely to implement the re-vitalization process of regional communities by focusing on the owner-managers, who can initiate the re-vitalization cycle in the region, and eventually contribute to the region enormously.

Key words:Regional re-vitalization, local SME (Small and Medium Enterprise), Community Leader
type owner-managers, an explorative study

Hiroshi Nakamura/Kazuhiro Asakawa
Disadvantages in external environments and Japanese bio-venture firms’strategies

 In an industry where its external environments are relatively unattractive, when its potentialities are rather high and when managerial resources are difficult to be transferred to other countries where relatively excellent external environments exist, two types of “Dilemma of the SCP logic” (“Dilemma of the SCP logic by poor current external environments and great potentialities” and “Dilemma of the SCP logic by poor external environments and difficulties in transferring managerial resources to other countries) exist. It is important for venture firms with scarce managerial resources to overcome disadvantages in its external environments. Focusing on the bio-industry in Japan, this paper considers how Japanese bio-ventures overcome the disadvantages, based on the (can) case analysis. In terms of strategic management theory, it is then shown that existing management theories, which used to be discussed independently, are closely linked in explaining strategies of strengthening competitive edges of Japanese bio-venture firms.

Key words:bio-venture, SCP logic, external environments, Centers of Excellence, Resource-based View

Tadao Yoshino
Turnaround of Venture Business

 The purpose of this study is to clarify the mechanisms of corporate turnaround on venture business. Now corporate turnaround is reduction of hypertrophy management resources, especially improvement of financial affairs.
 Consequentially corporate turnaround is an over concentration of major corporations. The venture business of weak management resources is beyond the bounds of corporate turnaround. Turnaround about venture business is not discussed. Venture business needs turnaround discussions.
 But not discussions. And venture business fails. There is a study which has a high significance.
 Different from traditional ways of corporate turnaround, we take notice of strategic pattern changegrowth phase from a founding phase ,a start-(on a ) up phase. It is not simple strategic change, from business concept based on a founding phase, and strategic pattern based on composition of organization ,through continuous change and discontinuous change. As mechanisms changing new strategic pattern, we evaluate corporate turnaround based on a case study, and try to clarify.

Key words:Corporate Turnaround, Business Concept,ContinuousChange, Discontinuous Change, Strategic

Hajime Iino/Hironori Higashide
The effects of superior’s use of motivating language on subordinate job performance and job satisfaction

 We explored the relationship between superoir’s use of motivating language and subordinate job performance , job satisfaction to 114 information technology industries in Japan. Sullivan(1988) suggested superior’ use of motivating language(including di(s) rection-giving language, empathetic language and meaning-making language) have positive impact on subordinate job performance and job satisfaction. The authors tested whether the Sullivan’s motivating language theory would be applied to Japanese context. Furthermore, we explored whether the effect of a motivating language changes with differences in the scale of company (between venture and big companies). Results of data analysis show that in large corporations, quality of work of subordinates deteriorates, when superiors use direction-giving language, while in ventures, enthusiasm for work of subordinates deteriorates, when superiors use meaning-making language. It is also found that when superiors use empathetic language, in large corporations, quality of work of subordinates rises, while in terms of subordinates of ventures, enthusiasm for work rises and on personal life falls.

Key words:motivating language, job performance , job satisfaction, venture ,big businesses

Case Study

Tetsuya Kirihata
Nanotechnology Commercialization and Valley-of-Death Phenomenon

 Many experts predict nanotechnology to become one of the leading new industries in Japan in the 21st century. There are several reasons why nanotechnology is attracting attention in Japan: (1) nanotechnology is a fundamental technology and as such has a big influence on the existing industry and society; (2) in the fields of fundamental nanotechnology research, Japan is seen as having a comparative advantage internationally.
 In this paper, I examine the concept of valley-of-death phenomenon, i.e. the state in which even superb basic research cannot easily be commercialized. To examine the valley-of-death phenomenon of nanotechnology in detail, I classify the process for commercialization into three stages: basic research stage, development stage and commercialization stage. The cause of valley-of-death at the development stage of nanotechnology is discussed based a questionnaire survey of nanotechnol(on) ogy businesses. This survey reveals that “funding” “external collaboration” and “extracting visions and conceptualizing demand (market)” are the main causes of valley-of-death at the development stage of nanotechnology.
 Finally, I conclude with some policy recommendations about the commercialization of nanotechnology, especially with regards to “funding” and “external collaboration”.

Key words:Nanotechnology, Valley of Death, Commercialization, Development, Financing, External Cooperation,Extracting Visions, Conceptualizing Demand

Yoshihito Takahashi/Hiroshi Shimomura
Co-operative strategies for pharmaceutical firms and biotechnology ventures

 In the pharmaceutical industry conventional research and development (R&D) has involved the investigation and screening of many synthesized chemical substances. However, R&D in the biotechnology industry requires a different, alternative approach.
 While large-scale pharmaceutical companies have abundant experience in pharmaceutical R&D, this approach is not always successful in the biotechnology setting, where a model employing greater originality is required. The propelling of R&D modularity and depositing of initial biotechnology development into biotechnology ventures are important factors required to effectively and successfully launch biotechnology medicine.
 A co-operative strategy of connecting business partners is also important for a successful biotechnology venture, because such ventures cannot cover the whole value chain in the pharmaceutical industry. In fact, the ability to develop partnerships will decide the ultimate outcome of biotechnology ventures.
 The present value chain model utilised by the pharmaceutical industry needs to change and those companies that are able to develop effective relationships with business partners will be able to control the whole value chain as a module conductor.
 This paper discusses an entrepreneurial venture which involves the role of a virtual pharmaceutical company, which may then have the potential to become a fully specified pharmaceutical manufacturing module integrator.

Key words:Biotechnology venture, Genome pharmaceutical development, Co-operative strategy, Modularity, Module conductor, Module integrator

Makoto Ishikawa
The study of new valuation effectiveness

 After “Japanese Big Bang”, there were so many plans for the reform of Japanese financial system, which were proposed and enforced to recover the Japanese economy and achieve its continuous growth. In those plans, preparations of infrastructures, such as Stock Market, were propelled rapidly, and foundations of new market or deregulations were occurred in succession. As a result of deregulation, it’s getting easier to make IPO, Initial Public Offering, for venture firms even if they are operating at a loss in the red.  But, it is imperative for lasting supply of risk money to new companies to establish and spread a new valuation technique of companies, as a benchmark. So this thesis proposes a new method of measuring companies.  In the first place, the present state and problem of IPO valuations are made clear, and Real Option method is proposed as a solution. After that, some trail calculations of the IPO pricing examples by Real Option method are done, those prices are verified, and other problems in relation to valuation too.  The results of this thesis are the following. 1. In the case of IPO price calculations of such firms under high uncertainty, there are some effects to apply Real Option method used the Black=Scholes formula. 2. Conditions to introduce Real Option method are the following. ① Being in existence of many specialists like MOT. ② Coming into wide use of purchasable handily application software. ③ Equipment of structures of disclosure to make easy for obtaining informationabout existence of real options or parameters.

Key words:Real Option, IPO, Black=Scholes formula, MOT, Valuation

Masayuki Okuyama
A Consideration About The Entrepreneur Rearing That It Went Through The Business Plan Contest (BPC)

 Though BPC (business plan contest) is carried out in each place and the number is on the increase, it is a subject whether the part that business plans contest will be substantial from on in the proposition of entrepreneur’s prod(now) ucing in great numbers can be borne. This research is the case research of the business plan contest “Student Entrepreneur Championship,” for the student. The part of BPC in the support to the entrepreneur and a future aim are examined by this research based on such a critical mind.
 As for the future BPC, it is important how whether to enrich the function of “dug up” and “support deeply to an enterprise success” in addition to the function of before which it has. It is expected to enrich the function that each BPC depended on the character with thinking about an alliance with the support program to various other entrepreneurs.

Key words:Venture, Entrepreneurs, Support for the Foundation, Student Entrepreneur, Business Plan Contest(BPC)

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