The Significance of Government's Role in Technology Standardization: Two Cases in the Wireless Communications Industry

The Significance of Government's Role in Technology Standardization: Two Cases in the Wireless Communications Industry

DongBack Seo (University of Groningen, The Netherlands and Hansung University, South Korea)
DOI: 10.4018/jitsr.2010120705
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Abstract

For first generation (1G) wireless communications technology standards, the Japanese government’s early decision provided an opportunity for its national manufacturers to be first movers in the global market, while the late development of wireless communications in Korea made the Korean market dependent on foreign manufacturers by adopting the U.S. standard (AMPS). Moving toward the 2G wireless technology market, both countries decided to develop standards instead of adopting a technology from outside their regions. Japan developed its own standard, PDC, while Korea developed CDMA systems with Qualcomm, the U.S. technology provider. Although these governments’ decisions on technologies looked only slightly different, the socio-economic consequences were greatly distinctive. The Korean success brought not only the rapid development of its domestic market but also opportunities for its manufacturers to become global leaders, while the PDC standard only provided the fast growth of the Japanese domestic market without any opportunities for the Japanese manufacturers to grow further internationally in the 1990s. By the end of 1990s, two nations again had to decide a 3G technology standard with vast challenges and pressures.
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Japan

Japan, as a defeated nation in World War II, was devastated, so the first priority of the Japanese government was reconstructing the nation. With scarce resources and capabilities, the Japanese government was heavily involved in developing certain industries such as motorcycles, sewing machine, steel, and shipbuilding through directing necessary resources (Porter, 1990). Companies in these industries were able to gain competitive advantages under the government’s support, protection from foreign competitors, and policies like market liberation in a timely manner. Although there were other factors such as demand conditions and disciplined workers, the role of Japanese government was significant in reviving its industries.

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