January 08, 2004

Culture Creates Business Advantage

I'll never forget a Forbes article (can't find a link right now) a few years back extolling the comparative advantage that the US has because most houses have a garage. The idea went that a garage is a perfect place to start a small business, to have a first office that is rent free and thus lowering the barrier to fulfilling entrepreneurial dreams. They had a nice photo spread of the garages that were a whole slew of famous companies' first office locations. In this case, physical space created lasting comparative advantage. All else being equal, the US will always have an advantage over a more crowded nation without a car culture (and attendant garages) because of this cheap office space.

I was reminded of this as I read an article on Japanese use of mobile internet applications for business.

It is ironic that there are probably many more mobile Internet business users in Japan than in the United States or Europe in spite of the fact that U.S. and European service providers initially placed much more emphasis on business users than Japanese service providers (e.g., see J.P. Morgan, 2000).

The reason for this unexpected turn of events is that screen savers and ring tones -- and the micro-payment services that support these contents -- created a critical mass of users in Japan, which in turn has driven innovation in the market.

Screen saver and ring tone popularity, which are a very frivolous manifestation of the general japanese love for gadgets, created a serious business advantage that will help keep Japan Inc. one step ahead. Or maybe I shouldn't use the Industrial Policy (IP) laden term, Japan, Inc. After all, mobile internet usage for business was something that emerged despite a lot of encouragement from the big boys, not as any manifestation of the classic Japanese IP approach.

There's lots of other good information in the article on exactly how and what mobile internet usage is emerging in Japan, RTWT for a rundown. The juxtaposition of the Forbes article and this one leads me in a different direction. Comparative advantage is often unplanned, spontaneously emerging, and will likely always retain the capability to upset the existing economic order. I mean ringtones! Who would have thought it? It's as ridiculous as... garages.

Posted by TMLutas at January 8, 2004 11:46 AM