Going soft: How the rise of software-based innovation led to the decline of japan's it industry and the resurgence of silicon valley

Published

Journal Article

This paper documents a systematic shift in the nature of innovation in information technology (IT) toward increasing dependence on software. Using a broad panel of U.S. and Japanese publicly listed IT firms in the period 1983 to 2004, we show that this change in the nature of IT innovation had differential effects on the performance of the IT industries in the United States and Japan, resulting in U.S. firms increasingly outperforming their Japanese counterparts, particularly in more software-intensive sectors. We provide suggestive evidence that human resource constraints played a role in preventing Japanese firms from adapting to the documented shift in IT innovation. © 2013 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Full Text

Duke Authors

Cited Authors

  • Arora, A; Branstetter, LG; Drev, M

Published Date

  • October 28, 2013

Published In

Volume / Issue

  • 95 / 3

Start / End Page

  • 757 - 775

Electronic International Standard Serial Number (EISSN)

  • 1530-9142

International Standard Serial Number (ISSN)

  • 0034-6535

Digital Object Identifier (DOI)

  • 10.1162/REST_a_00286

Citation Source

  • Scopus