Section 4 Summary of Chapter 2
This chapter discussed competition on three different levels: companies, regions and individuals,
which can be differentiated as seen in Figure 2.4.1 below. All of these various analyses showed that
evaluations can be based on universal scale or diversified scales. The former can be quantified relatively
easily, while the latter tends to be more qualitative. Looking at companies, it is evident in the case of the
former that quantitative information is based on accounting standards, and in the case of the latter, it can
be understood to be equivalent to the Intellectual Capital Statement. In the same way, in the regions, the
former is undertaken through regional economic cyclical analysis, and the latter is identified through
regionally-distinct asset analysis, with evaluation being done using academic records in the case of the
former and evaluation of skill standards in the latter at the individual level.
Figure 2.4.1 Three-storey structure of the “value evaluation” of
companies, regions, and individuals
Evaluation
scale
Quantitative/
qualitative
Uniform/
diversified
Combination Combination of
of quantitative
uniform and
and qualitative
diversified
evaluation
scales
Quantitative
evaluation
Uniform
scales
Uncodifiable
Uncodifiable
Uncodifiable
characteristics
characteristics
characteristics
Intellectual
capital
statement
Regionally-distinct
asset analyses
Skill
standards
Traditional accounting
report
Regional economic
cyclical table
Educational
background
Companies
Regions
Individuals
Modality of
competition
Competition for
differentiation
Price competition
Source: METI.
As was emphasized in this chapter, in order to build a resilient economic structure that ensures
prosperity even in a global economic environment, Japan should adopt innovation and differentiation as
the core modality of competition throughout the economy, and should accordingly develop diverse
evaluation scales beyond those that are quantifiable and uniform. As can be seen in Figure 2.4.1,
perfectly codifiable evaluation is not possible for companies, regions or individuals, and it is inevitable
that some individual characteristics will remain implicit. However, by developing evaluation scales in
areas equivalent to the second strata of Figure 2.4.1, it is possible for modalities for competition to
evolve. This evolution is achieved, for example, by promoting enhancements for value creation not
limited to corporate price competition and by opening a path to regional revitalization that is based on
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regional cyclical analysis, and in so doing enables the quality of human resources to be improved in a
way that more accurately reflects future market trends for the individual. In addition, as has been
indicated in the discussions on each country on the issue of the knowledge economy, the development of
evaluation scales for the factors in the second strata have complementary relations, for example, between
companies and regions, and between companies and individuals. In other words, a company
demonstrating an evaluation scale for human capital links its regional human resources strategy and the
development of skill standards that individuals can use for reference.
In addition, such development of evaluation scales under competition based on innovation and
differentiation can serve as a new “bridge” to link supply and demand, and promote reorganization on
the supply-side. The value creation as described in this White Paper is not limited to the creation of only
new things from the development of leading edge technologies. The changes occurring in the animation
production industry and CD manufacturing industry are enabling a greater diversity in production
functions through liberalization from the regulations specific to the method of preservation of the
tangible fixed assets and enabling a response to specific demands. In addition, in the actual case of
Akasaka Town in Okayama Prefecture, they rediscovered an asset (“Asahi rice”) and this led to a
successful case of specific demand. Competition based on innovation and differentiation is therefore a
linkage of “seeds on the supply side” and “specific demand” through information other than price. At the
same time, as can be seen in the abovementioned example, the link to specific demand led to a
reorganization of assets held by companies and the regional community. Development of evaluation
scales for intellectual assets of companies and regions and also for individual skills through which
specific evaluation of factors other than price is conducted links the supply to the demand, and plays a
role as a new bridge to promote reorganization on the supply side.
In order to achieve the evolution of competition modalities through the development of evaluation
scales, the following points should be borne in mind.
Firstly, a long-term and broad-ranging perspective needs to be adopted. As was discussed in this
chapter, discussion of evaluation scales is not limited to economic pricing, but also incorporates broad
areas including a concept for corporate social responsibility. Accordingly, in future discussions, it will be
necessary that they are undertaken not in a piecemeal fashion, but in a manner that advances discussions
taking into account long-term societal modalities.
Secondly, priority needs to be placed on the spontaneous evolution of practices in the private sector,
rather than on homogenous systematization. As shown in Figure 2.4.1 of the evaluation scales that are to
be developed in the future, many hold difficulty in being generalized through quantification. In addition,
there could be many evaluations that can only be assessed by trial and error. Moreover, a considerably
important issue is to try to actually evaluate the link between intellectual assets and specific demand
rather than the development of evaluation scales alone. Accordingly, in the development of evaluation
scales, adopting a common approach should be prioritized so that experiences on the ground level of
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private sector businesses in the regions can be capitalized upon.
Thirdly, there is a need to aim for the coexistence of diverse evaluation scales. Indeed, regarding
corporate evaluation including corporate social responsibility, the approach taken by the UK which
places much emphasis on the market for its evaluation is one such approach.
Fourthly, there is a need to aim to upgrade the value creation environment rather than preserving the
status quo. As described above, looking at individual factors, there are many discussions, such as those in
Section 1 of this chapter that have earlier been discussed under traditional Japanese-style management
and Japanese-style systems. However, what is being discussed here is the development of systems and an
environment that will realize new modalities for competition transcending individual corporate activities,
and should be perceived as environmental improvement upon Japan realizing an evolution of
competition modalities ahead of the world.
Finally, there is a need to make a leading contribution to international discussion. Given that
economic activities are now a global issue, regional evaluation scales and modalities for competition can
no longer be a “closed discussion” in a purely domestic situation. From now on, Japan will need to
actively participate and contribute to discussion concerning the progress of systemization.
Given such concepts, if Japan is able to move to a “new value creation economy” by developing such
evaluation scales at the corporate, regional and individual levels and projecting these to the world
through the realization of modalities for competition, this in itself will represent a change in the Japanese
economy, and under future competition conditions in the global community, Japan would be able to
contribute to the construction of a resilient economic structure able to realize stable economic
development in Japan.
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