What is the Kyoto Model?

A number of regions in Japan have been heralded as a home-grown “Silicon Valley” by local promoters and observers alike. Examples include Hokkaido's Sapporo bio-tech cluster (introduced in chapter 4) and Tokyo's Akihabara electronics retail district that spawned later developments in software. Even far-flung Kyushu has laid claim to the title. Kyoto prefecture is itself situated within Japan's “Keihan Valley” and the economic performance of its vibrant entrepreneurial (particularly high-tech) community of firms has given rise to the notion of the “Kyoto Model.” For example, throughout the 1990s and 2000s the performance of these Kyoto firms in return on investment (ROI), sales, and profit have continued to outpace Japanese giants headquartered in Tokyo such as Hitachi, NEC, and Sony.

One might ask whether this new so-called “model” is so distinct from the much-belabored Silicon Valley or Third Italy archetypes. For example, all three regions (Palo Alto, Tuscany, and Kyoto) share similar structural–institutional characteristics common to innovative communities world-wide. These characteristics include being situated far from the national political order and being abundant in indigenous resources that fueled initial economic development (e.g. mountain streams to power textile mills).

A number of features about Kyoto make it uniquely able to produce comparatively large numbers of world-class companies owned and managed by entrepreneurial mavericks. This regional success has spawned a number of works in Japanese that have sought to define the Kyoto Model and present its exemplar firms (Ishikawa and Tanaka 1999; Horiuchi 2001; Imai 2004; Inoue and Tsuji 2001).