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http://dx.doi.org/10.7545/ajip.2018.7.1.009

Regional Resilience of Industrial Ecosystem in Financial Crisis: Comparison between Toyota-Kariya Automotive Subcontractor Cities and Hamamatsu Start-Up City  

Fujiwara, Takao (Toyohashi University of Technology)
Publication Information
Asian Journal of Innovation and Policy / v.7, no.1, 2018 , pp. 9-29 More about this Journal
Abstract
Japan's manufacturing is mostly dependent on the automotive industry in Toyota-Kariya cities. However, the nearby city of Hamamatsu is the home of a start-up ecosystem known as Japan's Silicon Valley. How is it possible to evaluate the innovative potential of each regional industry? What kind of guidelines exist for continuing R&D investment when companies' net incomes are negative in the face of the 'Valley-of-Death' or financial crisis? Is it possible to measure the regional resilience ability in the context of the financial crisis? Entrepreneurial innovation is defined as a real-option portfolio consisting of investment decision to commercialize R&D findings. The subcontractor system implies a vertical and tight industrial group. However, a start-up ecosystem means a platform for horizontal and flexible partnership. In this research, the data include the financial indices of each of 18 public companies in both regions between FY2009 and FY2017. The objective of this paper is to clarify the call option or resilience function of equity for R&D investment in the context of the financial crisis in both regions by using Bayesian MCMC analysis.
Keywords
Start-up ecosystem; subcontractor ecosystem; real options; Bayesian MCMC analysis; regional resilience;
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