JAPANESE INNOVATION STRATEGY AND THE ACQUISITION OF UK INFORMATION TECHNOLOGY FIRMS T H W Minshall Christ’s College, Cambridge A dissertation submitted to the University of Cambridge for the Degree of Doctor of Philosophy Cambridge University Engineering Department April 1997 Preface Except for commonly understood and accepted ideas, or where specific reference is made, the work reported in this dissertation is my own and includes nothing which is the outcome of work done in collaboration. No part of the dissertation has been previously submitted to any university for any degree, diploma or other qualification. T H W Minshall Cambridge April 1997 Acknowledgements I am particularly grateful to my supervisor, Elizabeth Garnsey, for her guidance and support throughout the course of this research. In addition, thanks are due to Nick Oliver and Hugh Whittaker, and all my colleagues at the Manufacturing and Management Division of the Engineering Department, and at the Judge Institute of Management Studies for their advice and constructive criticism. On the industry side, my gratitude to the companies in the UK and Japan who agreed to contribute to the contents of this dissertation. Finally, my thanks to my family, for encouraging me, and to Nicola, for all her support and for applying her new-found skills at proof-reading. This programme of research was supported by a Postgraduate Training Award (J00 429 332012) from the ESRC. Table of contents Chapter 1 Introduction ............................................................................................................ 1 Introduction to the research .................................................................................................................................. 1 Background........................................................................................................................................................... 3 Reported motives for the acquisitions .................................................................................................................. 9 Chapter 2 Convergence towards the ‘digital industry’ .......................................................... 15 Chapter overview................................................................................................................................................ 15 Changes in the computer industry ...................................................................................................................... 15 Convergence towards the ‘digital industry’........................................................................................................ 22 Alliances within the digital industry................................................................................................................... 38 Japanese firms within the digital industry .......................................................................................................... 44 Conclusions......................................................................................................................................................... 51 Chapter 3 Literature review .................................................................................................. 52 Chapter overview................................................................................................................................................ 52 Part I: Strategic Management ............................................................................................................................. 53 Part II: Management of Innovation..................................................................................................................... 64 Part III: Management of Acquisitions ................................................................................................................ 74 Conclusions......................................................................................................................................................... 84 Chapter 4 Conceptual approach........................................................................................... 86 Chapter overview................................................................................................................................................ 86 Introduction......................................................................................................................................................... 87 Competences and capabilities............................................................................................................................. 89 Building up competences and capabilities.......................................................................................................... 95 Components of an analytical framework.......................................................................................................... 102 Chapter 5 Research methodology ...................................................................................... 106 Chapter overview.............................................................................................................................................. 106 Methodology selection...................................................................................................................................... 106 Design of the case study ................................................................................................................................... 109 Sources of data.................................................................................................................................................. 113 Selection of case study firms ............................................................................................................................ 115 Data collection protocol.................................................................................................................................... 116 Validity, reliability and generalisability ........................................................................................................... 117 Compilation of data .......................................................................................................................................... 118 Chapter 6 Case Study A: Fujitsu-ICL.................................................................................. 120 Chapter overview.............................................................................................................................................. 120 Fujitsu ............................................................................................................................................................... 121 ICL.................................................................................................................................................................... 127 Acquisition........................................................................................................................................................ 133 Motives for the acquisition ............................................................................................................................... 135 Post acquisition................................................................................................................................................. 137 Closing comments............................................................................................................................................. 153 Chapter 7 Case Study B: MELCO-Apricot.......................................................................... 156 Chapter overview.............................................................................................................................................. 156 MELCO ............................................................................................................................................................ 157 Apricot .............................................................................................................................................................. 164 Acquisition........................................................................................................................................................ 168 Motives for the Acquisition .............................................................................................................................. 168 Post-acquisition................................................................................................................................................. 169 Closing comments............................................................................................................................................. 184 Chapter 8 Case Study C: Kao-Protoscan .......................................................................... 186 Chapter overview.............................................................................................................................................. 186 Kao Corporation ............................................................................................................................................... 187 Protoscan Software Services Limited............................................................................................................... 198 Acquisition.......................................................................................................................................................