CIRJE-F-813 "Effects of Re-invention on Industry Growth and Productivity: Evidence from Steel Refining Technology in Japan, 1957-68"
Author Name Nakamura, Tsuyoshi and Hiroshi Ohashi
Date August 2011
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Abstract

This paper examines the economic impact of re-invention — the degree to which an innovation is modified by user — on industry growth and productivity. The paper focuses on two re-inventions made by a Japanese steel company; these inventions improved the productive efficiency of Austrian-made refining technology, namely, basic oxygen furnace (BOF). Results obtained from the plant-level production-function estimation indicate that re-inventions account for approximately 30 percent of the total factor productivity of the BOF, substantially promoting the dissemination of the BOF technology. Our simulation analysis indeed reveals that re-inventions contributed to steel output growth by about 14 percent. This paper also documents that innovating companies played the role of a "lead user" in developing and disseminating their re-invented technologies.