Interactions between the spatial organization of firms and regional industrial systems: Semiconductor industries in the United States and Japan

The global economic system has become increasingly borderless in recent years due to the advanced transportation and communication technologies characteristic of the "Information Society." The organization of firms has likewise developed within these global networks. The local agglomeration of knowledge-based activities in major cities and regions has increased although the advancing information technologies seem to eliminate the necessity of such local agglomerations. The objective of this study is to provide a systematic framework that can explain the spatial organization of firms and its dynamic interactions with regional industrial systems. For a proper understanding of the evolution of the regional industrial systems in the above context, this study includes empirical research on American and Japanese firms engaged in the semiconductor industry. It places special emphasis on tracing the connections between the whole spatial chain of production activities based on the data concerning the spatial organization of firms. Special attention is given to three factors in the analysis: (1) the technological characteristics of the semiconductor industry; (2) the organization of firms and industrial organizations in the U.S. and Japan; (3) relations of inter-firm networks and the role of regions in local agglomeration. The local agglomeration of design and R&D-related activities and globally dispersed networks of manufacturing processes in both the U.S. and Japanese semiconductor industries are under investigation here. It would appear that local agglomeration of R&D and design-related activities are due primarily to the way in which face-to-face communication facilitates knowledge-intensive activities within and among firms. In contrast, mass-production plants which do not involve much interaction with R&D or design activities can tolerate global dispersion. American and Japanese firms exhibit markedly different patterns in spatial organization that arise from the differences in the specific industrial structures of both countries. This study would suggest that the local agglomeration of knowledge-intensive activities has increased in importance recently since face-to-face communications still remain the most effective means of conducting many types of knowledge-intensive activities.