Technology spillovers and informatisation in Japan: An analysis of information technology diffusion in large versus small and medium-sized enterprises

While Japan ranks second in the world in terms of Information and Communications Technology (ICT) production, the diffusion of Information Technology (IT) in Japan is occurring only in very specific segments of the Japanese economy. Even though Large Enterprises (LEs) are integrating IT into their practices, Small and Medium-sized Enterprises (SMEs) are much slower in assimilating IT. The first part of this analysis will demonstrate Japan's global position in IT in terms of production and diffusion, discussing the current direction of informatisation in Japan. The second section will illustrate the critical relationship between Japan's technology spill over production growth, and R&D showing that this process is partially accountable for Japan's current economic stagnation. The third section will show that information technology diffusion plays a critical role in this process. The final section will deal exclusively with the micro-causes of this imbalance demonstrating a disparity of IT diffusion in SMEs and LEs. This critical fault line in Japan's transition to an information-based society has relevant policy, economic and corporate implications for strategic national decisions