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OrganizationalInnovationin the Toyoda Enterprises,1895-1933
William Mass 1

CenterJ½r Industrial Competitiveness University ofMassachusetts, Lowell
Andrew Robertson

Harvard University

The storyof Sakichi Toyoda(1867-1930), greatindustrial the entrepreneur and national hero,is taughtto every Japanese school child.Foreign tourists toldhe wastheJapanese are Thomas Edison. recently 1985,the As as patent officelisted Sakichi Toyoda oneof thetenmostimportant as inventors inJapanese history. textile The machinery company he founded that eventually gave birthto theToyotaMotor Corporation. Before Japanese the stock market bubble burst, the Toyota Motor Corporation committed150 billion yen (roughly $150million)for therecently completed ToyotaIndustrial Museum, a remarkably well-donepa:anto a visionof socialprogress technological as progress. What is lacking a sense the critical is of and essential of social role organization, without which the determinants and consequences tech~ of nological development be misunderstood. paperexplores will This both the organizational the technological and aspects earlyToyodaentrepreneurial of history insights the foundations Toyota's for into of postwar performance and potential implications economic for development moregenerally.
• The authorswould like to thank Qiwen Lu and Damian Kieran for their excellent research assistance. addition, wouldlike to thankour colleagues In we Takeshi Abe, Eisuke Daito,KazuoWada,andparticularly HideaMMiyajima helpfuldiscussions for their for and assistance securing in Japanese-language materials. of them are exempt from any All responsibility our errorsof omission for and commission. international The collaboration thathassupported research beenfunded theSocial this has by Science Research Council and
the National Science Foundation. Some of the research was conducted while William Mass

wasa HarvardNewcomenFellow,and partsof thispaperwerepresented the Harvard to Business HistorySeminar a paper in co-authored HideakiMiyajima. earlier with An version of thispaper presented the"Symposium Industrial was at on Development International and

Competition" theSuntory ToyotaInternational at and Centres Economics Related for and Disciplines, London School Economics Political of and Science, January 1996.Finally, 4-5,
we want our readers to be aware that in this draft we have followed Western convention in

placing Japanese surnames in thetext,butfirstin listing last bibliographic references.

BUSINESSAND ECONOMIC HISTORY, Volume Twenty-five, 2,Winter no. 1996.
Copyright ¸1996 bytheBusiness History Conference. 0849-6825. ISSN


In TheTechnological Trans•vmation ofJapan: FromtheSeventeenth to the T•ven•y-First Tessa Century, Morns-Suzuki thesurprising of a leading cited claim interwar Japanese technologist, director thepioneering the of RIKEN Institute Masatoshi Okochi that "Japanese researchers were skilledand original inventors, but that Japan's weakness in an inabilityto commercialize lay radically new ideas"[pp. 116-7].Okochi's concern was thatJapanese firms wouldmorereadily choose refineimported to technologies wherea market wasalready developed, rather thanto bearthegreater uncertainty, associated risk,andheavy developmental of taking moreradical costs a innovation from laboratorybench to full-scale production. Morris-Suzuki points to the exception proves rule,by discussing classic that the "the example Japanese of innovation": Toyoda the LoomWorksestablished Sakichi by Toyoda 1906, in and his son Kiichiro,who, drawing his university on training, in place put systematic costly and large-scale research extensive and prototype and mill testing refinehisfather's to inventions. In a recentpaperon "The Learning Process and the Market:The Japanese CapitalGoods Sectorin the Early TwentiethCentury," Tetsuro Nakaokautilizedthe conceptof appropriate technology describe to the possibilities in the industrialization early process indigenously for developed
technological leaps. For instance, domestic capital goods producers serve can nichecapitalgoodsmarkets that supply machinery localmanufacturers to producing traditional products. Thesesectors poorlyserved expensive are by and (for theixpurposes) inappropriately designed specified and capital goods produced developed in economies. indigenous The innovations reinforce and accelerate development, simultaneously altering previously existing conditions and openingnew opportunities "quantumleaps in technology" for for indigenous capital goods producers. Nakaoka notesl "Onetypical example a manufacturer made of who this leapsuccessfully Toyoda is the LoomWorks"[Nakaoka, 1994,p. 13].Nakaoka citesthree"quantum leaps" initiated Sakichi narrowloom, ixonbroad by in loom, and automatic loom invention, latterrefinedby Kiichixo. the Given the ongoing changes economic in conditions accompany that successful development, Nakaoka stressed needfor recurring continuous the or technological leapsto sustain development the process. Eachsuccessive technological leap requked upgraded moreexpensive and equipment engineering and know-how. Nakaoka identified insufficientcapital resources the most general as impediment barrierto sustained and development. Deciding whereand how bestto deployfinancial resources aimedat "quantum leaps" technology in requkes deepknowledge the adequacy the platformfrom which one of of attempts leap,the resources to needed helpbridge gap,anda strategy to the
for theix effective mobilization.

Thispaper describes theToyoda how enterprises achieved international competitivenesstextile in machinery production. elaborates andsuppleIt on ments assessments the of Morns-Suzuki Nakaoka addressing and by questions
about the relation between Sakichi and Kiichixo's mechanical innovations and



the technology readily available from foreign machinery suppliers; extent the and character indigenous of Japanese innovations textiletechnology; in the relationship strategic of choices and innovations both technology in and organization; the riseof Japanese and industrial leadership reflected the as in negotiations technology over transfer and a proposed mergerbetween Platt Bros.and two Toyodaenterprises. Collaborative research reported elsewhere addresses relatedquestions about the role of industrial organization and nationalinstitutions alteringthe strategic in optionsavailable Japanese for textile andtextile machinery enterprises [Lazonick Mass, and 1984,1995; Mass andLazonick, 1990;MassandMiyajima, 1993]. The insights Morris-Suzuki Nakaoka of and highlight unevenness the anddiscontinuity organizational of development technological and achievment in the process economic of development. mostimportant The and fundamental feature Japan's of interwar growth wasthecharacter andrelationship of between development both 1) exportsectors, in primarily lightindustries and

especially cotton textiles, 2) importsubstitutionheavy and in industries. a 'As case study, paper this strives buildanunderstandingtheuneven to of evolution of organizations the "leaps" and toward international technological competitiveness cotton in textile machinery, keyto long-term the cotton textile export success, part of a continuous cumulative as and developmental process. We aimto present integrated of elements continuity discontinuity an view of and
in the dynamics Japanese of technology transfer and development in and particular illuminate following to the phenomena:
ß Finance and Markets The critical access to finance and markets

provided Toyoda's by sustained relationship with the leading general trading company Mitsui Bussan, withindividual and Mitsui managers, was periodically strained entrepreneurial as initiatives required independent an development path. ß Long-Term Relationsto Key Technologist$ and TechniciansTherewasa remarkable, generally and unknown least the West), (at in rivalrybetween first and second the enterprises established Sakichi by Toyoda (Toyoda LoomWorks theToyoda and Automatic LoomWorks), whereinhe sustained relationships mutual supportwith key of technologists thecompany formerly from he managed. ß ProductDevelopment Manufacturing Toyoda and played leading a role in pioneering introduction the American the of system interof changeable intoJapanese parts manufacturing, essential thecommercial to
success of mechanical innovations.


Inventionand OrganizedIndustrialResearch Organized industrial research played early leading at Toyoda an and role (and reassess we the character relative and importance the accomplishmentsKh'chixo of of relative hisfather to Sakichi). central The technical innovations, embodied in the Toyoda automatic loom, resulted successful in pioneering commercializationautomatic of weaving machinery competition in with both imported technology indigenous and rivalsbecause they were

ß ß An Introductionto the Early History of ToyodaTextile Enterprises In 1885. of Technology TransferfromJapanto Britain . TechnologyTransfer acrossIndustries. Sakichi began efforts his at developing superior hand loomsin 1887. 16]. p. endeavor in His coincided with a periodof slack trade. As a meansto generate revenuenecessary finance the to . aboutthe same at timea flying-shuttle attachment. Duringthe following yearhe patented his firstwooden handloominvention. called a "battan. Sakichi's technical advance involved linking the flyingshuttle the movement the reedwhenbeating to of downthe weft.Sakichi Toyoda participated an evening in study groupwhere he leamed the newly of enacted Patent Law andwassaidto havesethisgoal on invention an avenue contribute national as to to development. 1995.however. Sakichiattended the Third NationalIndustrial Exhibitionin Tokyo in 1890 and viskedthe machinery pavilion everydayfor two weeks.We describe nature the and sources tension of between PlattBros. Sakichi returned hisvillage the and had to by end of 1893.e theirownpurposes. Having grown in a traditional up textile manufacturing region.4 / WILLIAM MASS & ANDREW ROBERTSON appropriately designed suit to Japanese textile machining and capabilities.'efforts manufacture Platt to andsell automatic weaving technology developed licensed Toyoda.the unexpected and ultimately failed irfifiafives Mitsui by Bussan merge to PlattBros. the same for At timeToyoda enterprises' strategy structure to theirrelative and led domination theirrivals. evenin the faceof promising returnsto continued investment areas current in of strength.The breadth depthof theJapanese and efforts develop to indigenous textile technology prompted widespread competition simultaneously and promoted ß the development human technical of and resources rivals that sought to mobili7.But the woodenhandloom was not a commercial success. and theyintegrated design with the development superior of Toyoda ß manufacturing capabilities.andthe Toyoda LoomWorks thatreflected factors the undermining Bros." was introducedfrom France which could be attachedat much lower cost than a Toyodahand loom and offeredcomparable efficiency [Kobayashi. and from The Rise of New Industrial Leaders. Sakichi built four or five of his patented loomsin a smallweaving factory that he established theTokyoarea. This firstinvention allowed productivity a increase 50percent compared of with otherindigenous loomsin use. SocialOrganizationand Individual EnterpriseDevelopment. withthe Toyoda LoomWorksandtheToyoda Automatic LoomWorksreflected the changing relationships theirperception and among four parties all as theJapanese industrial faTns attained intemafional competitiveness.Finally.The deep and long-lived rootsof Toyoda's corporate culture supported success transferring its in existing capabilities and building into new capabilities the emerging for automobile industry.

1885-1933/ 5 continued loomexperimentation. [p. a device winding for yarn. Sakichi inventedhis f•rst successful narrowwoodenpower loom in 1896andgarnered muchindustry attention. tivityin the modernized increased mill four-fold.inspected operating the Toyoda powerloomsandevaluated prospects theirmass the for production. its top managers camefrom the Nagoya branch MitsuiBussan.INNOVATION IN THE TOYODA ENTERPRISES. relocated weaving He the factory retail and outlet. Toyoda Shoten.Toyota. The Igeta Trading Company wassetup asthesales agent. MitsuiBussan the mainbranch manager for the Divisionof CottonYarn andCloth. Nagoya opened Ito RetailStoreasa sales to and the outletfor the feelerin 1895. source Toyoda. Sakichireturnedto the Toyoda Shotenand renamed Toyoda it . order advance loomexperimentation.Sakichi's second wife andhis younger brother Heikichi managed store the andfeelersales [Toyoda. 28]: Table _1: Pricesof Narrow Power Looms. 1899 Loom Manufacturer Loom Price yen) (in Hartmann. disappointed thelackof financial by support hiscontinued for loomdevelopment. [p.French 872 389 Toyoda 93 The most importantachievement Sakichi's of continued development effortswasa patented let-offdevice that maintained warpat a constant the tension it wasbeingfed off the warpbeam. Againfacing partners concerned aboutbusiness solvency during cyclicaldownturns.p. German Diedrichs. he turnedhis attentionto the development a loom that would of automatically replenish the weft yarn when the yarn on a bobbin was exhausted.1988. fell In to his Sakichialso established independent an pilot plant in Nagoya running 36 powerlooms a basis gaining as for manufacturing experience 32]. This f•rstToyodapowerloom foundinitialsales success with small manufacturers weavingnarrow cloth for such export marketsas Korea. 28. Sakichi's capitalcontribution consisted of 60Toyoda wooden power looms. Alongwith a reeling machine customer. hereafter when only page numbers given brackets. feeler His produced constant lengths yarntwice of as efficiently conventional as devices. are in the is 1967].In addition. clothquality improved. Taiwan. 1898 weaver By a could operate or three two Toyoda steam-powered instead a single looms of conventional Producloom. Sakichiresignedfrom the Igeta Trading Company. In 1899Kamenosuke Fugino.Tohachi Ishikawa. 1967.34-40]. and Toyoda's looms wereeasier maintain much to and less expensive those theprimary than of foreign competitors 47.Sakichiestablished the Otokawa Weaving Company as a partnership. p. Manchuria. Mitsui negotiated exclusive an ten-year contract Sakichi producing selling with for and powerlooms. Sakichi of and Toyoda became chiefengineer the responsible improving powerloom for the [pp. Sakichi invented yarn-reeling a machine. as and for the f•rst time. and costs by over50 percent.

Kanegafuchi re-equipped powerlooms its with automatic shutdechanging mechanisms designed Sakichi.Although initialeffortwasnot in the successful. doesnot are it operate it should. Sakichi the ToyodaTradingCompany and suffered financial losses providing in material support this experiment. Moreover.Mitsui was restricted its public actionsbecause its role as the exclusive in of representative PlattBros..) will in Kanegafuchi up a mill experiment compare performance set to the of 50 Toyoda Trading Company looms with 44 PlattBros. gives workers it the many problems.28-29]. 155].all the automatic looms proved be unsatisfactoryoperation. by The underlying business relationshipwas probably with Mitsui Bussan. Second.6 / WILLIAM MASS & ANDREW ROBERTSON Trading Company (Toyoda Shokai) whichabsorbed former Trading the Ito Company.Toyota1988. to in whereas PlattBros. opened independent mill running power He an cloth 138 looms. for Sakichi drew two lessons fromthisexperience: he became Fisst. powerlooms. fullycognizant theextent of of foreign competition confronted he viedto introduce automatic he as an loom into theJapanese market. 1994. U. whichwould normally have been responsible marketing selling automatic for and the looms.in Japan. 43. with 150 looms equipped with Sakichi's automatic attachments furtherexperimentation. 1988. 155].(I)t not a simple as is machine. Sakichi supervised testing under mill conditions whendeveloping hismechanical all innovations 41[pp. p.a firm with with experience manufacturing machine in textile parts [Suzuki. ten Dra. p. sixKip Baker and looms (English loomswith warp-stop motions). 1994:p.S.. His wife and his younger brotherSasuke managed ToyodaTrading the Company and the mill. bobbin-changing per automatic looms. one of the three dominant integrated spinning and weavingfro-ns) was interested developing in Sakichi's automatic loom for the manufacture of broadcloth export. so that Sakichi couldonceagainturn to his loom experiments 40. (a of Ltd. Mitsui Bussan interested financing establishmentthe was in the of Nagoya Weaving Company. for Lacking capacity the for loommanufacturing.However. After a one-year trial. Suzuki. In reviewing experience producing the of clothwith Toyoda's narrow automatic looms. . of (Thepressures leading change the to in Mitsui-Platt relationship be discussed a latersection. 156]. still of Sakichi agreed allowthe companyto utilizehis patented to devices because Kanegafuchi promised license manufacture to and Sakichi's loomif it proved successful. pp.the headof MitsuiBussan's Nagoya branch officeOkano Teiji recounted the problems resulting from the poor qualityof loom manufacturing the complexity the loom'smechanisms: and of "Because the techniques in thismachine's used manufacture not advanced. requireslongtimeto gaintheskill it a necessary useit" to [Suzuki.pp. from then on. 29-30. 1994. for Although at an earlystage loom development. Sakichi contracted KimotoIron Works.. [p. Kanegafuchi CottonSpinning Company forerunner Kanebo.powerlooms the werea success. Sakichinext inventedan automatic shuttle-changing devicethat was attached narrow to powerlooms 1903.Toyota.

reportedly resistant first at to sharing control. p. his on manufacture.1909 Loom Model 38 Sales 947 39 2. 1988. 157]. for In addition its greater to durability.anda ModelL. The sales record summarized below confirms the looms' commercial success as the Shimazaki Factory operating capacity was near [47-48. 1994.usedfor weaving coarse yarn.and a pilot cloth factory. Table 2: Sales Summary 1905-March.201 Concerned about sustaining ToyodaTradingCompany's strongfinancial foundation thefuture. Sakichi established Shimazald the Factory.Seishu Iwashita. "simplified" light loom(kei-ban) narrow. andseven eighttechnical school or high graduates Sakichi's [49]. Sakichi secured loan of 130. 28].was amongthe other top managers. Sakichi. 85 yenthe iron 38 loomwastwiceas at expensive the earlier as all-wood framemodel. consisting botha weaving-machine with a production of factory capacity of 150 powerloomsper month. recruitment of suchhighlyeducated employees very exceptional was amongsmall proprietorships. aware the importance his relationship his but of of to creditors.p. able In 1903 he hired two engineering university graduates (Kogakshi). agreed incorporationsecure to to large-scale œmancing cooperand ated in establishing Toyoda Loom Works (Toyoda-shiki the Shokki Kabushiki Kaisha).307 L (kei-ban) 4. With the assistance MitsuiBussan's of Osaka branch manager Kamenosuke Fugino. wasalso president thegiant who the of spinning theOsaka firm Spinning Company. Toyota. In 1906in an areawithinNagoya.INNOVATION IN THE TOYODA ENTERPRISES. Sakichi theoperating was manager theToyoda of Loom Works. Sakichiturnedhis attentionto raisingthe investment funds required continued for automatic loomexperimentation. The success Toyoda's of power loomwasevident early 1906.A weaver couldoperate or six seven Model38 loomscompared onlytwo or threeof the earlier to models [Suzuki. two graduates from a post-secondary technical education program (Kotokogyo).By 1905he hadinvented higher a performance andwoodnarrow iron loom. into Sakichi began recruiting technically employees. as as whenFugino visited Sakichi hisproduction and facility recommended and that Toyoda convert a joint-stock to company. president the Toyoda The of LoomWorkswasFusazo Taneguchi. saleof the power and loom. for thin-weave cottonandjutefabrics. The following twonewloommodels year weremarketed: Model39 the powerloom.000 a yen from MitsuiBussan finance to expansion. important an arranger the business in world. He renewed focus the development. additional and consultants included the renowned TakeoYamanobe (mostclosely linked with the OsakaSpinning .theModel38 power loom(named the38thyearof theMeijiperiod). 1885-1933 / 7 Recognizing lengthy the development periodnecessary construct to a competitive automatic loom.

The problems KimotoIron Workswerenot uncommon at among manufacturers iron powerlooms othercountries well asin machine of in as manufacturing elsewhere Japan.an all-ironwidepowerloomin 1908. Sakichi's managerial control considerably was diluted [Yamazaki. . The Introductionof the AmericanSystem and the Originsof Advanced Manufacturing in Japan At the first general meeting the ToyodaLoom Worksin 1907. servicing smallandmedium-sized clothmillsselling the to domestic market. thelargest were shareholders 5 percenteach.. only a in it Not Nagoya ClothCompany at othercompanies but using Toyoda's iron frame loom. The capital investments the ToyodaLoom Workswere madeby in fmancial leaders Tokyo.p. in andNagoya [lzumi. 47].8 / WILLIAM MASS & ANDREW ROBERTSON Company) Fugmoof MitsuiBussan. Without interchangeability. 52].theresults uniformly are bad. [pp. of president Taniguchi explained: It is most regrettable that at the presenttime we still do not have sufficient equipment completely to manufacture Ioom.Osaka. 18]. Toyoda and The TradingCompany ceased operation 50-51]. mainly because Japanese machining capabilities were inadequate producing for sufficiently accurate component parts[p. no used the manufacturing processwere alike.1980. In large-scale operations looms inevitably brokedown.Sakichi realized H-model the loom had to be made of metal to be able to withstand the increased vibration resulting fromthegreater loomwidth.p. Sakichiturnedto the task of developing wide loom suitedfor a integrated millsproducing broadclothfor export markets. broken each partrequired a newpiece be specially to made[Suzuki. 1994. president Mitsui the of Bussan.p. Toyoda Loom and its associated the patented equipment reachedstage which isunwanted. developed He the H-model.. KimotoIron Works in The wasnot engaged in themanufacture interchangeable Almost twomachines in of parts. poorresults is The stemfrom a failure in the manufacture of the loom.Though Sakichi Hachirojiro and Mitsui.Its leading position emerged with its pioneering improvements manufacturing in methods. As a result of these failures and accidents.The this iron framenarrow looms installed Nagoya at Clothwereprovided byToyoda weremanufacturedtheOsaka but at KimotoIron Works asourShimazaki Factory incomplete. Toyoda sold morepower looms thananyof itsdomestic rivals. the and Toyoda LoomWorks soon became dominant thenarrow-cloth in power loom marketsegment. 161].All previous attempts manufacturing at a workable widepowerloomhadfailed. theToyoda and LoomWorks quickly turned to the challenge broadloomproduction the directchallenge the of and of dominant foreign loomsuppliers. 1987.therewere 143 additional with shareholders.

Francishad provided guidance aJapanese at leading machine company. thoroughly standardized gauges. a shop as independent theToyoda of . From 1905 to 1907. and used their own tools." of including useof indicators gauges. Because pilotweaving the plantat Shimazaki beenconverted a warehouse. 1994. p.However. developed standardized specifications.INNOVATION IN THE TOYODA ENTERPRISES. owned. Two newfacilities soon were established. first the production system employing modernengineering technology Japan in [Toyowa. the layoutof equipment the of and on production line. The commitment establishing technological to new capabilities reflected the was in decision forgo to paying dividends shareholders 61. the Ironworks lacked resources implement full planfor reorganization the to the andwithina halfa yearFrancis dismissed was [Suzuki. introduced [Hie to the company batchproduction standard of models. Igekai pp.ending craftorganization manufacturing of the of where skilled metal workers made.. theToyodaKikui Weaving Factory. 162]. pp. The Toyoda LoomWorkssoon developedseries newiron-frame a of models both narrow for looms(theK model 1908andthe moresuccessful in L model 1909) broad in and looms (model in 1908). tool Igekai Ironworks. Toyodacouldestablish system standards begin a of and manufacturing interchangeable Workers parts. out to [p. and With thisequipment. for With its own tool factory. Sakichi themdeduct required had the amount (halfof Francis' pay) fromhisownsalary chiefengineer executive as and director. American an teacher mechanical of engineering the Tokyo at HigherTechnical School who hadalsobeenemployed an engineer the as for Pratt and Whitney Company. where he "trainedworkersin the basic techniques machinemanufacture. the and drewup an overall planfor the factory. at Francis firstdesigned directed construction a machine and the of tool manufacturing plantthatproduced lathes othertoolsrequired production and in in 1907. Beforeaddressing manufacturing methods the KirnotoIronworks. factory the madethe approximately gauges 300 required loomproduction. on high-quality machine toolsto consider purchasing [Nakaoka. cutting highprecision "the and the of gears and screws.thedesign jigsand fixtures. Suzuki.. the UnitedStates. In confronting difficulties themanufacture Toyoda the with of looms at the Kimoto Iron Works foundry particular. taughtengineers He about. Francis. in Francis redesigned 'tools. theadjustment main and of the [lathe] spindle. had to Sakichi sought to establishnewexperimental a factory. 162-63]. 1885-1933 / 9 Sakichi's search solutions improvements himto hireCharles for and led A.Other than a single tool installed the IkegaiIronworks.. were trained accord in with a newdivision labor. builtanother weaving He pilot factory.. H These Toyoda ironframe looms were mass produced thefactory Francis at that designed. pp. 25-26. 1994. Germany. 1967. Whenthe management Toyoda at Loom Works provedreluctant pay Francisthe full salarySakichihad to promised. 8-11]. the by all machinery installed the factory themostmodern machinery in was iron from England.1994]." and advised managers essential.

Aisaburo Mano. 1994. Conflicts emerged also among managers the responsible for meetingthe new qualitystandards for implementing and new work organization practices. 166-68].Not surprisingly. 10~12]. Sasuke. By 1910the highdevelopment costs andthe investments required to scale production up showed promise reaping of substantial returns. and Despitesignificant turnoverof both managing engineers workers. after [p.p.Suzuki. of Toyodawas able to doublefactory output between 1908and1910 without increasing workforce its [Suzuki. a .pp.20 percent thanthe costof a comparable less imported loom. Three Mie directorshad been major stockholders the startof theToyoda from LoomWorks. he in fact continued a director as evenafterhe establishedrivalcompany.Underthe direction of an ImperialUniversity-trained engineer. the Mie textfile engineers operatives experience operating and with in imported looms(both automatic non-automatic) improvements thenewmodelToyoda and made in looms they tested.and the results demonstrated overall no performance difference between them. theworkers but sought meet to quantity output goals.Sakichi's brother.Toyoda'swide iron power looms were evaluated in comparison with Platt Bros.New and higherqualitystandards in werenecessary achieve to interchangeability. At leastin part because thesechanges.In 1913thepriceof theToyoda broad loomwas160yen. Toyoda and the LoomWorkssoon developed loyalgroup a of engineers workers and who achieved interchangeability partsand who of differentiated theirpractices from the restof the metal-working industry. they as disagreed about appropriate the scale of R&D expenditures.Suzuki. 1994. a result.from the second half of 1910.but a new their casting foundry wasestablished 1908.With orders widelooms for beginning arrive to fromintegrated spinning companies. p. much but of the periodfrom 1907leading to World War I wereyearsof relatively up sloweconomic growth. turningpoint had beenreached the international a in competitiveness theToyoda of looms[p. Start-upproduction problems and difficulties operating in Toyoda looms undermill conditions prompted Spinning Mie (latermerged Toyo into Spinning) senda technical to manager inspect operation Toyoda's to the of pilot factory in October 1909. They initiallysubcontracted iron work to Kimoto. 52]. rift emerging to The between Taneguchi Sakichi and deepened. As Sakichi resigned from the company that was builtuponthecommercialization inventions thatcontinued carry of his and to hisname hisdeparture62.ToyodaLoom Worksbegan paying dividends its stockholders. 165]. Extensive mechanical testing particular in required large capital investments. Alffiough Sakichi Toyodaended formalmanaging his relationship Toyoda with Loomin 1910. 1994. 168]. Continued difficulties manufacturing in exacerbateddeveloping between a rift Sakichi president and Taneguchi.59. managed newclothmill testsite the [p.10 / WILLIAM MASS & ANDREW ROBERTSON LoomWorks. pp. this earlyperiodof new product and process development rife with was customer complaints from both mills purchasing narrowlooms and the growing numberof mills ordering wide looms[Toyowa.Still.1967.looms.

).354 of looms integrated in spinning companies 1920identified percent foreign in 63 of origin (two-thirds which of were from Platt Bros. thelaunching hiscareer and of toward becoming head the of Enshu Loom. 150.52-53]. now the manufacturing by supervisor Toyo of Spinning. 43]. and key technicians at Toyoda Loomwerereassignedsimilar in capacities theKimotoIron Works to [Suzuki. pp. Difficulties coordinating in large-scale testing narrowloomsat of Nagoya ClothCompany prompted amalgamation thetwo companies the of in 1913 and the subsequent re-equipping both facilities of with wide looms. Toyowa. 166-70. continuing supply problems confronting Toyoda Loom. 2 A survey theinstalled of stock 49. Suzuki. Aisaburo Mano of Toyo Spinning and Sakichi Toyodaprovidedcrucialguidance the formerin productdevelopmentand the latterin manufacturing to ensure ToyodaLoom Works' success. Sakichi continued provideguidance. p.INNOVATION IN THE TOYODA ENTERPRISES. . 2Oneimportant consequence merger thedeparture Kimoto of the was of IronWorks' chief engineer Fuguro Sakamoto.thechief rivalof Toyoda Automatic Loom.p. 1949. 1885-1933/ 11 More important. pp. The ToyodaLoom Workscontinued development the iron broad of loom and its production capacity. to The success thisN-typeof of broad loomledto thevirtual cessation loomimports Japan 1920. Table 3 provides evidence the of increased success the Toyoda of LoomWorksafterBritish imports were interrupted World War I [Yanagihara. asthe even company relied hispatented on inventions hisunofficial and guidance key of manufacturing personnel.and out of the 36 percentof loomsthat were domestically produced. The history Enshu of Loomwill bebriefly discussed below. The combination Kimoto'songoingfinancial of difficulties. 1994. of in by MitsuiBussan's Fugino repeatedly urged theKimotoIronworks that be the nextfactory introduce to interchangeable technology. to especially during difficult times. 1979. in The coregroup connected Sakichi to Toyoda. Assisted AisaburoMano.andToyoda's needfor expanded production capacity MitsuiBussan mediate acquisition Kimotoby the led to the of Toyoda LoomWorks 1916. 90 percent these over of weremade theToyoda by Loom Works [Yanagihara.International competitiveness secured thebasis loommodels was on of developed of and manufacturing capabilities attained Sakichi's after official departure. theToyoda to Loommanaging engineers hadputin place he in thecasting facility. ToyodaLoomWorksdeveloped English-style wide loom an iron thatwasdelivered Toyoin 1914and1915. by 1979.goalthatit parts a fitfullyattempted eventually achieved and fully under newmanagement. 1967]. including chiefengineer the (Fuguro Tsuchiya). heads design the of (Iwataro Okabe)and casting operations (Chotaro Kubota).

join Sakichi Ishibara and proceeded England.S.the vibrationlevel was higher. to whileNishikawa the Mitsui and Bussan representative followed through theU.patent on application process. in and After arriving New York. Draper the bobbin-changing mechanism too complicated. of of 1909-1914]. patents six duringthe years1909-1914. Sakichi recorded U.12 / WILLIAM MASS & ANDREW ROBERTSON T•ble 3. practical a textile mill engineer.Providence. him.846 213 Narrow Width L 1909 Iron 15.a shuttle-changing and loom(1912).an automatic shuttle-changing mechanism a pickercheck(1910). and In the Americanlooms' speedof revolution was slower.554 163. a protecting and device shuttle for replenishing (1914)[Annual Reports the Commissioner Patents.S.including inventions related a warplet-offanda circular to loom (1909).S. Sakichi in wastaken around textile to facilities surrounding Boston.247 Total Broad Width G 1907 Wood-iron 70.T 1914 1932 Iron Iron 87.114 901 Total Total as of October 1935 92. LoomSales Total Year Number of Classification Type Narrow Width Narrow Width Developed Construction Looms Sold 1907 1908 A K Wood-iron Iron 1. New Bedford. 1910Sakichi along with hischildhood friendandemployee Akiji Nishikawa.He as in . Worcester the New York-based and by machine branch manager Mitsui Bussan. Sakichi Ishibara.908 180 Broad Width Broad Width N L. Fall River. of Sakichi gainedconfidence from evaluating the construction operation American and of looms lightof whathe hadlearned in from his own factoryexperiments inventions. loommakers he left New York for England October1910. comparison.' Toyoda LoomWorks. [pp. departed a tourof textile on districts the UnitedStates Europe. Sakichi reportedly thathistechnical felt capabilities superior the were to U.technical had a expert from Japan.462 Learningfrom a Trip Abroad On May 8. the was and highrate of warp breakage resulted an unsatisfactory in numberof cloth defects 63-64]. Believing theinvention a competitive that of automatic loomhadhigh worldwide value.

Saldchi madea dkectlink between development the automatic the of loom and the Japanese abilityto capture Britishexportmarkets. Japan. On firstseeing Manchester. one- . Ready eager renew manufacturing development and to his and efforts. In the widelycirculated prescient and reportof his Britishtravels. to Although there wereno dominant outside financial partners. is estimated ourlaborcosts pound. to it that per will dropto 23%of British costs. we manufacture If our automaticloom. however. of In the number of machines our workers on double width looms can operate gradually is increasing.For this reason. wages the of British workers overfourtimes are those ourworkers. the culminating certain in victory[p.5.INNOVATION IN THE TOYODA ENTERPRISES. average In the number of machines eachfemale operator monitors only4. for Additionally. England. will gradually If we overtake British. we cando this. 64]. 1885-1933/ 13 investigated spinning weaving in Manchester thenvisited and mills and mills on the Continent another for monthbeforearriving backin Japan January in 1911 [p. October1912. possibility a requiring much additional industrial development twentyyearsto and accomplish Mass Lazonick. onlyeight these and of wereequipped automatic with shuttlechanging mechanisms the start. whichexpanded from 100to 200 looms between 1911and 1914. the first time. Mitsui Osakabranchmanager the FuginoKamenosuke served the executive on boardof thecompany.64]. According the original to contract.he renegofiated In the termsof the original contract transferring loompatentrightsto the his Toyoda LoomWorks. For costs ouroutput slightly is higher thanthatforBritain.a privately financed and closely heldclothmill thatmanufactured commercially wassimultaneously cloth and dedicated loomexperimentation.realized making industry I that our the biggest wouldbe a fairlyeasy task. he decided the For to complement his research improvedloom operationwith large-scale on research spinning into technology. (see and 1990). insufficient realize planned to his goalof equipping looms 200 with automatic shuttle-changing mechanisms. andhisfamily of He relocated a newtextile to mill in Nagoya. at Needingthe other 100 loomsin order to maintain the combined commercial viability his mill and loom experimentation. is there are no factories equipped with automatic looms. Sakichi established the Toyoda Automatic Weaving Factory. and the number of machinesour workers operate rises eight.holdgreat I hope ourindustry. Saldchi's intense efforts automatic in loomdevelopment him to focuson led minimizing extentof yarnbreakage. of Saldchi secured additional financing a remarkable in manner. Instead only 100widepowerlooms werepuxchased. aftera 10percent profitwaspaidoutasdividends Toyoda to LoomWorks'shareholders. Sakichi's initialfinancing was. production of onepound. Moreover. Saldchi this time avoidedchallenges his managerial to controlby securing personal sources financing. In effortsto minimizereliance outside on capital.

At the in timeRisaburo thebranch was general manager C. Itoh& Co. Meanwhile. Sakichi's as commitment securing to the funds necessary prevent short-run to the diminution hisexperiments of proved extraordinarily in thelongrun. much at in a smaller facility thanthe average of 50-60. as Sakichi wanted provide corporate to a legacy large enough both heirsandtheir for . Michael Cusumano.with a cornerof the facilitydedicated loom experiments. 13].Following Japanese custom. He therefore decided integrate to his operations backward spinning.67-68].a leading for raw cottontrading company. ToyodaLoom Worksdeveloped the increasingly popular iron wideloomsastheWorldWar I economic boomextended their market. Sakichi sustain did the viability hismillconcern of during period a when didnotwantto relinquish he sole control hisenterprise 65-67]. his biological Kiichiro hisprimary [10p.Themagnitude thefuture costly of earnings he traded away on a scale could possibly foreseen. The useof widepowerlooms smaller-scale at weaving millsbegan at this time as well. Sakichi's daughter Aiko married Kodama's younger brother Risaburo 1915.p. confront into To (andsolve) fundamental the technicalproblemsinvolved in automaticweaving.. of Sakichi agreed tradethe remainder his to of revenue claims a lump-sum for settlement 80.000 mill spindles. Toyoda the Automatic Weaving Factory manufacturing was cloth. The alliance had dramatic consequences withinthe Toyodafamilyaswell. plannedto begin an experimental He spinning department Nagoya 1914with only6. Sakichi adopted Risaburo.14 / WILLIAM MASS & ANDREW ROBERTSON thirdof the remaining profits wereto be awarded Sakichi. However. "The war stopped flow of European the and American cottongoodsinto Asia. thereby who became eldest supplanting his son. was he not have From1914to 1919 the ToyodaLoomWorksearned millionyen that wouldhavebeen 3 turned overto Sakichi royalty as payments. and Japanese spinning and weaving manufacturers surged fill thevacuum" to [Hayashi.Sakichi ableto of was purchase additional the looms andthereby sustain momentum his to the on automatic loom experiments well.000yen. Sakichi needed to consolidate complementary the technical organization and linkages between weavingand spinning operations. citedthe adoption has of Risaburo a primaryreasonfor Sakichi's as enduring commitment to business expansion othermajor into growth areas such automobiles. of [pp. thispoint he At deepened alliance his with IchizoKodama. 1983. Sakichisteadily expanded integrated his facilities response in to increased sales stimulated the World War I economic by boom. One autoindustry historian. to Willingto forgo his share futureearnings. As Table 3 shows. who provided him assistance establishing in spinning operations [pp. Toyoda-Kodama The familyalliance joinedtextile technological capabilities marketing with expertise critically in essential input and product markets: cotton and cloth. to Sakichi foundthatthepurchased wasproneto frequent yarn breakage. problematic for weaving with an automatic loom. son as heir 68-9].000ringspindles. manager Mitsui's the of Nagoya branch.

Kiichiro couldreceivehis due and familyresentments mightotherwise that thwarteffective development of theproductive potential thealliance of could avoided be [Cusumano.0 9.0 5 OtherToyoda Relatives 15 Unrelated Individuals 1.000employees principal and and shareholders (see Table4) [pp.0 29. research But and experimentation automatic on looms subsided theToyoda as textile enterprises provedincreasingly successful. Sakichi up a personally set controlled enterprise China. Most important.The new company was established Sakichi president with as and Risaburo managing as director. was by in 1918. Sakichi made notable advances patenting improved in an let-off device. Toyoda the Automatic Weaving Factory replaced ToyodaCottonSpinningand WeavingCo. Sakichi responded expanding China by his operations established Toyoda Spinning& WeavingWorks in and the Shanghai.000 This spindles 400 looms. serving national the interest improving by relations with China. would he develop production abroad whenother Japanese spinning companies would not. Capitalized5 million (approximately at Yo 5 million Sakichi yen) was president AkijiNishikawa the general and was manager. thismove so was a strategic also decision produce a lower-wage to in economy 73].. 1. The periodfrom 1912to 1915provedto be a veryproductive period for automatic loom invention and patenting.2 1. expressed His reasons seeking offshore for an production were site two-fold:First. Japanese livingstandards wages and wereincreasing. Sakichi that beyondbusiness fek considerations. company capitalized 3 millionyen The was at ($1. Table4:Toyoda CottonSpinning Weaving and Ownership. 1.5million).INNOVATION IN THE TOYODA ENTERPRISES.4 Total Shares In October 100. With a sufficiently largeinheritance. 1918 Stockholders % shares Sakichi Toyoda FujinoKamenosuke (Mitsui) Risaburo Toyoda Kodama Yoneko 48.4 10. pp. Ltd.5 1. Sakichi aware and was thatJapanese advantages notcontinue wage could indefinitely. After fouryears war-time of growth. 1885-1933/ 15 families. 58-59]. mill had60. in After 1920 whenChinese tariffs wereraised. and Sakichi moved family Shanghai ensure his to to that . [p..000 ring spindles. The newly incorporated entity had 34.000 1918 Sakichi traveled with Nishikawa to the Chinese mainland investigate prospects establishing to the for a new spinning and weaving enterprise a project would three there. other Japanese spinning companies began setting Chinese up subsidiaries.0 Kiichiro Toyoda Kodama Ichizou .V0-1].Second. that take more years bring to to fruition.000 powerlooms (only eight which of wereequipped automatic with shuttlechanging mechanisms).

Kiichiro. Kiichiroplayed central the role in the intensified research activities. new automatic A shuttle-changing mechanism developed. . was Sakichi devoted energy a circular his to weaving machine inventive (an effortthatwasneversuccessful. Kiichiro AssumesHands-on Research Leadership Kh'chiro a mechanical was engineer trained the University Tokyo.Althougtl in his thesis dealtwith pneumatic pumps. both the front and rearpanels movesimultaneously. 1920andwith his financial by in situation better than ever. Sakichi's simpler motionoccurred moreslowly thanother non-stop shuttle exchangers operated precision athigh and with even speed. forcing exhausted the shuttle from theshuttle at theendof therace. in Soon after theShanghai company established. at delayed opening theback of panel caused mischanges occur"[pp.p. ensures asthe new shuttle pushed that is into the shuttle box. described follows: mechanism is as "[A] linking frontandrearpanels the of the shuttle box. to Justasimportant successful for commercializationthe fundamental as patented inventions. essential modifications were made on the other basic loommechanisms asthewarplet-offdevice thewarp-stop such and motions.S14-1S]. because this of improvement motion's this shuttle changes became smoother required and less power. was Sakichi developed alternative an design 1909in whicha pushing horizontally in rod moved newshuttle theshuttle during shuttle the into box the change. Sakichionce again engaged loom researchand in development thescale on fromwhich hadpulled he back 1914. Sakichi's invention. was differentfrom the two central inventions that Sakichi patented 1903and1909. whichthe frontandbackpanels the In 1909 in of shuttle opened box independentlyhighspeeds. box Thisapproach notsuccessful. had in In 1903 Sakichi had designed automatic an shuttle-change motionin whichthe shuttle change occurred belowthe "race" uponwhichthe shuttle traveled fromoneside the loomto the other. which rapidlyachieved many improvements. One advantage thesecond of approach theincreased allowed was time to execute shuttle the change. [p. start again the then up afterthe shuttle exchange occurred. Sakichi traveled back and forth between Shanghai Nagoyaand oversaw expansion the Nagoya and the of experimental facility fromeight 32 automatic to shuttle changing looms 81]. The fundamental inventiondeveloped Kiichiro and patentedin by 1925. a member the company's as of technical staff he became a specialist castingtechnology in and machine-parts manufacturing ToyodaSpinning Weaving for and [Cusumano.Duringthe shuttle of change the newshuttle pushed was frombelowthe race. although a prototype the centerpiece the mainlobbyof the newly is in opened Toyota Museum) and automatic loom invention. Joined his son. [p. 58]. Mostshuttle-change mechanisms morecomwere plex. at of He workedfor hisfatherupongraduating from college 1920. Nishikawa was askedto manage textile the company operations 78].16 / WILLIAM MASS & ANDREW ROBERTSON the venturewould be a success. 1985.requiring loomto stopoperation.

the Toyoda Loomemployees producing looms which automatic the to the shuttlechangemechanisms were attached worked directlyunder Sakichi[Suzuki. disagreement had as The andconcern distribution potential over of returns fromfuture development of the 1909patents prompted Sakichi improve automatic to the loomandat the same time to strengthen patent his claims independent the Toyoda of Loom Works. testresults made apparent limitations yarn the of quality the parent at company.5 of that reached Kariya 1926[pp. [p. Yarnwassupplied theToyoda by Spinning & Weaving factory. In thisfirstphase. measured an accelerating an rate as by rate of patent applications. on which he would attachhis automatic mechanisms. production begun was withtwohundred looms purchased theToyoda from LoomWorksandnewlyequipped automatic with devices. Sakichi and recognized successful that development would require a separate production facility. automatic pilotplant builtin Kariya. evenas the dispute over patentrightsintensified.a dispute eruptedover the interpretation the renegotiated of terms of the 1912 agreement regarding actually who retained control overSakichi's 1909patent rights theirapplication theshuttle-change and to mechanisms Sakichi intended to install. became It critically necessary manage to the spinning process itself. including most the importantsinglepatent. 1994. An loom was AichiPrefecture. Earlyon. but the 32 experimental loomswereinsufficient effective for development management of practices worker and training. 1903through From 1921there beenfiveToyoda had shuttle-changing patents.With potential in capacity 500 automatic for looms. factory notadequate.82-84]: at by Sakichi asked Toyoda the LoomWorksto produce 1. 1885-1933/ 17 Sakichi finally decided operate ownautomatic to his loomfactory a as pilot phnt. Nozue. In before cooperating Sakichi's with experiments. addition. The resultswere immediateand just as dramatic.INNOVATION IN THE TOYODA ENTERPRISES.In Novemberand December therewere ten new patents.andasked long-time his . however. In October1924.dedicated the of spinning department. minimum The efficient scale a spinning for factory was 20.p.000 powerlooms. whichrequired establishmenta new.Sakichi dramatically gathered employees his the of company asked and themto put forthgreater exertions sustain to operations profitably. effect. a step Sakichi not taken partof the 1912settlement. loomtesting The stimuhted increased of invention.which would governthe designfor the shuttlechanging system it was developed as (Kiichixo's 1925 shuttlebox).a scale operation was 2. In the warp preparation processes requiredfurther modification automatic for weaving. additional nine patents thiskeymechanism in were developed between 1922and1929. However. 1923. 170].Meanwhile.000ring spindles costing millionyen. The automatic loom design was sufficiently perfected allowpreparations to to begin mass for production 84]. the was Sakichi leased an ironfactory Hioki fromhisclose in friend. Toyoda the LoomWorkswanted him formally sign to overto themthe 1909patentrights. whilehewouldensure inventive that efforts theautomatic on loom would be intensified.

170]. is eventhe case of This in reformed factories which in automatic looms have been successfully adopted. we devoted greatest to thisproblem. of Recently in England. However. 1929. Toyoda At Automatic Loomalso. thelast and seven.203 automatic looms withinthefttstyear.because improvements the above of in mentioned preparation process. particularly in casting. to This group. During 1925 automatic was the loom redesigned mass for production and successfully testedin a pilot plant of 350 looms. For example.In 1926 Sakichi established Toyoda Automatic Loom Works in Kariya.p.However.000) produced and 1. insufficient attention paidto preparatory is processes. fttst Kuboto. and in the future to accompany development more and more advanced this of cotton weavingtechnology with the productionof these looms. the operational in experimentation carried outat ourKariya factory. p.Of these.An important pointin researching problem how to adaptthe the of loom to Japanese conditions that the generalapplication is of automatic loomsto textile manufacture stillin its infancy. whether American an bobbin changer a shuttle or changer cotfid exceed 160-70 picks per minute provokedstormsof controversy.. went to Kanebo. in theToyoda in 24 KikuiWeaving Factory. The ToyodaAutomatic Loom Workswascapitalized 1 millionyen at ($460.next to the the experimental spinning weaving and mill.one frequently hearscomplaints aboutbad yarn. recently have we been testing loomfor extended a periods of time and getting results 220 picksper minute. became nucleus building production the for up capabilities. Even there. becausesmall sample no goodfor a test is . fromtheverybeginning.. only earlyloom models the operated outside Toyoda-controlled of facilities. 9-10): R. the care spinning fromlong yarn fiber cotton. 1994. is possible to useraw cotton it now hardlydifferent from thatusedby the standard powerlooms.then manyother engineers skilled and technicians from Toyoda LoomWorkstransferred the new company. The needfor andactual testing alterations the yarnpreparation of in andspinning processes became matterof utmost a importance successful for automatic weaving. Toyoda The approach entailed extensive testing a large on scale gainan understanding the linksbetween to of materials processing and machinery design. wereplaced 528 in the mainbranch plantof Toyoda Spinning Weaving. automatic & 124 looms wereplaced the Kikui Spinning Weaving in & Company closely (a affiliated millestablished 1918). Thisis the primary enemy automation.Itis is our company's greatest desire produce loom adapted the to a to currentstateof our cottoncloth industry. requixed theproduction automatic as in of looms. Soonafterits establishment. For example..18 / WILLIAM MASS & ANDREW ROBERTSON associate Kubota to construct foundryand casting a facilityin the Hioki foundry. eventually automobiles and of [Suzuki. longattached to Sakichi. thenof high-draft tingspinrang frames. Risaburo Toyodareviewed history 1929in a textile this in tradejournal[Toyoda.. 520looms wereplaced theKariya in experimental factory.

of Kiichixobecamea managing directorm chargeof loom production. Table 5 indicates As sales wereconcentrated the integrated with spinning mills. were One expert described typical the comparison the difference as between weaverwho a could operate automatic 25 looms oneoperating two to threepower and only looms. theToyoda and spinrang Weaving & Company. Toyoda LoomWorks. 8.the differences staffnag in requirements dramatic.143 Integrated School/Inspec. of is m .INNOVATION IN THE TOYODA ENTERPRISES.825 444 1 Sakichi's options raising capital the newcompany for the for included participation oneor a combmarion the following by of organizations: Mitsui Bussan.. the termsof thisresolution not known. with theexpectation thisnumber soon that will exceed sixty looms per operator.two hundred five hundred thirtymachines usedin testing.anda woodworking shopwerebuilt.ToyodaAutomaticLoom Company (Hioki FactoE• 1924to mid-1931) m Total Domestic Market 13. avoiding and potential patent conflicts between Toyoda the Loom Worksandthe Toyoda Spinrang Weaving & Company. 1979]. The automatic loom was an immediate successm the marketplace. we havegradually we each six but increased so that now eachoperator this handles over fifty looms. but are The shareholding interests theToyoda in Automatic LoomWorks shown Table6 andthe are in composition thefirstcustomers shown Table5 [84]. patentsuitwas and he had The resolved after 18 months with the direct mtervenrion of Aichi Prefecture's governor.. securing familyand managerial autonomy.3 timesas much as the 200 yen princeof a conventional power loom. The issues included sharing financial risk. TaMe $: Salesof AutomaticLooms..yieldinga commensurate nine. August In 1926the ToyodaLoomWorkssuedto forcea change the nameof recordon the in disputed patent. an ironworks.andsales the of ToyodaG-typeautomatic loombegan 1927.or ten-foldincrease productivity m [Ishii. The ToyodaAutomatic Loom Worksassumed pride of placeas the central concern among growing the number firmsm the Toyodagroup. However.. assigned operator looms. 1885-1933/ 19 ensuring observation each every the of and typeof design flaw. 1909 Thisaction ended possibility cooperation the of between Sakichi the company originally established. A founds.621 24 3.The newautomatic m loom cost 3. E•ott Korea Platt . to and are Initially.

a Lancashire weaver. 1982. & in Indigenous Development of JapanesePower Loom Manufacturing Capability:A "SocialPhenomenon" and Competition Although Toyoda the Loom Works anearly was industry leader it had manyrivals. 1927 Stockholder timeof establishment) (at % of shares ToyodaSpinning-Weaving Inc. weaving each region itsownleading had loom inventors. expressly the stated primary and purpose theToyoda of Automatic LoomWorks. invented flyingshuttle. hadmodified picker Kay the stick motionthatthrewthe shuttle fromoneloomside theother attachingto a handle thetop to by it at of theloom. themost and important expertise brought they back to Japan theirknowledge thebatten.so many. the called batten. The battenis significant the evolution for of weaving technology ks function the pivotal in the transition was as link from hand power to looms.1930. John Kay.The Toyodaenterprises continued expand. Sakichi suffered mild cerebral a hemorrhage 1927.In addition producing to cotton spinning weaving and machines profitably. he returned assuming as to primary responsibility overseeing in invention.in fact.. Ownership. 55]. Ltd. Saldchi was a counselor. alsorenewed effort to inventa He his circular loom. acutepneumonia in and he died on to but set October30. to France 1873. p.5 Total Shares 20. various At points thedecades in surrounding turnof the thecentury.In 1733. Skigejiro .000 The company president Risaburo. 61. to with the establishment the Shonaigawa Worksin 1928andToyodaOshikiri of Dye Spinning Weaving and Company Chuo and Spinning Weaving 1929.5 Saldchi Toyoda 5 KiichiroToyoda 5 Risaburo Toyoda 5 2 OtherToyoda Relatives 5 Ichizou Kodama 9 Others 5 13.Theweaver simply pulled handle the withonehand movethe to shuttle fromside side.was research develop to and textile machinery. in spent year a studying Western weaving technology.'Toyoda Automatic LoomWorks.20 / WILLIAM MASS & ANDREW ROBERTSON Table6. that TetsuroNakaokahasreferred the to activities loominventors entrepreneurs of and during latenineteenth the to earlytwentieth century a "sort of socialphenomenon" as widespread throughout weaving the regions [Nakaoka.and doubled a weaver productivity. Ltd. Kiichirowasthe general was and manager. was of The battenspread gradually throughout weaving the districts and marked turning a pointin thepace extent continued and of improvements to the traditional handlooms. bytheKyoto and sent prefectural governmentLyon.For a time he in appeared be recovering. to Twoweavers a loommaker.

of the earliest All models varieties powerloomswere and of narrow looms constructed woodexcept thegears.MichioSuzukifounded Suzuki LoomWorks(thepredecessor of Suzuki Automobile Industry) developedpower and a loomin 1913. 1885-1933/ 21 Matsuda Mie invented pedal-operated loomin 1885.the f•rststep in a hand toward development a practical the of power loom. Forming de factotechnological a community. by mixing or longer. Domesticconsumers as preferred narrowcloth. The specialized weavers maintained competitive a advantage providing in narrowclothmadefrom coatset yarn for domestic customers thewidespread until adoption Western of dress afterWorldWar II.Masajiro Suzuki establishedloommanufacturing a business in Enshuandconstructed iron narrow an powerloomin 1908.shortfiber cotton. traditional weavers necessarily changed a in complementary manner. developed locally suited power looms varied theincorporation that in of the devices needed transform to increasingly complex handloomsinto powerlooms.Spunfrom domestically grown. imported cotton fiberwith domestic cottonstock. the traditional Producing Center (Sanchi) weaving .Soon thereafter Tochigi. in The transformation pedal from loomsto power looms principally required mechanical new devices thewarplet-offmotion for thatwouldcontrolandmaintain constant tension the warpyarns. Changes thequality yarnsupplied the spedalized in of by spinners and woven by the specialized. a history thechanging (For of product quality choices theJapanese in textile market. from for pulleys. Sakichi Toyoda's early efforts IgetaTrading at Company Aichihavealready in beendescribed. a few and othermetal parts. Eventually weavers the became capable of fullyincorporating domestically yammadefromwholly the spun imported raw cotton into their cloth. in Kozaburo Terasawa redesigned pedaloperated the loom in a mannerthat closely prefigured earliest the powerlooms. Japanese yarnwas coarse (defined a yarn"count"below20).whichwasusedfor kimonos and appredated its for suitability dye absorption for (especially indigo).INNOVATION IN THE TOYODA ENTERPRISES. Ishimatsu Kubota Osaka of produced f•rst the Japanese iron loom in 1903. part as a substitute nativesilkproducts. The indigenous development powerloom manufacturing of capability in itsinitialstages advanced productivity thetraditional in sector specialized of weaving mills.domestic In market standards created barrierto œmer. several and parts modifications of lesser significance. power a drive mechanism. Over timethe specialized weavers learned useyarn to madeby mixingsilkandcottonfibers. effect. During this transition. These along withothers including Sakichi Toyoda.)As higherincome consumers purchased imported cottontextiles.Theseimproved hand looms diffused widely the 1890s. in for the tastes thebroader of consuming public changed. see 1982]. twoinventors. these inventors learned from eachotherandat the same timedeveloped differentiated loom designs. cloth on a rolltake-up motion.Sakichi Toyoda made the transition first to mixed wood-iron and then to all-iron looms in the 1907-9 period.(Direct tariff protectionwas also in place. Nakaoka. a imported yarnand cloth.

442 Suzuki Model (Hamamatsu) 202 188 522 952 290 55 2.988 3.924 10.961 50" 1. Duringthe 1920s. equivalent 52 percent their1929stock looms. export-oriented mills increasingly purchased domestically manufactured looms. to of of Table Z' Chssification PowerLoomsusedby the Members the Enshu of of ExportCotton Textile Industry Trade(March.781 non-automatic Toyoda power looms between 1923 and 1929. large the integrated.687 (Hamamatsu) Nisshin Model 364 368 330 4 16 1. Sanchi. The integrated spinning millscontinued buy the majority their to of loomsfrom foreign manufacturers the successful until domestic development of ironbroadpowerloomsduring WorldWar I.082 NogamiModel 256 220 248 12 - - 736 Total 4. and in They purchased 24. the ToyodaLoom Works futuresales would become increasingly dependent capturinglarger on a share thegrowing of market broad for power loomsin the specialized weaving production centers.073 3.22 / WILLIAM MASS & ANDREW ROBERTSON sectors adapted the changing to fashion increasingly by adopting broader power looms(see Table7 below).218 631 159 22.014 60" 56 70" 14 Total 8.993 The Toyoda Loom Works continuedto confront significant competition fromrivaldomestic power loommanufacturersselling the in to independent weavers. 1937) Less More More More More More Company/Inventor Than Than Than Than Than Than Model (Location) Toyoda Model 36" 667 39" 730 40" 5.000Toyodapowerlooms)were integrated mills.209 Iida Model 674 104 765 90 54 - 1. the Table 7 shows the extentof competition amongdomestic loom producers the in . 1929theToyoda By LoomWork's14 bestcustomers (those buyingmore than 1. Withtheimmediate market success of automatic looms theintegrated market theirfounder in mill by Sakichi's new firm.12 of whichwereJapanese two of whichwerebased China. were who increasingly oriented making to broadcloth for domestic (expanding) and foreign sales.

the Draperloomwascalleda bobbinchanging automatic loom. Technology Transfer and International Competitiveness Sustained Japanese research automatic into looms began 1898 in whena technologist Osaka from Spinning Company. Sakichi's attempts develop loomthat couldautomatically to a replace theweft whenexhausted began 1902soonafterthese in firstautomatic looms arrived Japan. Northrop and commercially introduced his employer. Becausethey had difficultymaintaining the looms in operating condition.1980. 12.H. Sakichi in But pursued development an automatic the of shuttlechanging ratherthan striving imitateor furtherdevelopNorthrop's loom to .Because bobbinwasinserted the withoutstopping evenslowing or the operation the shuttle of and the loom. invented ease weavers' to the "mental anxiety" frommonitoring action the and preventing faulty clothresulting frombreakage thewarpyarn[Mass. The Toyoda Automatic Shuttle-Changing Loom: CorporateIndustrial Research.These p.p. ToyoSpinning.INNOVATION IN THE TOYODA ENTERPRISES. Draper by the Company. the and and Mie Spinning Company installed Draperlooms theirmillsasearlyas 1900. in (Outside the UnitedStates. primarily becausethe Drapers participated establishing moreexport-oriented in the BritishNorthropLoom Company market to theirinventions Europeandelsewhere. twomostfundamental The inventions theDraperautomatic were loom weft-replenishing mechanism thewarp-stop and motion.) in Japanese mills had experimented both Draper(U. DraperCompany of the inventions were more frequentlyknown as Northrop looms. key complementaqr a invention was the warp-stop motion. In the majorspinning companies senta groupof technical specialists the to United Statesto studythe automatic loom that had been invented by J. with the largestsingleshare 0 7 percent) being heldby theToyoda LoomWorks the growing in broad loomsegment [Izumi. 1900.To enable weaver operate larger the to a numberof loomsnow that the time-consuming of changing weft supply task the was mechanized. 1895. Calico Fimshing Weaving. 1983. The former pushed a yam-filled bobbin place into withina shuttle pushed theempty and out bobbin whenits supply yarnwasexhausted of without stopping operation the the of loom. 15]. theyamalgamated but over timeto formoneof the sixmajorspinners. returned from America 1898with an automatic in loomfrom theDraperCompany. three companies failed in theirearlyefforts operate to automatic looms. Takeo Yamanobe.)andNorthrop(British) with automatic looms. usually they used looms simple the as powerlooms afterremoving theautomatic attachments [Hayashi.Inventing Draperautomatic in the loominvolved numerous complementaqr inventions a scale industrial and of research resulted a that in rateof patenting Drapersurpassed by the mostinventive at only American companies the turn of the century at suchasGeneral Electric andWestinghouse. 1885-1933/ 23 export-oriented Enshu districtin 1937. Indigenous Development.S. The Osaka Spinning Company. in 1989].

The and is the of principal concerns addressed are related the technology here to strategy at Toyoda. otherforeign models automatic of looms imported Japan into included Stafford. In a 1929articlepublished the Japanese in tradejournal. Contrasting differences technology the in strategies across all thesecountries enterprises beyond scope thispaper. Ruchi. Because bobbinwasinserted the into the operating shuttle the formercase. In addition theDraper Northrop to and automatic looms. I•'chiro Toyoda explained history research development the of and for an automatic shuttle-changing at ToyotaAutomatic loom LoomWorks. 2) thesmaller and bobbin could be storedin largerquantities the bobbin-magazine in compared with a smaller number shuttles of requLdng morefrequent refRling morelabortimein and preparation before installing theshuttle in magazine. the Henry Bayer.thisissue structured research automatic on machinery. especially the in design thewarpstopandlet-offmotions" Toyoda. A mill with 1.24 / WILLIAM MASS & ANDREW ROBERTSON design. Noue. The implications thedifferences precision of in standards dramatic were in a numberof areas: the extent of complementary inventionrequiredfor integrated operation with the restof theloom'scomponent parts. and Osaka Machinery automated looms. each these for For of issues.Suzuki. in whereas muchlargershuttle the was replaced the latter.The centraldetermining factor aroundwhich other importantconsiderations revolved the significantly was greater machine precision required integrate to the bobbin-changing mechanism the restof loomoperations with compared with the shuttle-changing mechanisms. Kimoto Steel. Notingthe differences in cotton and yarn qualityin Japancompared the United States. p. a difference slight of economic consequence.the costs of loom manufacturing. Sakamoto.000automatic shuttle-changing loomsrequired only 30 weavers . Hartmann. they in but wereeven commercially less successful the than meager penetration the loom marketby the BritishNorthropLoom of Company's bobbinchanger. Interestingly. "Because looms Japan in mustbe ableto weave using thissortof yarn. extentof mechanical the expertise required both for installation machine and maintenance machine as integrity degraded use. on and 1990]. Domestic rivals included the Ariuma. 1929.) [Mass Lazonick. (Lessthan 5 percentof Britishloomswere automatic theeveof WorldWar II. extentof the machine vibration. increasing breakage machine yarn and wear.000 normal power looms requiredmore than 300 weavers out of a total mill work force of four to five hundred workers. The mainadvantages the bobbinchanger of werethat:1) lessenergy wasrequired change muchlighter to the bobbinthanthe heavier shuttle. Kip-Baker and looms. with andtheextent retraining of required weavers. the bobbin-changer in required machinetolerances no greaterthan 1/16 inch compared 1/8-inch tolerances the shuttleto for changer. the differences favored automatic the shuttle-changer. to Kiichiro explained. of [K. 20].TheTextile Review. A mill with a 1. automatic shuttle-changing weredeveloped looms and introduced Britain.

Withhindsight. this projectappears stupid. Sakichi's inventions were not a soloeffort. and the laborcostsavings of was course less of consequence in lower-wage Japan thanin theUnited States. Even thoughthe shuttle-changer required redesign material less and change therestof a non-automatic thanwouldabobbin on loom changer. which was editedby Kiichiro and Risaburo.As one mightexpect.Kiichiro attachedshuttle-changing mechanisms two hundred normal looms to produced the ToyodaLoomWorks. to Those graphs indicate annual that company patents varied between to tenwithnotrend(butwithanaverage one estimated the by authors around of five). established Sakichi's has that actual wassignificantly than role less hewascredited in thecelebratory with biography issued shortly afterhisdeath.His summary the experience at of was that. Although company a the lists totalof 85 patents 28 utilitymodels and registered Sakichi for Toyoda. Toyoda developedlarger a shuttle could that carry larger a bobbin. theirfirstefforts the Kariyaexperimental In at plant. 108-9.whileindividually patents held dearlytrenddown fromthe60-70peryear range between and30 peryear theendof the to 20 by period.Ishii. all English-language on.Kh'chiro and two employees also were involved inventive in activities.corporations 65 percent the 131 weftOn held of . This biography the source is drawn directly indirectly. Research IshiiTadashi by of theJapanese Patent office andShoji Okumura. hasgraphed trends loom-related Ishii the in patents all of for Japanfrom 1907to 1921 for patents registered individuals patents to and registered companies. "It was a monumental failure. Patent The Officelists29 patents awarded Sakichi.. Toyoda. 23]. the difference in the number of mill workers was reduced to seven fewer workers on bobbin-changers.. 1979].INNOVATION IN THE TOYODA ENTERPRISES. the larger With shuttles. the listingexplained that. independent an historian of technology. the required complementary invention improvements manufacturing and in were considerable.p. by 1985. or by accounts.It is clearthat Kiichiro principally was responsible thecompany's for inventions 1921. 1929. evenin the area of weaving technology.p.000 on bobbin-changing loomswas possibly much as 12 workers. manyof the others to with actually obtained Kiichiro[Okumura. effortsat redesigning exchange the weft mechanisms provided important an stimulus moreextensive to inventive activity.but increasingly reliedon an a groupof contributors whomhe andKh'chiro assembled. the otherhand.either In case laborsavings small the were relative the to otherfactors influencing relative costs. requiring less frequent refilling the shuttle of magazine. loomsran as if possessed the by demons. as However.They repeatedly broke down and refused to run smoothly" [K. 1885-1933 / 25 (only under ideal 20 the conditionstheToyoda mill)and total only at pilot a of $0 mill workers. at the timewe wereworking but hardto understand calibration the of automatic looms. after The increased tendency toward corporate opposed individual as to invention was a more general phenomenon. The additional savings mill laborin a mill with 1. Over the years. especially Sakichi's in later years.

Despite these indications significant of corporate efforts derdoping at looms capable automatic replacement.1979. sales the Toyodaautomatic of loomincreased from 44 in 1925to a prewar peakof 12. Enshuautomatic The loomreceived widespread publicattention when529 looms wereinstalled the Nakabayashi at Integrated ClothCompany in October1929with "120 of the leading lightsof the textilemachinery industry attendance" in [Yanagihara.55-56].He spent five years and20.000yen developing automatic an bobbin-changing loom prototype. clothmanufacturer the longest a with sustained interest devdoping automatic in the bobbin-changing loom. 192-96.while EnshuLoom had first year sales 1926 of in 1. 1949p.p. ToyodaAutomaticLoom Company hired 14 [Taniguchi. 1979.the increasing mechanical complexity inventingcommercially of acceptable automated machinery required organizing industrial research a significantly on largerscale. p.However. Sakamoto hired as an engineer Enshu was at Loomin 1921. p. as narrow loommanufacturer in 1920. 27. of weft Toyoda Automatic Loom's sole significant surviving competitor duringthe prewarera was the automatic bobbin-changing supplied the EnshuLoom Company.Suzuki. 1985. Sakamoto developed enduring periodic had an if working alliance with Toyo Spinning.and the muchsmaller. pp. As wasthe case thedevelopment the Draperautomatic in of loom. as at Sakamoto wasasked takecharge renewed to of experiments Northropautomatic with loomsat Toyo Spinning 1920 at the request Toyo'smanufacturing in of supervisor. Over the entire period overa thirdof these hires wentinto theToyodaLoomWorksalone.126 automatic looms and rose to a pre-warpeak of 10. 519-20].4 peryearby the 1930s. AizaburoMario.26 / WILLIAM MASS & ANDREW ROBERTSON replacement motionpatents takenout from 1926to 1932[Ishii. 5. loom by The development the Enshu of loomwasprimarily result President the of Sakamoto's effort. 17].Dr. Manoreattached automatic the mechanisms theoriginal to imported automatic looms 1923. Enshu Loomoriginated a single-product. As Toyoda's mainautomatic loomrivalEnshu Loom . 1985.104by 1937. For the period1926-1931 the ToyodaLoom Worksmade18 suchhires. 63-64].717 in 1935 [Taniguchi. process a reflected the increasing in number technical of high school graduates entering engineering positions thetextile in machinery firms. adapting Draper design. rapidly but growing.andimtiated four-year in a intensive study (1925-1929) in two Toyo factories ten or more types of automatic of looms and attachments. the During this time. 4. In 19001.no. Uno.Toyo Spinning alsomadean exceptional commitment resources of towardthe loom's successful development. notedearlier. In terms market of share overall and prewar competitive performance. p. He was an exceptional inventor who did not develop internal an research andorganization staff remotely close the scale to attained thetwo by Toyodafirms.7malegraduates year per weresoemployed.46.andno.pp.. whereas rateof hire the wasat 3.Having worked chiefengineer theKimotoIronworks. 41-42.

starting production.INNOVATION IN THE TOYODA ENTERPRISES. set for Kiichiro withhisemployee met Chosaku Suzuki and Aoki of Mitsui Bussan. provided full report. He closed the deal after two months on December 1929.000. Platt Bros. Kiichiro in theUnited was States. still notproduce we can looms of thesame quality thetwosample as looms from company sent our in Japan. because the increasing of severity the recession. in 1930 to Platt in up Suzuki spent anda halfyears Britain. response thePlattnegotiations. Bros. of and various manufacturing practices. these and machines nowin actual are operation the at Prestonfactory. Theresults better were thanToyoda expected. Draper Crompton and & Knowles. Furthermore. theUnitedStates •100. wanted purchase Platt to thepatent rights various in countries outside Japan thebasis a royalty on of contract. the organizational development manufacturing marketing Toyoda of and at Automatic Loom Workswas essential only to makeand sell the new not invention. 1885-1933 / 27 had key individual engineers acquired and technical knowledge drawing by from its alliances with leadingmanufacturers. to At thetime. Suzuki accompanied automatic one loomto Britain January in order assist Bros. report asfollows: His was The so-called first stepof prototyping machines been two has completed. Mitsui Bussan. Lookingat the manufacturing itsinitiation thepresent.wasvery interested the opening the in of Karitani Factory the operation 520Toyoda and of automated looms. to India for close examination. of China. however. Toyoda preferredlump-sum a payment. to Moreover. of Platt invited Toyoda Kiichiro Britain. a Plattordered 205 automated loomsshipped theirplantin Bombay. west including India. negotiation The began April1929and in lasted for several months. to of Platt gained theproduction marketing and rights every for market except those Japan. The exhaustive precise and nature loom manufacture of surprises foreigners everyturn. I mostly leave these difficu16es yourimagination. wanted Platt exclusive access to allloommarkets of Singapore. Suzuki was able undertake to testingprototype a loom. the basis this experience. decided pursue On of they to the purchase theToyoda of patent rights.This is most heartening. showing two looms thedominant to American loomproducers. A Merger Attempt and Failed TechnologyTransfer Havingprovided Japanese the textileindustry with textilemachinery sinceits founding.This pleases that these the at me . Enshu Loom had no but comparable internal staff for industrial research. Bros. is altogether from to it like the HiokiFactory period our owncompany's of development. and for A keyToyoda engineer. Platt's representatives in Japan.Because theextreme of complexity thenegotiations. one in Aftersome seven months. 24. also a source experience but as of essential further to refinement of the imtial innovation. According theterms thecontract. hurried In to he backto Japan and then off immediately Britain.

In order to enter this competition.500wasto havebeen paid. that Whitt.claiming because the errors that of and deficienciestheblueprints.In addition. •61. he wrote up detailed instructions. Although there wasgreater breakage and wasteon the Platt-Toyoda looms.rushed start-up production orderto have Platt the of in fortymachines handfor thetest. created January in 1929. Lancashire in of the CottonCorporation solicited from eachautomatic loom manufacturer forty machines to be tested between the end of 1931 and 1932. in explanations. this Toyoda quickly conductedstudy a evaluating PlattBros.with his mission coming an end.fortymachines wereshipped the LCC. models and submitted under article 7 of thecontract. contacted Toyoda Automatic Loom. PlattBros.the fttstorderof the Toyoda loom design produced Bfitain. One of the tasks thisorganization therationalization machinery equipment. proposed postponing payment. thatsome thelooms given of weretun for the [ttsttimeduring the testing pefiodandthiswas.aker. of demandedreduction thepatent a in fights transfer fee. the Lancashke Cotton'Corporation (LCC). conditions. The results to of this test demonstrated the Northrop.PlattBros.significant improvement these in aspects occurred thefour-month over test. SoonafterSuzuki returned Japan.142]. Qualified these as results mightbe for Platt-Toyoda. in stark is contrast thehistory to of testing experimentation and atToyoda enterprises described above. November to in 1931.In thisway.in effect." would unable market automated they be to the loom.Vickers-Stafford. of was of and In order to assist members their choices equipment.000. The factthatthislevel testing in of termsof machines. otherthreeloommanufacturers in the andin particular Lancashke the looms included the testwereusing in fully trained workers. wasa notable this achievement. at One response the severe to decline the Britishcottontradewasthe of concentration textile firms throughan amalgamated of organization. the on was to At endof March1932.Suzuki crucial thisprocess.which was not the case for the Platt-Toyodalooms [Lancashire Cotton Corporation. duration. Based on his experiences guidingthe prototype in development the Platt-Toyoda of automatic loom. requiring "precise that information detailed and warnings be outlined. whichweresubmitted MitsuiBussan thenpassed to to and on Platt Bros.Platt Bros. Bros. In May 1931.28 / WILLIAM MASS & ANDREW ROBERTSON Englishmen who refused recognize merit of automathag to the [to produce automatic the] loomarebeginning perceive necessity to the for them. 1931]. independence company and from access experimentation purposes learning couldbecome basis to for of a for assessing technological business and potential.In December 1931. and Platt-Toyoda looms wereallcompetitive. the claims. The results suggested following: the .Estimating a loss •50.Suzukiprepared to to return to Japan.we gradually worktowards operation the of looms 244rpm [p.

means By of this agreement. PlattBros. a defensive As technology strategy. should whatwe of we do can to in somesmallway alleviate Platt Brother's the patent fee burden.thesedamages shouldhave beenavoided. two sample looms.aggressively continued pursue to formalizing its relationship the Toyoda with Automatic LoomWorksthrough Mitsui its agents. was eager explore possibilities further to the for collaboration possible and merger withtheJapanese companies. Only 200 looms weresoldover the next two years production.15 shillings. represented it both Toyodas LoomWorksandtheAutomatic (the LoomWorks) domestic in and foreign sales.500. Thuswe cannotagreeto a reduction the patent in transferfee.delayed competition diffusion Toyoda the and of automatic loomsinto their markets Asia. a Platt had already paid ToyodaAutomaticLoom Companyœ38. The production and marketing the Toyoda-Platt of automatic loom wereneverestablished a sustainable on basis. After extensive negotiations. 1885-1933/ 29 The errors the blueprints regrettable.'exclusive agent bothweaving for and spinning machinery imported Japan. buying Toyodapatentrights the wasat leastpartially successful. of Kiichiroconsidered highly it likely that Plattwaspursuing preemptire a strategy purchasing of Toyoda's patent rightsin order to forestall competition. by thewar'send was and automatic patents loom taken in various out foreign countries expired. MitsuiandtheolderToyoda LoomWorkswere .500 pounds.outside of India.anticipating impending its competitive decline. being largely revisions madeduring prototyping. [pp. reasons the failureof the Plattof The for Toyoda loomaredisputed thetwosides.The renegotiated contract was signed Platt Bros. into Europeaswell.particularly in their largeIndian market.theToyoda and company began negotiations throughthe Mitsui Bussan London office to allow it to sell its own automatic looms directly whatuntilthenhadbeenPlatt's in exclusive territory. A new agreement negotiated 1937whereby was in Toyodawouldpay Platt3 pounds. totalingœ61.By 1936. the most for parttheyaretrivial.000 fifteen of for payments scheduled over sevenyears. but within the registered area for patentrights.. to Shortly thereafter Japanese the economy militarized. company Our provided PlattBros. had For a timePlattBros. in are However. elsewhere payment onepound. usbegin Let these discussions 146-7]. because the variousserious of problems afflicfngBritainbecause the Depression. twocompanies the reached compromise. We do not believethat these errors supportthe extent of the damages. They negotiated setdement a substitutingsingle a payment œ45. Had these opportunities been sufficienfiy used. and in addition sent Suzuki to guide the prototyping. and the was Toyodawas onceagainable to exportits automatic loom directly the wholeworld. by From the beginning negotiations.INNOVATION IN THE TOYODA ENTERPRISES. thesame into At time. shillings everyautomatic 10 for loomsoldin India. However. MitsuihadbeenPlattBros. Platt Bros.in England July and by by in Kiichiro Japan September in in 1934.the paymentwas 1 pound.

mustpurchase that stockshares facevalue. saw still value PlattBros. Toyoda The Automatic LoomWorks was the technology driverand the faster growing company.andspinning machinery rose 2. into The problem wasmanaging relations theforeign with client deciding and whenandhowthe exclusive contract could be broken or amended. with the two rapidly emerging Toyodafirms. although magnitude the of that valuewas opento question. 99].Beginning 1933.30 / WILLIAM MASS & ANDREW ROBERTSON ambivalent about Platt's proposals. In this case Mitsui's exclusive trading Platt Bros. Thus.a maturecompany. production. sales automatic and of looms spurred the development spinning of machinery the ToyodaAutomatic at Loom Works. but practically limitations representation generally the on were applied alltextile to machinery.000 sold yen. thevalueof weaving machinery wasalmost million sales 4 yen. Mitsui confrontingproblem was a increasingly commonamongtradingcompanies involvedboth in importingand in representing domestic companies hadbecome that increasingly successful in production oriented toward importsubstitution. ToyodaLoom'spresident Kanematsu argued PlattBros. annual spinning machinery sales averaged 5 millionyen.whereas valueof spinning 7 the machinery wasonly265. theToyoda and Automatic LoomWorks wasclearly reticent fromthestart.spinning in exceeded weaving machinery sales continued do so through and to 1938.Duringthis period.designs andcancontinue do so. and respectively.SekoandNanjo. theirimpacton business of and strategies. to have nothing realvalue addto of to the proposed merger that both fro'ns and wouldbe betteroff withoutour participation" Bros. The contrast methods managing in of those transitions provides window a into the extent of changes the relativecompetitive in strengths the firms.thatPlattBros. [Platt Archives DDPSL 1/106/37 March30. withinMitsuitherewerediffering perspectives the valueof merging on Platt Bros. interested less in joining withcompanies mightslow down. openly stated that ".director responsible technology.The manager Mitsui's of textile machinery department.DuringthenextthreeDepression years. experience. at JohnBissett.nearly over 75 percent greater thenot quite million average annual than 3 yen for weaving machinery [Toyoda. . to where Mitsui was lookingto resolveits own internalconflicts[Taniguchi. Policy transitions to be expected circumstances were as changed..For the period1927-1929. the early1930s By Mitsui suffered stagnation loss thespinning a and of frame import business similar to whatit hadearlier experienced British with imports Japan. Bissettmaintained that "Platt's name. in Japan the time for was at negotiating for Platt. 1992.. the of perception thesechanges. Mitsuibrought bothToyodas the tablewith PlattBros.. that it The development.the two (Toyoda) fLrms havelittle or nothingto gain from Platt Bros. theyhavealready that copiedall the bestof Platt Bros. Toyoda the Automatic Loom sales of weaving machinery exceeded millionyen.. 1931]. p. cooperation.7million sales to yen. The senior Mitsuimanagers fromOsaka Tokyo.' in participation.wascontractually for limitedto spinning equipment. the Platt Bros. sales 1967]. Furttichi.

They. 1885-1933/ 31 manufacturing knowledge.coulddo. so and forth) theToyoda of Automatic Loom Works. of Particularly vexing thedisparity perceptionsthevalue thefixed was in of of assets (land.. machinery."In response. has the of They alsoknow the prices whichwe havebeenquoting howfar belowthemtheycansell" and [platt Bros. Anotherfactorreflecting conditioning relative and the change in competitivenessthe Britishand the Japanese of franswas the continuing depressionsales Plattmachinery. contact and with the textiletrades all in thecountries theworldhada definite of value would and have be paidfor to by sometangible share recognition that value. March1931Bissett In reported both companies that were occasionally engaging pricewars. 1931]. whichthey sayare withoutnew ideas. factory. With this in mind Kanematsu "would not seriously consider Platt'sexpected pricefor participation the merger"[PlattBros. Archives DDPSL 1/106/37 April23.". research. and do it better and cheaper. treatit asbargaining in I'll [platt Bros. officeequipment.This stiffened attitude both fzrrns. Bissett was surprised discover to that one enduring resultof Platt's licensing Toyoda the automatic loompatent a diminution hisJapanese was of counterparts' respect hiscompany's for capabilities.INNOVATION IN THE TOYODA ENTERPRISES. Mitsui of the Bussan Tokyosenior manager reported Bisset Kanematsu's to of "certain" beliefthat his company coulddo anything Platt Bros.2 million yen.(will) busyfor the nexteightor nine be months. the AutomaticLoom Works self-valuation was 1.both •ms so havebooked goodorders. Bissett initially was assured these that records weregoing be made to . havenot said.0 million yen.... furniture. According Bisset.andBissett's valuation a fraction was over1..67millionyen. in Duringthe nextmonthtradeconditions hadchanged sufficienfiy thatby lateApril he wrotethat.. patterns.Finally.. of all it hasfilled as First Automatic loom'smindwith exaggerated of the valueof their ideas loom. A thixd factor undermining basis corporate the for amalgamation was thelaxge difference therelative in valuation thetwocompanies. 1931]. down on us for havingpaid so muchand havingpaid so litfie discussion.. poorbusiness very people! thisis no doubtpart of All thescheme bargaining it is disquieting thinkthere justa of but to is litfierealsubstance it. 1931]. in Archives DDPSL 1/106/37April8. Furthermore. rough the calculations advanced Mitsuito explain value by the basis the two Toyodas of drew on the companies' closely held financial records. in of whereas saw recovery sales 1931 a in for bothToyodas.but have they doneeverything indicate to withoutactually saying thattheylook it.(O)ur dealwith Toyodafor the manufacturing rights of the automatic loomis acting a handicap.. However. buildings.Next theyare furrely convinced astextilemachinists that they arenowreally superior Platts otherEnglish to and firms.. Archives DDPSL 1/106/37 April23. Toyoda Loom Works the put value at 1. to Toyoda Automatic Loomis stillwillingto negotiate the priceis but goingup.

thenegotiations brokedownbecause twoToyoda the companies disagreed abouttheirrespective market valuations. newly establishedJune1928. wroteto Mitsuibeforethe end of the monthexplaining futuremerger that proposals wouldhaveto be putbefore TMM board. by Finally. The largedifferences valuation in were an outcome dramatically of different conceptions howto justify of value determinations. the of fee in In midstof depressed trade. 1931.but the negotiations accomplish goalof "strengthening tiesto the two did their their Toyodas orderto morefullyparticipate thedevelopment thedomestic in in of textile machinery market" [Taniguchi. (TMM). Mitsuimanagers attempted serve intermediaries the negotiations. Archives DDPSL 1/106/37 May 16. the The letterto Kiichiro with complaints aboutthe technology transfer process the request and for renegotiation the patentlicense soonfollowed November. Therewas no means establish cormnon to a basis derming terms for the andlevels asset of valuations.pp. both refused open and to theirbooks theotherandto Platt.particular. who alsoserved manager the Experimental but as of and Research Department. Thus.99. in retired fromPlattBros. negotiations as stretched thechanging on. for The older Toyoda company secure was with rising sales specialized to weavers. 120].Mitsui's policyshifts andrelative failure guidethe merger to negotiations completion readily to are comprehensible withinthecontext developing of Japanese self-sufficiency and export competitivenesstextile in machinery production. but the "books"never materialized to [Platt Bros. . relative capabilities and performances themachinery of suppliers theMitsuisenior led managers most predisposed valuePlatt'scurrent to strengths backawayfrom supporting to anymeasures might that inhibit development theJapanese the of firms. at the start was more concerned aboutdamaging relationship its with Platt Bros. PlattBros.32 / WILLIAM MASS& ANDREW ROBERTSON available him. MitsuiBussan. director the who not onlywas mostactive assessing technologies thetechnological in new and capabilities of the two Toyodas. the newerToyoda and company was beginning high-wireact in pursuing a the development an automobile of business. to and Bissett.. The PlattBros.31. 1992. Meanwhile.pp. Ltd. to as in but thegapwastoo great.the effortsto rationalize domestic production and curtail pricecompetition wereaccompanied contraction the resources by in devoted research development. 1992. Disagreements changing and assessments among Mitsui managers diffused support ability brokeranyshort-term its and to resolution.Boardof Directors approved theirparticipation the amalgamation September 1931. Toyodas effect The in withdrew fromnegotiations lateMay 1931. initiatorof the merger the discussions.Platt in on 17. a resulttherewas a largespread the participants' As in current capitalization the variouscompanies' of expected futurerevenuestreams. 114-15]. In the Toyoda Automatic LoomWorks notable its lowoperating was for capital and low profitability resulting from its high development costs.strategic orientation cannot adequately be assessed without linkingthe overlapping patent and mergernegotiations with the simultaneous formation the leadingBritishtextilemachinery by fLrms of TextileMachinery Makers. Taniguchi.

Ientreat to comewith us [so]I you can act freely.Although Platt laterrenewed a proposal merger 1933. 17.and believing Toyoda's that asking price double Plattlicensing washighly at the fee unrealistic. visited leading with he the loom manufacturers the UnitedStates. 22]. November4..1928. & The officialandwidelyreported purpose the trip to the U.INNOVATION IN THE TOYODA ENTERPRISES. the were to be devoted to developingautomobile-related research and development. introduced first assembly He the line conveyer in Japan for loomassembly belt withinToyoda Automatic Loom Works.Taniguchi.before Kh'chiro traveledto Englandin 1929 to conduct patent the negotiations PlattBros. Technology TransferfromToyodato Toyota As noted earlier.with Sakichi's blessing. and he introduced Japan's first moldingmachine. feesfromPlattBros..He alsoimported high-quality German andAmerican machine tools. of Furuichi Tsutomu. 1992. In effect. Simultaneously with his directionof auto researchand product development. prerequisites for future automobile manufacturing. p.Kh'chirowas absorbed the study machine in of tools.pp.1/91/31 June13.Kiichiro was using the patent rights in negotiations a pretext hisresearch as for [Fumichi.wasto attemptto of sellautomatic loompatent rights at least seta price or to basis comparison for and negotiation with Platt. v/siting autoassembly plants parts and manufacturerstheUnitedStates in and Britain. Kiichiro organized group a of engineers and began researchon gasolineengineswithin the Toyoda Automatic Loom Works. Kiichiro also hired a chemical analyst. Kh'chiro upgrading loommanufacturing was the capability a testbed as and training for developing site automobile manufacturing capabilities. 1959a. Kh'chiro aboutdeveloping company's set the capabilities for precision machining improved and mass production methods.Havingalready decided attempt to automobile manufacturing Japan. he spent timestudying and his machining machine and tools. Archives. constructed facilities chrome and the for plating orderto in improve precision durability theautomatic the and of loom's rotating parts. 117]. The British-based headof the textilemachinery division MitsuiBussan. tellsa different story. in Draper and Crompton Knowles. November 1931. Kiichiro thepatent left negotiations Fumichi otherMitsui to and representatives. DDPSL 1/91/5 September 24. he installed electric an furnace the foundry provide in to high-grade castings. Furuichi attempted excuse to himselffrom the negotiating effort." WhereverFumichi and Kh'chirotraveled. 1931.. It is well knownthat.S. How . 4. for in neither company responded [Platt Bros. Returning fromhistourin March1930. 1885-1933/ 33 in November1931 at exactly sametime that Platt'scomplaints the forced renegofiafion the Toyodalicensing of fees. Kiichiro metwithFuruichi privately explained "these and that proceedings are not in orderto sellin the UnitedStates. Awarethat about70 percent American of loomswere already automatic and that the remainder wereweaving clothmoredifficult adapt automatic to to looms.

508 In September 1933 •c•o oversaw completion •e T•e A •e of en•e proto•e. 1934.331 1. and m Au•st. Orders Deliveries.000cars.645 26. each participant hamg to pass capaci•h•dle of 20.asshown in Table8. the company car increased capita•afion 6 •on yenafter•e Cab•et decided accept its to to ß e ou•e of •e veNcle manufac•e b•. In December •c•o asked •sab•o to convene emeran gency bo•d of •ectors mee•g.459 5.371 1.029 21. hadmachine orders exceeding current far its production capacity.030 6.437 7.253 6.801 53 399 662 525 1. Kiichiro wasleading company his into a high-risk strategy be in on the startof the Japanese to automobile industry. wasestab•shed m •th a capital 12 •on of yen• Au•st 1937.In 1935•e •s• of Co•erce and Indus• anno•ced •e plan•at wo•d become Law Conce•g •e Manufac•e •e of Motor VeNcles.096 5. Table8. Toyoda The Automatic LoomWorks.' Toyoda Automatic LoomCompany. enacted May 1936.268 1. orgamafional •ce The s•c•e consisted seven of •ncfion• depaments•clu•g ad•s=afion. Instead expanding fill existing of to orders.•e planmadek cle• •at onlya m sma•nmber of domestic autoproducers wo•d be •owed to compete.085 1935 1935 1. and 1932-1937 (Semi-Annual Data) Looms Untilled Spinning Frames Untilled Year Orders Deliveries Orders Orders Deliveries Orders 1933 1933 1. .332 4.488 285 645 213 262 702 1.•sab•o Toyoda waspresidentand •c•o Toyodawasexecutive president.34 / WILLIAM MASS & ANDREW ROBERTSON effective profitable and these techniques for loommanufacturing well were as is a matterfor future research.937 2.Ltd. At an 1.349 906 2.718 1.414 594 221 504 431 1. ex=aor•a• mee•g on Janua• 29. a •e automobile depar•ent at •e Toyoda Automatic •om Workscompleted f•st Model its A1 passenger proto•e by May 1935.947 3.245 1937 1937 9. where•e boardapproved estab•shment the of an AutomobileDepar•ent re=oacfiveto September 1933. •e •st use of the "Toyota"name appeared the Model • on automobile developed 1936.•e ToyotaMotor Co.043 3.ToyodaAutomatic •om Works stoc•oldersvotedto increase company's the capita•afionto 3 •on yen andto addautomobile manufac•e andstee•a•g to •e businesses m •sted its mcles of mco•orafion..

no. p."(Warm Remembrances). 11. 1959a. Daniels. no. Japan. several and but product generations success of reinforced visionof top managerial technical the and leadership oriented to takeon the challenges integrating of industrial research.A. 1959b. Boshokku 50. Transformation. 32 Fumichi. 1979.the manufacturing engineering and departments to work closely were togetherin order to build low-price. "Strategies Developing Technology: for New A Comparison between the Northropand the Toyoda Automatic Looms. 67]. 1907-25. product development. Not only did the organizational capabilities ToyodaAutomatic of Loom providea resource platformupon whichto attemptanother"leap. 42-50. Index Patents from United Patent of Issued the States Office. Tadashi. Boshokku 50.1988. 5 (March __." Business Histo{y. "The TextileMachine-Making Industry and the World Market. Britain and eds.1870-1960. Michael. (Cambridge. technical. Cusumano. Ishii. O]apan. DC).INNOVATION IN THE TOYODA ENTERPRISES. Tetsuya.D." KyotoSangyo University. 1885-1933/ 35 sales. October.. Transformation and Development ofTechnology Japanese Indust{y. 1983). andmanufacturinga newindustry. product development." United in The Nations University. Takeshi. "British Training Japanese for Engineers theCase Kikuchi of Kyozo. high-quality vehicles. Huashang Shuehang La•nhehuai Banniankan (Semi-annual Journal TheChinese of Cotton-Mill Owner's Association). no. 1926-1932. 1980. Cortazzi G. kai. Automatic and Automobile. nos."department a with responsibility improveall to processes products coordination the otherdepartments. October. "the respective managers eachdepartment of weregivensimultaneous managerial controlof the other department" [Toyota. "The Business Strategy Japanese of Cotton Spinners: Overseas Operations 1980-1931. manufacturing the Toyoda and at Automatic Loom Works in addition to the critical new resources Kiichiro and other Toyotamanagers integrated orderto "leap"into automobile in production.1-6 (1979)." 'q'he Loom the inEntrepreneurship. manufacturing. "Biography Sakichi of Toyoda"(in Chinese). kai. 1859-1991 (London. DC). Japanese The Automoln7e Indust{y. Janet. and in with Furthermore. MA.20-24. Developand ment Japan.Toyoda Sakichi shokki to gijutsu no hatten" (The Development Industrial of Technology from the Viewpoint Patent of Rights Toyoda Sakichi's Inventions Textile of Machinery). Tsutomo. Bi Gong.. 2 (1947). "Historical BackgroundTechnology of Transfer. 1991). Hunter. (Washington. he wasalsodirecfiy control the "totalvehicle but in of engineering administration. and Kiichirowasthe headof the research department. Hatsumei [Invention]. Hayashi.12-26."both technological organizational. engineering. 10." in H. 10. Japan. . Kobayashi. "Onko Chisin. __. (October1990). "Tokkyo mitasangyo kara gijutsu-shi . Kuwahara. in the Cotton The United Nations University." Journal Business of Stua•es (Ryukoku University) (June 35. IzumiTakeo. in References Annual Report the of Commisdoner ofPatents. "Onko Chisin"(WarmRemembrances). Famie. 1995). (Washington.. 76.. The innovative strategy and structure theToyotaMotor Corporation of continued a timeto drawupon for the capabilities developed through organizational the experience industrial of research. Kesaji. 1985).

1994). and eds. Toyoda Risaburo.. "Official Report ConcerningTestof Automatic a Looms.(September ka/. (1984). London School Economics. "The Performance theBritish of CottonIndustry. Suzuki. San•yo-kd•ei Kenkyo."Jidoshokki tsuite Omoide. Tessa. Eancashire Record Office. No. Shunichi and Mikono. Archives.. LevyLeboyer.Historical SturgesInternational in Co•)orate Business." ("The Regional Machinery Industry Interchangeable Manufacture: Meiji Period's and Parts The Power LoomManufacturing Industry")."Senkanki niokeruNihon-boshoku-Kikai Kogyono Tenkai. Toyota MotorCorporation.. EighthAnnualMeeting. JS/94/271. January 1994. "Mechanical Organizational and Innovation: Case the DraperLoom. "Indigenous Innovationand Industrialization: Foundations Japanese of Development Advantage."Research in Economic Histo{y. Jun." The of Business History Rev/e•v.ToyodaAutomatic Loom Works.M."("The Development Spinning Weaving of and Machine Industry DuringInterwarPeriodin Japan").. KurumoUniversity. 22. Toyova Koryo Roquju Nenshi (Toyowa Industries Year History). Ryotaisenkanki no Taigaikankd Nihon (International EconomicRelations during the InterwarPeriod).36'/ WILLIAM MASS & ANDREW ROBERTSON __. 46. (December. Business (y Economic Histo{y.. "The Declineof a Technological Leader: Capability Strategy. Nussbaum. Toyota:History the $0 Years A of First (1988). p. OkumuraShoji. Shuttleless and Weaving." Suntory-Toyota International Centre Economics for and Related Disciplines. 22 Morris-Suzuki. and W'flliamLazonick. 2. (Toyoda Jido ShokkiShashi Henshu linkai. Preston. (Cambridge. JidoShokki Toyota Seisakusho (1967)." ni no ("Memories Automatic of Looms"). Mass.Shikurodo IVata.. OhishiKaichiro. (March1932). 23. 40-nenshi (The First 40 Years)."The Journalof Textile the Institute. H. ed. "Jidoshokki Sentaku Hitsuyo no Joken. "SenKyuhaku Sanju Zengono Boshoku Kogyoni okeru Kiki NichieiKankeino Ichidanmen-Puratto-Ryotoyoda no Gappei(Gapppen) Mondaiwo Megutte"("One Phase Japanese-British of Relations TextileMachinery in Industries circa1930s: Focus on the MergerProblem Between Platt and Both Toyodas")." in Teichova." ("Necessary Conditions the for Choice Automatic of Looms"). Shakai Kagaku Kenkyu. 1992.Madein 1931. Yutaka. (Fall1993)151-68. 25-42. "TheJapanese cotton spinners' direct investments China into before Second the World War. Technological The Transformation of Japan:from Seventeenth Tvaen•ythe tothe firstCentury (Cambridge. WilliamandWilliamMass. no. DDPSLCollection. 1994).1985. Will/am. Yonjunen-shi. Etc. Diffusion andDevelopment: Fostering PrivateCapabilities The Rootsof the Japanese and 'Economic Miracle. Will/am. p. Nihon Keizai-hyoronsha. (October 32 1990). 18 __." and Association Japanese of Business Studies. 60 Hixo Hayashi. 18701913. 1995. Lazonick. (Winter1989). June1985." Osaka University City Economic Rev/eva. 1929)9-10. ToyodaAutomatic Loom WorksCompany HistoryEditorialCommittee. 19 234-44.1967)." The of Business Histo{y.' toOn'mono Gtyutsushi SilkRoadandCotton:A to Ito no (The History theTechnologies YarnandCloth)Tokyo. of of PlattBros. eds. 116. Tokuzo. (Keizai Zasshi Diamond Co. (1991). (PRO)England."The British Cotton Industryand International Competitive Advantage: State theDebates. Mass. andHideakiMiyajima. 89-129. 63 . Taniguchi. Suzuki. (1982)."The Role of Domestic Technical Innovation ForeignTechnology in Transfer: Case Japanese The of Cotton Textile Industry. NakaokaTetsuro. "Technology Transfer. Alice. Mass. Lancashire CottonCorporation.William. __.1-22.Keno Yoshida. .45-62.Ltd. Seni Kiki Gakkaishi. 1989). "The Learning Process the Market: and The Japanese Capital GoodsSector in theEarlyTwentieth Century. Papers Best Proceedings. TI. 9 . Boshokku 18."' Business (Y Economic Histo{y. of Discussion Paper. "Chiho Kiki Kogyoto Gokansei Meijiki no Rikishokki Seizogyo. 1 (1949)188-196.

Yamazaki. 26 . 6. Tom. 1885-1933/ 37 Uno. Boskokku 20. no.INNOVATION IN THE TOYODA ENTERPRISES. kai. Keid Shitin." photocopy.Yonyoshi. nos."RyotaisenkankiokeruEnshuMen orimonogyo Kozo to Undo" ni no (Structure and movement the cottonweaving of industry Enshudistrictin the in interwar period). January 1979."Business History. Hiroaki. 8. (1969). 1-2 Yanagihara. "Development Cotton of TextileIndustry TextileMachinery and Industry in Prewar Japan. "Nakabayashi MenpuGomonKojo ni okeruSakamotoshiki Jidoshokki no Jisseki" ("Actual results the Sakamoto of Authomatic Loomat the Nakabayashi Cloth's GomonFactory"). "University Graduates Japanese in Enterprises beforethe Second WorldWar.June1929. Yonekawa. 6. 0uly1984). Shin'ichi.

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