GLOBAL COLLABORATION AND TECHNOLOGY IMPACT
FOR REGIONAL DEVELOPMENT-A Successful Case in Japanese Flower IndustryMakoto HIRANO, Feng LIU and Peiqian LIU
Kochi University of Technology

ABSTRACT: Knowledge spillover on advanced technology is thought to be one of the mostsignificant measures for encouraging regional industries as well as forming regional industrialcluster.

However, in many rural areas, it is not easy to produce spillover itself because of lack ofeffective knowledge source and lack of capability of surrounding regional enterprises for utilizing
spilled out knowledge/technology, in addition to the difficulty of forming an effective industrialcluster.
The case researched here is one successful example of local business on lily bulbs, in Kochi.
Kochi is a warm, mild climate, rural area in Japan, suitable for growing lily bulbs.

However, one

problem for this industry was the difficulty to ship/grow lily bulbs in winter because lily bulbs
cannot be cropped in cold seasons. The company’s unique idea was to import lily bulbs to Japan,
located in the north hemisphere, from some countries in the southern hemisphere by using freezing
containers and large freezing compartments and ship the bulbs to the flower farmers after warming
them up.

By this measure, they could monopolize the winter bulb market in Japan.

This case implies us significance of finding a competitive business model in rural regions.
global collaboration is one very important element to find such a business model.

Here,Even by using

conventional technology (what we call low-tech), not by using advanced technology (high-tech),regional industries can be effectively encouraged by adapting technologies to such a suitablebusiness model.

KEYWORDS: global collaboration, technology impact, regional development
1. INTRODUCTION AND BACKGROUND

to encourage regional industries by making a kind ofindustrial cluster in the rural regions with knowledge

Recently, regional disparity has been one of the mostlink among many competitive regional enterprises

serious social issues in Japan.

andHow to develop

withknowledge

spilloverfrom regionaland encourage regional industries is a nation-widelaboratories/universities on advanced technologies.

urgent issue, and particularly it is a very, daily life

However, the reality in many rural regions in Japanmatter.

is that they lack of such regional competitive

What we call “Cluster Theory” proposed by M. E.

enterprises and also lack of knowledge source ofPorter (1984) has been known as a most popular

edged technologies.

theory for regional development.

knowledge source of advanced technologies in rural

The main idea is

Even if there is somearea, most of the surrounding regional enterprises

manner of technologies.

This section introduces

cannot utilize such technologies effectively, because

overview of their company itself and their businessmost of them are involved in what we call low-techscheme.

industries.

2.1 Business overview

In such reality, one of the clues to encourage

The business of Nakamura-Noen Co., Ltd. is toregional industries may be alliance with some othertransact (trade and grow) lily bulbs and its’ nurseries,

companies over seas.

Because most of the otherdomestic enterprises in the same industries arecompetitors rather than partners, some foreign
enterprises far from domestic market may be moreeasily collaborative for business alliance, on thecontrary.

A. C. Inkpen (2006) pointed out that, inthe last decay, global alliances are more than aprice-driven, financial, relationship shaped bycontractual details.

Some distinct elements

distinguishfromalliances

otherinter-firm

for cut flower business industry.

They are also

handling the bulbs and nurseries of some otherflowers, like tulip, freesia, and so forth
They are dealing with about 34 million lily bulbs(32 million bulbs were imported from foreigncountries).

They have a top one market share oflily bulbs in Japan.

They also are dealing with

about a half million freesia bulbs and a hundred
thousand tulip bulbs.
They have over fifty year’s history on lilybusiness.

And now they have been grown to be anrelationships, and one of them is “The relationshipexcellent global company with fifteen employees,

involves the exchange of knowledge associated withannual sales amount of about 2.3 billion Yen (in May

technologies, skills, or products,” he mentioned.

2007) and the capitalization of 99 million Yen.

The global alliance between enterprises in different

2.2 History

countries may become one of the elements thatcompensate regional knowledge spillover.
In this paper, one successful case of regional
business by utilizing global collaboration ontechnologies and products is introduced to find aclue to solve the stagnated regional economy and theregional disparity issue.

The case itself and theanalytical view for their outstanding businesssuccess will be very suggestive for many other rural
enterprises and people who are making effort forregional development.

The founder of the company was the father of thecurrent president, Mr. Hiroshi Nakamura.

a high-school teacher on biology and much curious
about growing lily flowers.
In 1955, he established a business of selling lily
bulbs in Kochi Pref.

The business was transferredto the current president, who had been worked for
insurance company for twelve years.

He becamea president of Nakamura-Noen in 1998.
In 1984, the former president initiated selling lily
bulbs imported from Netherlands.

That was thefirst trial for Nakamura-Noen to deal with foreign
bulbs.

2. OVERVIEW OF NAKAMURA-NOEN

He was

The reasons why they initiated dealing

foreign bulbs were the variety of flower kinds, thelower prices, and much amount of items, comparing

Nakamura-Noen is a unique bulb trading/growing
company.

They are involved in trading andgrowing flower bulbs and nurseries, mainly on lily.
Their uniqueness is shown as their business model
depending on global collaboration and their utilizing

to the domestic bulbs.

However, there were somestrict government regulations for importing foreign
bulbs at that time, therefore they need much amountof effort to grow foreign bulbs in a special regulated

compartment is kept at a low temperature with 0.1

manner.
In 1987, they constructed the refrigerating

degree range preciseness, and the thermal system isbulbs.

completely maintained with self power generation by

Fortunately, in the next year, the rule on imported

heavy oil even when electric power is stopped bystorehousesystemtokeep

foreignbulbs was deregulated for the market.

So, in 1989, typhoon or earthquake.

They induced thosethey sent a delegation team to Netherlands to learnsystems by purchasing from a refrigerator firm, notthe advanced technology on lily bulbs in Netherlands

by developing it by themselves.

as a preparation to enlarge the business of importing

made much effort to develop the technology to warm

foreign bulbs by using the refrigerating technology.

up the cooled bulbs by themselves.

In 1990, Nakumura-Noen became a cooperation toHowever, they
Theydeveloped a specific warm bath system for thawing
bulbs and encourage their germination.

enhance the financial power.
In 1992, they built a warm green-house to

The second key is a technology to grow bulbs to

testimony grow bulbs to flowers to research the best

nursery or followers.

conditions of growing.

They also built a facility

greenhouse of about 1620 square meters in 2007.

for warming bulbs cooled down in the refrigerating

The greenhouse is maintained from 15 to 24

storehouse.

centigrade and completely controlled its daylight,

In 1999, they initiated a new business model to

They built a large

ventilation, temperatures, water supply, and fertilizer

import lily bulbs from the southern hemisphereconditions by computers.

countries, such as Chile, and New Zealand, in ordersystem, they analyze the suitable conditions to growto develop a new lily flower market in winter season

bulbs.

in Japan.

Before that, there was no custom and nokinds of foreign bulbs and the bulbs suitable forbusiness of growing lily bulbs in those countries, but

Japanese customers (flower agriculture farmers) are

Nakamura-Noen taught them how to grow bulbs andvery limited as less than one percent of all, they havecollaborated with them to develop winter bulb

to research the best growing conditions of bulbs andbusiness in Japan.

to provide such information to the customers.

By this effort, finally they

By using computer data

Because they are dealing with thousandsIn

could launch their new business by transferred lilysuch a sense, they are selling not only bulbs

bulbs from opposite climate countries.

themselves but also the information of bulb growing.

2.3 Business Model and Technology

That is one key of their business success, because

Their business model strongly depends on somefor the customers and this is a strong differentiation

conventional technologies.
One key is the technology of refrigerating naturalproducts.

their information on growing bulbs is very precious

They did not use any special advanced

and competitiveness of Nakamura-Noen comparing
to the competitors.

They onlyThat is, they are not using any specific advanced

utilized a conventional refrigerating technology fortechnology (high-tech) but they are developing thetheir purpose to transfer the foreign bulbs by ship

utilization of conventional technologies (low-tech)without decomposition.

by adding their created specific tacit and explicit

technology, like biotechnology or else.

Nowadays, in every day,they receive amount of foreign bulbs of aboutknowledge.

This is their innovation style.

200,000 ton at the importing harbor, and they store

Schumpeter(1900)

thosewithproduced not only by creating a new product by newThetechnology but also by some new combinations ofbulbs

insidethecompartment

refrigerating system inside the company.

mentioned,As J.

innovationisbusiness elements, like logistics, organization orbusiness manners.
combinationofIn this case, the key is thenewbusiness

model

and

2.5 External Circumstance on Flower Industry
Basically, globalization is not always good formany domestic enterprises, because it brings moreconventional technologies.

and more hard competition to the domestic market.

2.4 Organization Management Style

Even in the flower industry, the law on importing

The average age of total fifteen employees is 32.8foreign bulbs was deregulated in 1988.

After that,

The average salary of the employees isin 1990’s, the price of flowers has been getting down.

almost twice of that of the average income of people

For example, a high price lily was sold at 3000 yen

in Kochi Pref.

in 1980’s, but now the same lily is sold at one thirdyears old.

Among fifteen employees, one isstaying in Netherlands, ten people entered to thisof the previous price.

company after 2001.

There is no employees quit

price foreign cut flowers will be imported much

In the present, for their recruiting

more, and the flower farmers should go into a hardthe company.

a new employee, there came many applicants frommany other areas in Japan and the competition ratio

From now on, the low

survival game.
Nakamura-Noen, however, utilized the change asAsa business opportunity on the contrary, and made ashown in such a phenomenon, this company is very

unique business model by utilizing refrigerating

popular for younger generation.

technology and freedom of importing bulbs.

to enter this company is about one hundred.

The president, Hiroshi Nakamura, emphasizes thatthe basis of management is how to grow people.

3. ANALYSIS AND DISCUSSION

He urged the employees to be autonomous andencouraged

themtojudge

bythemselves.

3.1 Factor 1.: Global Collaboration

Because every employee can behave by themselves

for New Business Modelwith autonomy, it produces the best service toThe current business of Nakamura-Noen strongly

customers, he thinks.

All of the employees join independs on importing lily bulbs as described before.

research in the greenhouse to learn how to growOver 90 percents of total amount of lily bulbs thatbulbs, along the policy of this company.

they are dealing with are imported ones.

Even located in a rural area, the company isThis

success story is a very symbolic story which

involved in international transaction and has foreignindicates

visitors every day.

circumstances.

The point is that they arranged

to improve their foreign language capability.

theirmodel

Relationship and friendship with foreign countries

positively.

The employees are encouraged

are most significant mission in this company.

howbusinessruralindustries
toovercome

utilize

theglobalizationParticularly, the most outstanding business model

The president also makes it important to contributeof Nakamura-Noen is to import lily bulbs fromto the local community because the local community

southern hemisphere countries.

and the human network surrounding the company

model, they could monopolize and got the top sharearein the winter lily market in Japan.

also

thebasisofbusiness,hethinks.

Therefore, the company is holding a community
festival for the local residents, supporting theelementary school education, joining in some othercommunity activities.

By this businessIn the past,

there was small market on lily flower in winter inJapan, because of the difficult y to grow lily flowers
or lily bulbs in winter.

The idea that

Nakamura-Noen came up to developed the wintermarket itself on lily flower.
examplethat

globalization

innovation.

The

This is a goodbring

differenceusmarketbetweentheconventional business model and the new one intheir transaction is schematically described in thecollaboration.

They provided these technologies

and knowledge to the regional flower farmers when
they sold the bulbs.

This produced theircore-competence in this market.
In this case, they did not need specific edged
technologies (what we call high-tech) like advanced

figure 1.

biotechnology, molecular biology or else, andtherefore, they also did not need to develop thesethings by themselves.

The basic technology for

their business model was conventional refrigeratingtechnology.

The question is that, if they usedsome very advanced technologies, whether somerelatedtacitknowledge

regardingthekeytechnologies could easily transferred to them or theircustomers, or not.

It cannot be said so simply, but

it may be said in some degree that, if the key
Fig. 1. Business model and global collaboration

technologies

arewell-known

conventional

technologies and not so difficult/specialized, theHere, in the new business model, they aretransacting not only bulbs but also knowledge on
bulbs through global collaboration.

This is an

important key of their business success because thisknowledge linkage became their core-competence inthis field.

specific

advancedvery advanced technologies, but if they have asuitable business model to utilize conventional
technologies, it may be easier to establish theiradvanced technologies, as schematically shown in

As described in the previous section, they wereanyUsually, most of the regional enterprises don’t haveand conventional technologies than by utilizing

for Regional Businessusing

surrounding the technologies may be smaller.

core-competence by combining their tacit knowledge

3.2 Factor 2.: Technology Impact

notbarrier to transfer or share the tacit knowledge

the figure 2.

technology(high-tech) but they were developing the utilizationof conventional technologies (low-tech) by adding
their own specific tacit and explicit knowledge.
For example, after using refrigerating system, theyneeded to develop their own technology to warm up
the bulbs by the specific bath system and also theyneeded to research the detailed conditions ofsunshine, humidity, temperature, watering, fertilizing,and so forth to grow bulbs to flowers.

All of thesetechnologies were developed by themselves withsharing the related tacit knowledge among globalFig. 2. Technology impact in business model4. CONCLUSION AND REMAINED ISSUES

from the Promotion and Mutual Aid Corporation forPrivate Schools of Japan.

The case of Nakamura-Noen showed us a good
example of successful local business.

The successof their business depends on the following twoREFERENCES
1) Hamel G. et.al., 1989, Collaboration with yourpoints.

competitors and win, Harvard Business Review,

1) Building an excellent business model based on

Jan.-Feb., pp.133-139.

global collaboration

2) Hamel G., 1991, Competition for competence2) Combining conventional technologies and theirand inter-partner learning within international

own tacit knowledge to establish the businessstrategic

model

Journal, Vol.12, pp.83-103.

alliances,Strategic

Management

The case implies that, most of the rural enterprises3) Inkpen A. C., 2000, A note on the dynamics ofwithout competitive, edged technologies (high-tech),learning alliances: Competition, cooperation,

can establish a successful business by utilizing

and relative scope,” Strategic Management

conventional technologies (low-tech) and their own

Journal, 21, pp.775-779.

tacit knowledge, if they have an excellent businessmodel.

The important key is to build a suitablebusiness model, and global collaboration may be a4) Inkpen, A. C. and Ramaswamy K., 2006, Global
Strategy, Oxford University Press (book)5) Nakamura-Noen,Co.Ltd.

very significant factor to find such a business model

http://www.nfb.co.jp/Engilish/corporate_guid_e.

particularly in current globalized world.

html

Toencourage regional industries, the urgent issue may6) Porter,

2008.1.25 (Website Reference)
M.E.,

1980,

Competitve

be to have a good business leader to find a suitableTechniques

business model in perspective of the global world.

Competititors, The Free Press (book)Also, many suggestive cases should be introduced toprovide a clue for regional people.

This kind ofresearch shall continue to contribute them in thisaspect.

forAnalyzing

Strategy:Industriesand7) Porter, M.E., 1980, Competitve Advantage:
Creating and Sustaining Superior Performance,
The Free Press (book)8) Porter, M.E., 1980, On Competition, A Harvard
Business Review Book (book)

ACKNOWLEDGEMENT

9) Schumpeter, J.A.,1950. Capitalism, Socialism &Democracy, The President and Fellows of

The authors would like to express sincere
appreciation for President Hiroshi Nakamura

andhis stuffs of Nakanmura-noen for their kindcooperation for our interview.

Thanks are also

due to Prof. Osam Tomisawa, course director ofentrepreneur engineering graduate school in Kochi
UniversityofTechnology,

suggestions for this research.

for

his

precious

This work wassupported in part by the Special Subsidies in
Subsidies for ordinary expense of private schools

Harvard College (book).