Culture as a Barrier to Technological Innovation: The Paradox of Monozukuri in Japanese Corporate Governance

This paper investigates the cultural and institutional roots of Japan’s decline in the global semiconductor industry, with a particular focus on the collapse of Elpida Memory. While existing scholarship attributes this decline to external economic factors and technological shifts, this study introduces the cultural-institutional logic of monozukuri—Japan’s deeply embedded ethos of perfectionist manufacturing—as a critical explanatory variable. Through a cultural-institutional framework, the paper demonstrates how monozukuri, once an engine of technological excellence, evolved into a source of strategic rigidity in the face of a global industry paradigm shift toward cost-efficiency, speed, and adaptability. Drawing on historical analysis, policy documents, and case studies—including Elpida’s rise and fall—this research reveals how Japan’s government and corporate actors reinforced a “quality-first” philosophy even as market conditions demanded agility and innovation. The persistence of this ethos, institutionalized through employment systems, supplier networks, and industrial policy, resulted in misguided innovation and institutional lock-in. The paper concludes by discussing the broader implications for technological innovation in high-performing economies like South Korea, warning that cultural virtues, when uncritically preserved, can become strategic liabilities in rapidly evolving global markets.