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SPRINGER BRIEFS IN BUSINESS

Nobuyuki Tokoro

The Smart City and the Co-creation of ValueA Source of New Competitiveness in a Low-Carbon Society

SpringerBriefs in Business

More information about this series at http://www.springer.com/series/8860

Nobuyuki Tokoro

The Smart City and theCo-creation of ValueA Source of New Competitivenessin a Low-Carbon Society

123

Nobuyuki TokoroCollege of Commerce and Graduate Schoolof Business Administration

Nihon UniversitySetagaya-ku, TokyoJapan

ISSN 2191-5482 ISSN 2191-5490 (electronic)SpringerBriefs in BusinessISBN 978-4-431-55844-6 ISBN 978-4-431-55846-0 (eBook)DOI 10.1007/978-4-431-55846-0

Library of Congress Control Number: 2015954614

Springer Tokyo Heidelberg New York Dordrecht London© Springer Japan 2016This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or partof the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations,recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmissionor information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilarmethodology now known or hereafter developed.The use of general descriptive names, registered names, trademarks, service marks, etc. in thispublication does not imply, even in the absence of a specific statement, that such names are exempt fromthe relevant protective laws and regulations and therefore free for general use.The publisher, the authors and the editors are safe to assume that the advice and information in thisbook are believed to be true and accurate at the date of publication. Neither the publisher nor theauthors or the editors give a warranty, express or implied, with respect to the material contained herein orfor any errors or omissions that may have been made.

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Preface

Is it possible to establish a sustainable society in which human economic activitiescoexist in harmony with the maintenance of the global environment? This is a topicthat has attracted significant interest in the fields of natural science and socialscience in recent years. For sometime now, there have also been indications that themassive expansion of human economic activities is exceeding the limits that naturecan tolerate. Limits to Growth, a report published in 1971 by the think-tank Club ofRome, shocked the world at the time by presenting a catastrophic scenario of aglobal environment in distress due to severe depletion of resources, widespreadpollution, and overpopulation. Nearly half a century has already passed since then,and the predictions of the Club of Rome seem to be vindicated as the world indeedseems to be heading in the direction of the scenario it depicted. The world popu-lation has topped 7 billion, and the problem of the depletion of oil resources isbecoming a real possibility. Initiatives to reduce carbon dioxide emissions that arethe cause of global warming have made little headway, and emissions of the worldas a whole continue to rise. Have our problems reached a state where we no longerhave the means to solve them?

The answer to that question is that not everything on the horizon is bleak, andthere are definite signs that give us hope for the future. One of these is the creationof innovation by the corporate world. Although in recent times more than a fewcompanies have been severely chastised and named by environmental conservationgroups as culprits of environmental pollution, at present innovations forthcomingfrom the corporate world are beginning to be viewed as the only means forresolving environmental problems. For example, car makers are focusing on thedevelopment of electric cars and cars powered by fuel cells to replace existinggasoline-powered cars. If these cars become widely used by general consumers,they will contribute considerably to the reduction of CO2 emissions. The same canbe said of the widespread generation of electricity using renewable energy such asphotovoltaic power generation and wind power generation promoted by manufac-turers of electrical appliances and equipment. The development of new technologies

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and products by such companies has the power to significantly change today’ssociety. A look at past changes in society makes this point clear.

This book examines case studies of smart cities that are currently attractingattention as promising initiatives in the establishment of a low-carbon society andattempts to verify the achievement of companies in these initiatives from the per-spective of establishing competitive advantages. Smart cities are experiments inmaking entire communities “smart” by linking various products and services cre-ated to conserve the environment and represent an overall aggregate of innovativeproducts and services achieved by various companies. Moreover, companies thatare the main agents in the creation of smart cities are not individual companies of asingle industrial sector but comprise companies hailing from diverse sectors. Inother words, innovations created in a smart city setting are products of co-creationby companies of disparate sectors.

The case studies of smart cities taken up in this book are all projects that beganin Japan around 2010. Participating in the three projects examined are major cor-porations representative of Japan such as Panasonic, Toshiba, Hitachi, and NissanMotor, and all three projects are different in nature. The purpose of this book is tocarefully examine the kind of competitive advantage the respective companiesachieve through their participation in these projects. To do this, the book establishesa theoretical framework known as a “relationship-based strategy” and confirms theprocesses of co-creation among companies and the establishment of competitiveadvantage.

Existing theories for analyzing the competitive advantages of companies are allbased on competition among companies. Essentially, the underlying theory isestablished on the basis of how one company can defeat its competitors in themarket. Even in the so-called positioning view and resource-based view, which arerepresentative existing theories concerning competitive advantage, despite differ-ences in the focus of attention regarding the source of competitive advantage, thereis a common understanding that a competitive environment with other companiescreates competitive advantage. This book, on the other hand, adopts the view that itis not competition with other companies but co-creation with other companies thatcreates competitive advantage. During the process of co-creation with other com-panies, the technologies, know-how, and knowledge that companies have areexchanged and integrated, thereby creating new value. This book tells the story ofhow that value becomes a competitive advantage for companies. In this story, thesmart city projects can be considered the stage where various diverse companiesco-create and actually bring about new value.

In bringing this book to publication, as the author I have received the kindnessesof many people along the way. In particular, my colleague Professor MitsuruKodama, who is also faculty of Nihon University, has provided me with valuableadvice in a wide range of areas including the establishment of theories, drawing ofimplications, and question items for the field survey. Being blessed with theopportunity of an intellectually stimulating workplace, environment afforded me therare experience of writing this book. I would like to take this opportunity to expressmy heartfelt thanks to Professor Kodama. Moreover, during my field research, I had

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the opportunity to speak with many corporate stakeholders including dSPACEJapan, Panasonic, Toshiba, and Hitachi, who provided me with valuable informa-tion. I would like to express my deep appreciation to them too. To publish thisbook, I was fortunate enough to receive a grant from my employer, NihonUniversity, and I would like to express my gratitude to the university for providingme on a daily basis with a richly rewarding research environment. In closing, Iwould also like to take this opportunity to express my gratitude to Springer forproviding me with the opportunity to publish this book and to all of those in theediting department for their support.

Looking forward to a better future.

Nobuyuki Tokoro

Preface vii

Contents

1 Smart Cities and Competitive Advantage: A New Perspectiveon Competitive Edge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.2 Progress of Smart City Building Projects Around the World . . . . . 21.3 Review of Previous Research . . . . . . . . . . . . . . . . . . . . . . . . . . 41.4 Examining the Theoretical Framework of Competitive

Advantage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51.4.1 The Positioning View . . . . . . . . . . . . . . . . . . . . . . . . . . 61.4.2 The Resource-Based View . . . . . . . . . . . . . . . . . . . . . . . 7

1.5 Co-creation and Competitive Advantage . . . . . . . . . . . . . . . . . . . 91.5.1 Building a Competitive Advantage Through

Collaboration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.5.2 Competitive Advantage and the Creation

of Social Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111.6 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

2 A Theoretical Framework for Relationship-Based Strategies . . . . . . 172.1 What Is Co-Creation?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

2.1.1 A Review of Prior Research into Co-Creation . . . . . . . . . . 182.1.2 Defining Co-Creation . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

2.2 The Presence of “Ba”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212.3 Synthesis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 242.4 Emergence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 272.5 Relationship-Based Strategies as Co-Creation Strategies . . . . . . . . 30References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

3 Co-Creation of Value Generated by a Self-motivated“Ba”—A Case Study of the Yokohama Smart Community . . . . . . . 353.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 353.2 Analytical Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 353.3 Case Study: Yokohama Smart Community . . . . . . . . . . . . . . . . . 37

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3.3.1 Overview of Yokohama Smart Community. . . . . . . . . . . . 373.3.2 Yokohama Smart Cell Project . . . . . . . . . . . . . . . . . . . . . 403.3.3 Initiatives of BASF Japan. . . . . . . . . . . . . . . . . . . . . . . . 423.3.4 Initiatives of Murata Manufacturing Company, Ltd. . . . . . . 433.3.5 Initiatives of dSPACE Japan . . . . . . . . . . . . . . . . . . . . . . 45

3.4 Fukuoka Smart House Consortium and NagasakiSmart Society . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

3.5 Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

4 Co-creation of Value Through Initiative of a Leader Companyand Collaboration of Participating Companies—Case Studyof Fujisawa Sustainable Smart Town . . . . . . . . . . . . . . . . . . . . . . . 554.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 554.2 Analytical Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 554.3 Case Study: Fujisawa Sustainable Smart Town (Fujisawa SST) . . . 57

4.3.1 Overview of Fujisawa SST . . . . . . . . . . . . . . . . . . . . . . . 574.3.2 Five Areas of Value Creation in the Fujisawa SST . . . . . . 594.3.3 Process of Value Co-creation . . . . . . . . . . . . . . . . . . . . . 62

4.4 Construction of a New Business Model . . . . . . . . . . . . . . . . . . . 684.4.1 Panasonic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 684.4.2 PanaHome . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

4.5 Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

5 Co-creation of Value Through Collaboration of Governmentand Companies—Case Study of the Yokohama SmartCity Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 755.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 755.2 Analytical Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 755.3 Yokohama Smart City Project (YSCP) . . . . . . . . . . . . . . . . . . . . 77

5.3.1 Project Missions and Basic Principles . . . . . . . . . . . . . . . 775.3.2 Seven Demonstrations . . . . . . . . . . . . . . . . . . . . . . . . . . 805.3.3 Demonstration Results . . . . . . . . . . . . . . . . . . . . . . . . . . 85

5.4 Value Co-creation in the Yokohama Smart City Project . . . . . . . . 875.4.1 Interview with Toshiba. . . . . . . . . . . . . . . . . . . . . . . . . . 875.4.2 Interview with Hitachi . . . . . . . . . . . . . . . . . . . . . . . . . . 90

5.5 Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96

6 Theoretical and Managerial Implications . . . . . . . . . . . . . . . . . . . . 996.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 996.2 Implications Drawn from the Three Case Studies. . . . . . . . . . . . . 99

6.2.1 “Ba” and Emergence . . . . . . . . . . . . . . . . . . . . . . . . . . . 1006.2.2 Presence of a Leader . . . . . . . . . . . . . . . . . . . . . . . . . . . 1026.2.3 Analysis and Synthesis. . . . . . . . . . . . . . . . . . . . . . . . . . 104

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6.3 Economic Value and Social Value . . . . . . . . . . . . . . . . . . . . . . . 1066.3.1 Relationship of Economic Value and Social Value . . . . . . 1066.3.2 Integration of Economic Value and Social Value. . . . . . . . 108

6.4 Building Competitive Advantage Through Co-Creation . . . . . . . . 1106.4.1 Verification of the Establishment of Two Competitive

Advantages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1106.4.2 Requirements for Establishing “Competitive Advantage

Through Co-Creation” . . . . . . . . . . . . . . . . . . . . . . . . . . 112References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116

7 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1197.1 The Significance of the Establishment of a Low-Carbon

Society and the Creation of Innovation by the CorporateWorld . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119

7.2 Issues in Establishing Competitive Advantage ThroughCo-Creation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123

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About the Author

Nobuyuki Tokoro is a Professor of Business Administration at the College ofCommerce and the Graduate School of Business Administration at NihonUniversity. He specializes in environmental management and innovation and isparticularly interested in the relationship between corporate technical innovationand competitiveness in low-carbon societies. He has authored and published manybooks and papers both in Japan and internationally on the subjects of environmentalmanagement, innovation, and competitiveness. His 2005 book EnvironmentalManagement (Shinka suru Kankyo Keiei) published in Japan was awarded anassociation award from the Sustainable Management Forum of Japan.

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Chapter 1Smart Cities and Competitive Advantage:A New Perspective on Competitive Edge

1.1 Introduction

Modern society faces a wide range of issues, and one of the greatest that humanbeings have to solve in the 21st century is global warming. In order to limit tem-perature rises, we have to dramatically cut emissions of carbon dioxide, which is oneof the causes of global warming, but the close linkage of this problem with issues ofeconomic development means that various interests are involved, and it is commonknowledge that the world as a whole is making less headway than expected.

In these circumstances, the construction of smart cities is attracting attention.Smart cities use information and communications technology to optimize elec-tricity, water, telecommunications, transport systems, and other social infrastructurethat form the foundations of urban activity and create eco-friendly urban areas thataim to reduce energy consumption and carbon dioxide emissions. We can anticipatethat building such cities in various places around the world will encourage thedevelopment of a low-carbon society in general and play a role in ending globalwarming.

The purpose of this chapter is to observe the building of smart cities from theviewpoint of corporate competitive advantage and search for a source of newcompetitive advantage in the process. Smart cities can be analyzed from variousangles and approaches including urban planning, urban administration, informationtechnology, networks, urban civilization, and innovation. This book takes itsapproach from the corporate competitive standpoint that companies are the mainplayers in smart city construction, and that the corporate acquisition of a newcompetitive advantage through these construction projects further encourages theexpansion of smart cities, and leads to the realization of a low-carbon society.

This chapter begins by outlining the current state of smart-city building projectsproceeding across the world and reviewing prior research into smart cities. It thenconsiders existing theories of corporate competitive advantage, and aims to discussconcepts focusing on a new theory of competitive advantage presented in the text.

© Springer Japan 2016N. Tokoro, The Smart City and the Co-creation of Value,SpringerBriefs in Business, DOI 10.1007/978-4-431-55846-0_1

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