Porter maintained that government, by its choice of polices, can influence each of the four components of the diamond and in the case study there were several examples of Japanese government action that had a positive influence on the Japanese facsimile industry. First, the Nippon Telephone and Telegraph, NTT, which was the state monopoly communication company, allowed Japan to become one of the first countries to allow facsimile transmission over the public telephone system and completely eliminate the requirement for fully dedicated lines in the early 1970s which greatly improved infrastructure available for facsimile use. Second, the NTT eliminated a cumbersome approval process for facsimile installations in the mid-1970s by providing blanket approvals for facsimile machine models that met NTT standards. This was in contrast to the European nations which still required approval for each facsimile installation which held down facsimile demand. Third, the Japanese Government was one of the first to give facsimile documents legal standing which improved its appeal Japanese business firms. Fourth, the NTT invested heavily in dedicated facsimile lines to improve the speed of facsimile communication and aggressively marketed Japanese facsimile machines where telephone companies in other nations were far slower to react. Finally, the NTT allowed the free-market and private sector to work which drove demand and innovation of the Japanese companies. The NTT did not try to nationalize or protect the facsimile industry and a example of this was shown in Exhibit 9, which showed that Japan eliminated tariffs on facsimile machines imported and thus other counties lowered the traifss on Japaense machines
Factor Endowments
For factor endowments in Porter’s diamond, Japan’s substantial endowment of advanced factors, such as communication infrastructure, skilled labor, research facilities, and technological know-how, lead to Japan’s significant competitive advantage in...