Crisis and change in the system of innovation: The Japanese pharmaceutical industry during the Lost Decades, 1990–2010

This article uses the experience of the Japanese pharmaceutical industry to show how Japan's national system of innovation evolved from a closed, firm-based domestic system toward a more open, networked, global system. This occurred in the face of a crisis of economic and technological dimensions. During the Lost Decades, the nature of innovation in this industry shifted from incremental toward more radical innovation, as the system internationalised and as firms leveraged different environments around the world. This article highlights the varying roles that the components of the system of innovation play in shaping innovative industries. It also shows how institutions can be remarkably malleable in times of crisis