Introduction The concept of national innovation systems has won recognition in explaining innovation processes and specific innovation patterns (OECD 1999). Research on national innovation systems – particularly most empirical research on Japan – tends to interpret the concept of innovation systems in a quite rigid sense. Often it is used in order to explain why Japan has lost its competitive position in new industries, such as in business software or in the biotechnology sector (Goto 2000; Cottrell 1996). Many authors argue that given the path dependence of innovation systems, japan is particularly unable to adapt to new technological needs. Its labour market displays low mobility and a low degree of specialisation, its capital market has an aversion to risk, its industrial organisation prefers long-term transactions and the interlocking between universities and private industries in japan is weak. All of these characteristics inhibit new industry start-ups (Anchordoguy 2000). In the 1990s, this discourse caused japanese officials to implement far-reaching reforms at an astonishingly high speed (Hemmert 2005; METI 2001).