Japan used to be a tech leader. Here's how it can regain global standing

Davos saw less snow than expected this year. But inside the venue of the 55th Annual Meeting of the World Economic Forum, heated debates and lively discussions filled each room, underscoring the urgency and intensity of the global issues. Within the overarching theme, "Collaboration for the Intelligent Age", five distinct but highly interconnected areas were set as thematic priorities: Reimagining Growth, Industries in the Intelligent Age, Investing in People, Safeguarding the Planet, and Rebuilding Trust.

As a first-timer to this summit, a week in Davos provided valuable insights that are highly relevant to the Japanese business community, especially concerning Industries in the Intelligent Age.

For decades, Japan was at the forefront of technological innovation, leading in consumer electronics and hardware development. However, with the rise of the internet, the global tech landscape has shifted toward software, data and platform-based business models, dominated by a few key players. This shift has exposed structural challenges in Japan’s approach to innovation – ranging from educational priorities and talent shortages, to the lack of global-standard product development strategies.

These challenges were also mentioned at the Annual Meeting, in the session Japan Navigates Uncertainty, which explored strategies for Japanese businesses to adapt to an evolving landscape. Discussions emphasized the need to diversify trade relationships, invest in semiconductors, foster innovation, support startups and expand labour force participation; critical steps not only for economic resilience but also for strengthening Japan’s influence in global technology governance.

One critical factor that can be addressed immediately is Japan’s engagement in early-stage global discussions on technology governance and standard-setting.

Japan’s technology industry has often developed independently, leading to what is sometimes referred to as a Galápagos syndrome – or creating excellent technologies that struggle to gain traction internationally due to a lack of global standardization. Traditionally, technology standards have not been decided solely within formal institutions but rather through consensus built by key industry leaders and stakeholders, leaving Japan without a strong enough institutional presence dedicated to influencing these standards.

Another fundamental challenge lies in the difference in entrepreneurial mindsets across regions. In the United States, new technologies often emerge alongside a wave of startups – sometimes numbering in the hundreds – racing to develop applications and commercialize innovations. This rapid iteration is enabled by a legal and regulatory environment that allows for experimentation, even when new technologies initially fall into regulatory grey areas. Companies including Amazon and Airbnb, for example, faced legal scrutiny in their early stages, but were able to grow significantly before regulatory frameworks caught up.

In contrast, Japan and much of Europe tend to adopt a more cautious approach, emphasizing legislative clarity before allowing technological deployment at scale. This approach, while ensuring consumer protection and regulatory compliance, can sometimes slow innovation. The difference can partly be attributed to legal traditions: Common law systems, as seen in the United States and the United Kingdom, rely on case law and judicial precedent, whereas civil law systems, predominant in Japan and continental Europe, prioritize codified laws. This distinction shapes how new industries emerge and scale, influencing the pace of technological adoption.

Innovation and growth can also contribute to addressing global challenges as in sustainability and climate change. Sony, for instance, has made significant progress in reducing its carbon footprint and developing eco-friendly products. By advancing energy-efficient technologies and integrating artificial intelligence and renewable energy into consumer electronics, Sony demonstrates how aligning business goals with environmental responsibility can create new opportunities for growth.

Addressing these structural challenges requires a multifaceted approach: increasing participation in global governance discussions, fostering a regulatory environment that allows for agile innovation, and encouraging a mindset shift that embraces risk-taking. As highlighted in Japan Navigates Uncertainty, Japan’s ability to drive economic resilience through innovation and diversification will be key to its success in the digital era.

Global platforms such as the World Economic Forum provides a unique opportunity for engagement.

While the Forum does not set standards per se, it plays a critical role in shaping governance frameworks, industry applications and cross-sectoral dialogue. Active participation in such global platforms enables Japanese stakeholders to gain strategic insights and contribute to shaping the direction of technological development.