ESRI Discussion Paper Series No.355 How does innovation derive from the effective use of data and management skills? Evidence from JP-MOPS data for the Japanese wholesale sector

The study verifies how innovation derives from the effective use of business data and management skills in the Japanese wholesale industry. We apply an ordered logit model to data from the Japanese Management and Organizational Practices Survey (JP-MOPS) conducted by the Economic and Social Research Institute of the Cabinet Office in 2018. Based on 2,971 valid responses, we classify innovation activities into two categories: product innovation and process innovation. We estimate the model for five industry segments based on the Japan standard industrial classification: (1) textiles and apparel, (2) food and beverage, (3) building materials, (4) machinery and appliances, and (5) others. The results indicate that the factors affecting product and process innovation differ across each of these segments in the wholesale industry. Additionally, activities in product innovation are dominant in business establishments that effectively utilize data and analyze them for the development of goods and services. In the textiles and apparel segment, however, effective use of management skills has no significant impact on either product or process innovation activities. This is probably because the segment incorporates complex supply chains for products that are vulnerable to changes in trends or temperature.