This chapter analyses a phenomenon which the product analyst calls 'fat design' in the Japanese auto industry, a problem closely related to manufacturing firms' response to variety in the market, based mainly on an evolutionary perspective in the theories of the firm. The Japanese automobile industry continued to grow between the 1950s and 1980s, during which the production-development-supplier systems of the auto makers and suppliers emerged. The chapter analyses how the fat design problem emerged as a result of over-adaptation by the Japanese auto makers. It explains how excessive accumulation of the very product development capabilities that contributed to product competitiveness resulted in high cost structure: a side effect of inter-firm competition of dynamic capability building. The mis-adaptation hypothesis, regards the fat design problem as a result of the firms' failure in adapting their productive system to a fundamental change of the environment–the end of the continuous growth era.
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