Positive effect of cost pressure

Abstract

When a company acquires new knowledge, it expects to create new business by fusing the new knowledge with existing knowledge.At least that is how things appear superficially. However, Fujitsu's new business development discussed in this paper was not related to any new knowledge but sprung up because of other reasons. Because the company had invested a lot of resources to acquire new knowledge, it was impossible to recover the management resources that it had invested, which then became sunk costs, unless the company did something. We call such a situation "sunk cost pressure." In the case examined in this paper, this sunk cost pressure induced the combining of disparate knowledge in the company's possession, thus creating new business.