Urban Space as a Factor of Production: Accounting for the Success of Small Factories in Postwar Tokyo

This paper demonstrates that small manufacturing firms in postwar Tokyo were exceptionally successful. Not only were they more productive than their national peers, they were also remarkably competitive vis-à-vis large factories in Tokyo. The existing explanations for this double outperformance do not take full account of the urban setting in which this process took place. Small factories compensated for higher labor costs by being more efficient users of urban space. They thrived thanks to Tokyo’s particular urban form, which included a preference for mixed use and often blurred the boundaries between living and workplace. Small factories also benefited from being embedded in the relatively egalitarian structure of postwar Tokyo, as the city avoided spatial stratification despite megacity growth. Although Tokyo’s small factories remain important, their competitive edge has eroded from the 1970s onward.