This study attempts to provide a more comprehensive understanding of the mechanism by which distinct industry competitiveness between countries emerges over time in the way of integrating the national business system model at the country level of analysis with the sectoral systems of innovation and production approach in the industry analysis. Drawing on a comparative case study on the development of the flat panel display industry in Japan and Korea, this study identifies the significant influences of national institutions on key firms' entrepreneurial corporate financing and innovation pace in each country. That is, the sustained competitive price that enabled Korean FPD firms to catch up with the Japanese incumbents stem from their bolder investment strategies and faster process innovation. The ownership-based authoritative corporate governance and the hierarchical employment and inter-firm relationships in Korea encouraged them to implement these activities required in the given sectoral conditions. In contrast, the alliance based cooperative business system in Japan relatively hinders Japanese firms to carry out those strategies. This study provides empirical evidence of how a certain industry can be developed better than others in a particular institutional setting, which is significantly noted by the SSI theory but rarely investigated empirically. By examining the important role of the institutional structuring of the firms' investment and innovation strategies, the findings can contribute to providing the new research dimension and empirical insights both for entrepreneurial corporate financing and innovation speed literatures. In practice, this study can improve our understanding of industry dynamics in the FPD sector by expanding existing analysis on the sector which narrowly focus on the technology and operating management studies at the firm level.