Project Leader

NAGAOKA Sadao, Faculty Fellow

Overview

An in-depth study on the processes of innovation will be conducted by combining the results of surveys done in this and the previous fiscal year with related statistical data. The project will also undertake research to shed light on policy issues and will engage in international joint research. Specifically, the following research will be undertaken:

• (1) One of the focus points of the research will be the patent system.
• (2) To facilitate analysis of the R&D performance of firms and individuals based on the inventor survey, we will collate the names of patent applicants and inventors covered in the inventor survey and who appear in the patent database.
• (3) The research combining the inventor survey and the innovation survey of the National Institute of Science and Technology Policy, Ministry of Education, Culture, Sports, Science and Technology will be conducted.

These researches will develop a comprehensive understanding of the processes of innovation and examine the determinants of performance.

Major Research Results

RIETI Discussion Papers

• "Number of Backward Patent Citations as a Quantitative Indicator of Prior Art " (WADA Tetsuo)
• "Commercialization and Other Uses of Patents in Japan and the U.S.: Major findings from the RIETI-Georgia Tech inventor survey" (NAGAOKA Sadao and John P. WALSH)
• "The R &D Process in the U.S. and Japan: Major findings from the RIETI-Georgia Tech inventor survey" (NAGAOKA Sadao and John P. WALSH)
• "Structural Modeling of the Value of Patent" (SUZUKI Jun)

Project Leader

ASAKAWA Kazuhiro, Faculty Fellow

Overview

Recent changes in trends in R&D internationalization underscore the limited explanatory powers of existing "conventional theories." It can be said that a tectonic shift is occurring in global R&D systems encompassing both the advanced and developing regions of the world (Asakawa and Som 2008). With this issue in mind, this project seeks to identify new trends in R&D internationalization using the latest data available from questionnaire surveys conducted in the R&D headquarters of Japanese firms and their overseas R&D centers. In particular, the project aims to analyze current conditions and issues related to organizational and strategic aspects. Our re-examination of "conventional theories" indicates the need for a new analytical framework that corresponds to existing conditions. The micro-level analysis of firms and their overseas R&D centers developed by this project and the macrodata developed by the OECD and other organizations are expected to be complementary to each other.

Project Leader

FUKAO Kyoji, Faculty Fellow

Overview

Given Japan's shrinking labor population, productivity growth stands as a major source of economic growth. TFP is important also from the perspective of defining the rate of return on physical capital and for its impact on trends in capital investment. The purpose of this project is to annually update the Japan Industry Productivity (JIP) database to enable the analysis of recent trends in Japanese productivity. The project also seeks to integrate microdata covering the entire Japanese economy with macro and industry-level data in order to analyze improvements in macro and industry-level TFP and labor productivity from the perspective of individual firms and business establishment.

Major Research Results

RIETI Discussion Papers

• "Why Has Japan's TFP Growth Recovered?: An empirical analysis based on the basic survey of Japanese business structure and activities" (KWON Hyeog Ug, Kim YoungGak and FUKAO Kyoji)
• "Do Competitive Markets Stimulate Innovation?: An Empirical Analysis Based on Japanese Manufacturing Industry Data" (INUI Tomohiko, KAWAKAMI Atsushi and MIYAGAWA Tsutomu)
• "The evolution of the productivity dispersion of firms - A reevaluation of its determinants in the case of Japan" (ITO Keiko and Sébastien LECHEVALIER)
• "Embodied Technological Progress and the Productivity Slowdown in Japan" (TOKUI Joji, INUI Tomohiko and Young Gak KIM)

Project Leader

NISHIYAMA Yoshihiko, Faculty Fellow

Overview

Referred to by terms such as the "lost decade," the 1990s are regarded as a period of declining productivity. However, it is not clear what really caused a decline in productivity at the macro level. A number of causes are conceivable, such as declines in the productivity at individual firms, the entry of firms with low productivity, and the exit of firms with high productivity, but finding the actual causes requires an empirical approach. That requires examination with a combination of an appropriate economic model and appropriate statistical methods, but among existing studies there is nothing suitable that can be applied directly in this regard. From the standpoint of seeking desirable sustainable growth for the future, an important issue to address is that of gaining a unified understanding of changes in the substructure at the company and industry level, together with changes at the macro level. In our research we adopt a comprehensive approach to this issue from both theoretical and empirical perspectives.

Project Leader

FUJIMOTO Takahiro, Faculty Fellow

Sub Leader

OSHIKA Takashi, Faculty Fellow

Overview

As customer needs and social constraints (environment, safety, etc.) become increasingly complex and sophisticated, firms find it more difficult to take a modular approach in the products they supply to the market. In particular, in such products as automobiles, with many mechanical components remaining, require co-evolution of mechanics, electronics and software. This demands mutual coordination between the design of controlled mechanical components and the design of controlling electronic and software components. Based on this perspective, this project inquires into the contemporary problem of "complex products" from the standpoint of design theory. Specifically, we interpret products supplied to the market as being &artifacts" (designed objects), and analyze the causes of their growing complexity, and the response of firms to such developments.

Major Research Results

RIETI Policy Discussion Paper

• "Product Architecture and Corporate Behavior - Empirical analysis of business activities" (OSHIKA Takashi)

Project Leader

CHUMA Hiroyuki, Faculty Fellow

Overview

Through joint research conducted with the scientists and engineers of manufacturers of semiconductor devices and electron microscopes, this project examines, from an economics and business perspective, the historical background that gave rise to significant inventions and innovations and reasons why these inventions and innovations emerged primarily from venture-capital laboratories in Germany and the United Kingdom (and not from Japan, which is reputed as the most advanced in electron microscope).

Project Leader

TANAKA Tatsuo, Faculty Fellow

Sub-Leader

SUZUKI Jun, Faculty Fellow

Overview

Japan's competitiveness in the software industry is perceived as being weak. In the software industry as a whole there is an overwhelming import surplus, while exports are less than 10% of the value of imports. Among high-value-added high-tech industries it is rare to find any in which Japanese competitiveness is so overwhelmingly lacking. Additionally, this fact may have a negative impact on innovation in business processes that use information technology (IT). Why is this? Why has such a disparity in competitiveness arisen? Is it possible to devise policy remedies that will enhance competitiveness? The objective of our research is to empirically study various hypotheses that may answer these questions, and in so doing to identify the current state of software innovation in Japan, and to seek policies to enhance the competitiveness of software industries and promote business innovation through the use of software.

Project Leader

KODAMA Toshihiro, Japan Finance Corporation

Overview

Industrial clusters are being formed in various areas throughout Japan to promote innovation and to stimulate regional economic vitalization. The purpose of this research project is to consider measures that would promote the development of industrial clusters as effective innovation systems, by featuring empirical research conducted on two regions: the Technology Advanced Metropolitan Area (TAMA) extending over the western part of the Tokyo metropolitan area as a leading case in the "Industrial Cluster Plan" of METI, and the Keiji Area (the region covering southern Kyoto Prefecture and southern Shiga Prefecture) where numerous hi-tech firms and leading universities are concentrated. While studying theoretical aspects, we also conduct a number of activities aimed at developing practical policy recommendations. These activities cover continued research on the Keiji Area including interviews with local firms, research meetings held with local government agencies, public organizations for the support of industries, and university researchers and staff. In addition, an open symposium was held on January 16, 2009 for the general public and business community.

Major Research Results

RIETI Final Report

• "Final Report for the Study on Industrial Clusters for FY 2007"  (KODAMA Toshihiro)

KIER-RIETI Symposium

• "Innovation and Human Resources Development"  (January 16, 2009)

Project Leader

MIYAGAWA Tsutomu, Faculty Fellow

Overview

In line with the recent researches on the relationship between investment in "workers and organizations" and corporate performance by using microdata, this project examines how the performance of Japanese firms has been affected by their internal organizational reforms, personnel management and human resources development. Following Bloom and Van Reenen (2007), the research will be based on interviews with firm managers. Using the interview survey, the purpose of the research focuses on the effect of organizational and human resource management on firm performance. During fiscal 2007, considerable time was spent on designing and implementing these interviews and analyzing the results obtained from 151 firms with head offices in the Tokyo area. Nationwide interviews (573 firms) and questionnaire surveys of personnel departments (391 firms) were completed by September 2007. During fiscal 2008, a more detailed analysis of the impact of organizational structure and human resource development on corporate performance will be conducted by combining the results obtained from the above surveys with microdata from government statistics. Since the interviews have also provided new data on internal human capital formation at the macro and industry levels, and new estimation results have also become available from other countries, we will revisit the results of Fukao et al. (2007, 2008) which estimated intangible investment at aggregate level.

Major Research Results

RIETI Discussion Papers

• "Corporate Organizational Reform and Corporate Performance: Empirical analysis based on interviews with Tokyo-area firms" (MIYAGAWA Tsutomu, OZAKI Masahiko, KAWAKAMI Atsushi and EDAMURA Kazuma)

Project Leader

KWON Hyeog Ug, Faculty Fellow

Sub Leader

MATSUURA Toshiyuki, Fellow

Overview

The objectives of this research project are as follows:

• (1) To develop methods for accurate measurement of productivity in service industries and to undertake concrete empirical analysis on the determinants of productivity in service industries (human capital, innovation, introduction of IT, intangible assets, outsourcing, location, new entrants, deregulation policies, etc.) by using industry and firm level data,
• (2) To identify problems in Japan's service industries through an international comparison using rigorous methods, and
• (3) To develop specific policy recommendations based on the results that are ultimately obtained from these analyses.

In our research, we will collaborate with the following research projects at RIETI: II-3) Productivity of Companies and Industries, and Japan's Economic Growth (FUKAO Kyoji, FF & MIYAGAWA Tsutomu, FF); II-4) Japan's Productivity and Economic Growth: International Comparison and Analysis of Determinants of Productivity Growth (FUKAO Kyoji, FF); II-11) Study on Intangible Assets in Japan (MIYAGAWA Tsutomu, FF); and I-3) Empirical Analyses Relating to IT and Productivity (MOTOHASHI Kazuyuki, FF & MATSUURA Toshiyuki, F). We will also be collaborating with overseas research institutes (OECD, IFS, KDI, Brookings Institute) and overseas research projects (EUKLEMS).

Major Research Results

RIETI Discussion Papers

• "Demand Fluctuations and Productivity of Service Industries" (MORIKAWA Masayuki)
• "What Do Japanese Unions Do for Productivity?: An empirical analysis using firm-level data" (MORIKAWA Masayuki)
• "Productivity and Survival of Family Firms in Japan: An analysis using firm-level microdata" (MORIKAWA Masayuki)
• "Economies of Density and Productivity in Service Industries: An analysis of personal-service industries based on establishment-level data" (MORIKAWA Masayuki)
• "The Productivity Dynamics of Japanese Commerce: An empirical analysis based on microdata from the basic survey of Japanese business structure and activities" (KWON Hyeog Ug and Kim Young Gak)
• "How to Enhance the Productivity of Service Industries: Suggestions from recent studies and agenda for future research" (MORIKAWA Masayuki)

Project Leader

NISHIZAWA Akio, Faculty Fellow

Overview

How can product innovation based on university research be achieved? The global trend is to adopt policies to facilitate the creation of many "New Technology-Based Firms" (NTBFs), and to generate hi-tech industries in the geographic vicinities of universities through growth and agglomeration of these NTBFs. However, in Japan, this approach has not yet yielded successful results. Indeed, a pioneering project referred to as the "Sapporo Valley" is said to be losing its growth momentum. Against this backdrop, this project addresses the following two questions about Japan: Why has the model for the establishment of hi-tech industries based on innovation generated through the process of NTBFs creation, growth and agglomeration failed to function even in the areas with prominent research universities? What factors are obstructing the process of NTBFs creation, growth and agglomeration? The purpose of this research project is to analyze these questions from both empirical and theoretical perspectives, and to formulate benchmarks for the building of eco-systems in the regions.

Project Leader

KATO Atsuyuki, Fellow

Overview

The theme of this project is the "analysis of the productivity of firms providing differentiated services." Productivity research based on firm- and business establishment-level data normally uses sales (or value-added computed from sales) as the output and an industry-level deflator. This is because product-level data on production volumes and prices is hardly obtainable due to statistical limitations. These limitations are particularly restricting in service industries because of the difficulty in quantitatively defining production volumes. Moreover, the impact of product (service) diversification on the estimation of productivity is ignored. Furthermore, because estimated productivity fluctuation includes markups and demand shocks (changes in consumer preferences, etc. on the firm level), such estimates may not correspond with productivity fluctuations in the strict sense. In light of these problems, this project focuses on the following objectives:

• (1) Productivity estimation by using a model that explicitly incorporates product (service) differentiation under the actual limitations on the usage of price and volume data for individual products (services).
• (2) The results obtained will be compared with results from prior research (on economies of scale, productivity dynamics, etc.), and the effects of corporate characteristics and strategies and industrial policies will be analyzed.

Major Research Results

RIETI Discussion Papers

• "Productivity, Returns to Scale and Product Differentiation in the Retail Trade Industry: An empirical analysis using Japanese firm-level data" (KATO Atsuyuki)

Project Leader

KONISHI Yoko, Fellow

Overview

As a first step in analyzing service industries, this project has set the beauty industry-specifically hairdressing salons-as the targeted area of analysis due to their relatively simple production structure. Almost all businesses in Japan's hairdressing industry are under individual management. Nationwide, there are more than 200,000 hairdressing salons in operation. Until the late 1990s, the industry adhered to standardized operating days, hours and charges that were effectively maintained through union activities and laws. Much of this has changed in recent years due to the abolition of laws, reduction in unionization and the emergence of charismatic hairdressers. As a result, the industry has experienced severe price wars and the difference between salons and available services continues to grow. To understand productivity in service industries, it is necessary to define the equivalent of the production function in a manufacturing industry. A model for this purpose must be sensitive to changes in demand; it must be restricted by "floor area, number of employees and business hours;" and it must also allow for an upper limit on supply volume. This project involves collecting extremely detailed information regarding finance, customers, and labor from six hairdressing salons to be used in investigating the structures of supply and demand in the beauty industry.

Project Leader

FUKAO Kyoji, Faculty Fellow

Overview

For the Japanese economy to retain its vitality under conditions of decreasing population and the aging of society, it will be essential to achieve economic growth based on accelerated productivity growth. With this challenge in mind, this project, as a rule, annually updates the Japan Industrial Productivity Database (JIP), a basic source of data for analyzing Japan's economic growth and changes in its industrial structure, and analyzes the trends in TFP on a detailed industrial level with their determinants. In addition, by participating in "EU KLEMS," a joint international project on productivity in the European Union (EU), we compare Japan's industrial structure and productivity growth by industry with that of other industrialized countries, including the United States, the EU member countries and South Korea. Finally, we analyze the impact of the globalization of firms and their accumulation of intangible assets on their productivity. This is done using the JIP Micro Database, which covers most Japanese firms including those in the non-manufacturing sector, and microdata from government statistics.

Major Research Results

RIETI Discussion Papers

• "Embodied Technological Progress and the Productivity Slowdown in Japan"(TOKUI Joji, INUI Tomohiko and Kim YoungGak)
• "The evolution of the productivity dispersion of firms - A reevaluation of its determinants in the case of Japan"(ITO Keiko and Sébastien LECHEVALIER)
• "Do Competitive Markets Stimulate Innovation?: An Empirical Analysis Based on Japanese Manufacturing Industry Data"(INUI Tomohiko, KAWAKAMI Atsushi and MIYAGAWA Tsutomu)
• "Why Has Japan's TFP Growth Recovered?: An empirical analysis based on the basic survey of Japanese business structure and activities" (KWON Hyeog Ug, Kim YoungGak and FUKAO Kyoji )

Project Leader

KIYOKAWA Yutaka, Senior Fellow

Overview

The promotion of innovation is indispensable to Japan's survival. One of the systems supporting the process of innovation is the intellectual property rights system. Since the establishment of the Intellectual Property Strategy Headquarters in 2003, Japan's intellectual property system has taken a more pro-patent stance and its level of protection has been upgraded. Combined with the several revisions of the Patent Law that were enacted earlier and various changes made in the application of the law and related judicial matters, it is thought that the level of protection in Japan has been significantly improved. (See Y. Kiyokawa, "Evaluation of Japan's Pro-Patent Trends and Future Issues," METI Journal, April 2007). However, given the growing complexity and speed of R&D activities, it is becoming more difficult for individual firms to successfully undertake R&D on their own. This has prompted a move toward "open innovation," particularly in the software field. Similarly, "cooperation" in R&D is now observed in various fields. On the other hand, because intellectual property rights are essentially exclusive rights and proprietary by nature, they do not easily lend themselves to concepts of common good or cooperation and collaboration. In addition, exclusive rights cause distortions in market competition and their excessive application can obstruct innovation itself (e.g., patent thickets, patent trolling, etc.). While the promotion of R&D does require the effective protection of incentives, such measures are counterproductive when they undermine innovation in general. Given that significant progress has been made in Japan's intellectual property rights system in terms of the level of protection, the aim of this project is to consider what Japan must now do to promote greater innovation.

Project Leader

TAMADA Schumpeter, Faculty Fellow

Overview

The purpose of this project is to develop new indicators to be used in the formulation of economic policy. The approach taken is to investigate innovation, resulting from multiple and diverse inter-firm interactions, by using multi-tiered network analysis and patent value assessment methods to analyze data on corporate transactions and joint invention. Specifically, the project analyzes networks that connect about 1 million Japanese firms through joint patent applications, mutual share holding, business transactions and interlocking directorates. As the first step, the topological features of networks are identified by computing various network indicators for cases in which the strength of relations is not considered. These indicators are then examined to determine how they can contribute to economic policy formulation.In the next step, the strength of inter-firm relations is defined and multi-tiered networks are weighted accordingly and analyzed. In particular, a theoretical model will be developed to compute the value of a number of firms that are connected to form a cluster. Finally, properties of high value-added clusters will be analyzed and economic policies for promoting the generation of high value-added clusters will be examined.