Project Leader

NAGAOKA Sadao, Faculty Fellow

Overview

Effective research and development (R&D) by Japanese companies is of the greatest importance to the future growth of the Japanese economy. However, social science knowledge with respect to the fundamental factors of research such as the source of knowledge, external collaboration, spillover, financial constraints, barriers for the commercialization of research results, and the motivation of inventors is extremely limited. In our research we conduct a comprehensive survey of Japanese inventors, for the purpose of collecting information on these matters systematically at the level of research projects being implemented within companies. This is the first survey of its kind to be conducted in Japan. By means of statistical analysis of a combination of the information gathered from the survey and existing statistics, we will elucidate the structural characteristics of Japanese companies' R&D, and will analyze the determinants of R&D performance and future policy issues. In addition, we will make preparations with a view to conducting international comparative analysis from the next fiscal year onwards, including exchanging views with academics in Europe and the United States with regard to the questionnaires and research methods.

Project Leader

FUKAO Kyoji, Faculty Fellow

Overview

In the Japan of the future in which the working population is declining, raising productivity will be the principal source of economic growth. In addition, total factor productivity (TFP) determines the rates of return of physical and human capital, and it is also an important determinant of capital and educational investment. In our research we will be able to analyze the latest productivity trends in the Japanese economy by updating the Japan Industrial Productivity (JIP) database annually. In fiscal 2006 we aim to cover the years from 1970-2004. In addition, by integrating microdata covering all economic activity in Japan with macro industry-level data we will analyze increases in total factor productivity and labor productivity at macro industry level from the perspectives of increases in productivity within individual firms and factories, the reallocation of resources among firms and factories, and entry/exit behavior. At present, the work of creating productivity databases at the two-digit level (for the entire macroeconomy; 72 sectors) is being conducted through the KLEMS project led by the University of Groningen with regard to the core EU countries and the United States, and at Seoul National University with regard to South Korea. The JIP database is participating in the EU KLEMS project on behalf of Japan. By collaborating with these organizations and Dale W. Jorgenson (Samuel W. Morris University Professor, Department of Economics, Harvard University), we will make detailed international productivity comparisons at the industry level. In addition, in collaboration with various bureaus and divisions at METI, research will be conducted into such matters as the impact of internationalization on firm productivity (Policy Planning and Research Office, Trade Policy Bureau), estimation of stocks of intangible assets at the macro and industry level (Technology Promotion Division), and productivity in service industries.

Major Research Results

RIETI Discussion Papers

• "Productivity and Financing of Startups" (MIYAGAWA Tsutomu and KAWAKAMI Atsushi)
• "The Quantitative Assessment of Organization Capital" (MIYAGAWA Tsutomu and KIM Young Gak)
• "The Shadow of Death: Pre-exit Performance of Firms in Japan" (KIYOTA Kozo and TAKIZAWA Miho)
• "Determinants of the Profitability of Japanese Manufacturing Affiliates in China and Other Regions: Does Localization of Procurement, Sales and Management Matter?" (ITO Keiko and FUKAO Kyoji)
• "Estimation Procedures and TFP Analysis of the JIP Database 2006 Provisional Version" (FUKAO Kyoji, HAMAGATA Sumio, INUI Tomohiko, ITO Keiko, Hyeog Ug KWON, MAKINO Tatsuji, MIYAGAWA Tsutomu, NAKANISHI Yasuo and TOKUI Joji)
• "Does Off shoring Pay? Firm-Level Evidence from Japan" (Alexander HIJZEN, INUI Tomohiko and TODO Yasuyuki)
• "The Effects of Multinational Production on Domestic Performance: Evidence from Japanese Firms" (Alexander HIJZEN, INUI Tomohiko and TODO Yasuyuki)
• "Overseas R&D Activities and Home Productivity Growth: Evidence from Japanese Firm-Level Data" (TODO Yasuyuki and SHIMIZUTANI Satoshi)
• "What Determines Overseas R&D Activities? The Case of Japanese Multinational Firms" (SHIMIZUTANI Satoshi and TODO Yasuyuki)

International Workshop

• "A Comparison of the Productivity of Japanese, Chinese, Korean and European Firms" (Mar 2, 2007)

RIETI Policy Symposium

• "Determinants of Total Factor Productivity and Japan¡Çs Potential Growth: An International Perspective" (Jul 25, 2006)

Project Leader

ASAKAWA Kazuhiro, Faculty Fellow

Sub-Leader

SANBONMATSU Susumu, Consulting Fellow

Overview

In recent years importance has been placed on metanational management in which companies do not rely entirely on home country advantage but acquire and leverage management resources worldwide, building competitive advantage on a global scale. However, at present, the mainstream approach is, as in the past, one of global innovation in which large corporations in industrialized countries play the pivotal role. In view of this, the recent trends in the LCD industry in East Asia are worth noting. The process of industry creation based on innovation chains in the East Asian region, centered on Japan, South Korea, and Taiwan, can no longer work in conjunction with the supremacy of industrial countries or ethnocentrism. In our research we study new trends in this global innovation, focusing on (1) the LCD industry in East Asia and (2) the development of SMEs in East Asia, with the intention of analyzing the new evolution of global and regional innovation and of drawing implications for Japanese corporate management and industrial policy.

Major Research Results

RIETI Discussion Papers

• "Issues for Japanese Firms from Metanational Management Perspective" (ASAKAWA Kazuhiro)
• "Innovation and East Asian and Global Management of Startups and SMEs" (SANBONMATSU Susumu)

RIETI Policy Symposium

• "Metanational Management and Global Innovation: The Case of the TFT-LCD Industry" (Mar 14, 2007)

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 sustainable growth that should be sought in 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

TAMADA Schumpeter, Faculty Fellow

Overview

If companies are unable to obtain from within their own organizations the scientific or technical knowledge necessary for the development of new products, the alternative is to collaborate with universities or public research institutions. However, collaboration with other organizations incurs costs for searches and contracts. The objective of our research is a survey of joint inventions by researchers at public research institutions and private-sector firms, and through this to elucidate the roles fulfilled by the universities, other independent administrative organizations and other public research institutions, and to identify the implications for policies to further strengthen Japan's innovation system.

Major Research Results

RIETI Discussion Papers

• "Importance of Regional Innovation Systems" (TAMADA Schumpeter)

Project Leader

NOBEOKA Kentaro, Faculty Fellow

Overview

The most important issue for the Japanese economy is the creation of value-added by means of innovation. Research until now has been based on the hypothesis that if technical innovation can be achieved and used as the basis for developing products that meet market and customer needs, that will lead to greater international competitiveness and productivity. However, international competition has grown more complex in recent years, and in a rapidly increasing number of cases Japanese companies have been succeeding with technical innovation and developing excellent products as a result, but this has not led to value-added creation. In terms of technology management theory this means that even if value creation is achieved, it is not possible to achieve value acquisition. This is particularly striking in the sphere of information devices and digital home electronic products that use semiconductors, digital technologies, and communications technologies. Many aspects of this failure to achieve value acquisition that Japanese companies are facing cannot be explained within the existing theoretical framework relating to innovation systems. Our research is being conducted for the purpose of clarifying, both theoretically and empirically, the desirable form of value acquisition, and of making recommendations that will enhance the international competitiveness of Japanese companies.

Project Leader

FUJIMOTO Takahiro, Faculty Fellow

Overview

In the debate in economics about trade and industrial competitiveness, and in research into comparative advantage in particular, the tacit premise has been that within the entire process of producing goods, the importance of the physical production process, or, in other words, the efficient use of resources in that process, constitutes the foundation of a country's trade structure and industrial structure. However, in numerous tradable-goods industries, among which it is the rule rather than the exception today to be characterized by increasing returns to scale and product differentiation, the inference to be drawn is that rather than the efficient use of resources in the manufacturing process it is the efficient use of resources in the preceding process, namely the design process, that is regarded as important for analyzing any particular country's continuing industrial structure. Premised on the above, in our research we re-examine Japan's trade structure and industrial structure on the basis of industry theory based on a design theory in which the manufacture of goods (artifact) is considered from the viewpoint of creating design information, and "manufacturing" is taken as being the optimization of the flow of this to the market. Specifically, we will attempt to devise a framework for estimating industrial competitiveness from the compatibility of organizational capability (which, for historical reasons, is unevenly distributed in Japan) and the architecture of the relevant products.

Major Research Results

RIETI Discussion Papers

• "Increasing Complexity of Artifacts and the Role of Product Architecture" (OKUNO Masahiro, TAKIZAWA Hirokazu, and WATANABE Yasunori)

Project Leader

CHUMA Hiroyuki, Faculty Fellow

Overview

To create an effective innovation process in science-based industries we believe that a prerequisite is to mobilize a broader range of wisdom and knowledge of diverse experts both from within and outside each relevant company. Unfortunately, however, in Japan such mobilization of wisdom and knowledge can hardly be said to be sufficiently broad in scope to be effective. In view of this, even in fields in which there have been large numbers of creative discoveries, inventions, and improvements there is no shortage of cases in which it has been difficult to use these in a way that enhances the competitiveness of the relevant science-based industries. The purpose of our research is to re-examine, based on this awareness of current realities, the characteristics of the innovation process in the semiconductor (devices, equipment, materials) industry, one of Japan's foremost science-based industries, in particular its strengths and its weaknesses, and to seek remedies.

Major Research Results

RIETI Discussion Papers

• "Exploring Factors Behind the Weakening Competitiveness of Japan's Semiconductor Production System: from the viewpoint of meta-level integration capability" (CHUMA Hiroyuki)

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

KIYOKAWA Yutaka, Senior Fellow

Overview

The promotion of innovation is indispensable to Japan's survival. There is a system of intellectual property rights to support that, and pro-patent policies will enhance this. A milestone in the shift toward pro-patent policies was the establishment of the Strategy Headquarters to promote them under the Koizumi administration, but in fact its history stretches back to the mid-1990s. At that time importance was given to the spread of technologies and there was a lack of protection, as it was argued that such policies would not sit well with the promotion of innovation. In research conducted last year, factors such as the changes to the system implemented up to that time were assessed, and it was concluded that Japan's pro-patent level had improved considerably. In the United States, which is Japan's model for pro-patent policies, such policies have been revised because protection had gone too far, and in view of the increasing complexity and sophistication of R&D, there are calls for it to be undertaken on a collaborative basis. Against this backdrop we will study desirable forms of a system of intellectual property rights of a kind that stimulates innovation. Specifically, while listening to the opinions of companies directly affected by this question we will study issues such as the revision of the protection system (exclusivity) and the desirable form of management and business strategies of a kind that put intellectual property to good use.

Major Research Results

RIETI Discussion Papers

• "Developments in and an Evaluation of Intellectual Property Rights in Japan (Evaluation of the pro-patent trend since the latter part of the 1990s, in particular the patent system)" (KIYOKAWA Yutaka)

Project Leader

KODAMA Toshihiro, Professor, Institute of Economic Research, Kyoto University

Overview

For Japan's economic growth strategy the formation of industrial clusters is becoming increasingly important, both for enhancing innovation capabilities and for invigorating regional economies. In our research we will use prior research findings concerning the TAMA (Technology Advanced Metropolitan Area) project in the western part of the Tokyo metropolitan area, which is regarded as a model case in METI's Industrial Cluster Program, and will engage in activities such as research in the Kyoto region, where there is an industrial agglomeration of high-tech firms and leading universities, with the objective of putting forward suggestions concerning the desirable manner in which industrial clusters are formed. Specifically, by means of a questionnaire survey of manufacturing firms in the Keiji district, which stretches from Kyoto and its suburbs into the southern part of Shiga Prefecture, we will identify SMEs that excel in product development, and study the possibilities for the development of linkages between large enterprises and these product-developing SMEs. Based on this we will study measures and policy issues concerning the development of industrial clusters as effective regional innovation systems, including the implications for the country as a whole.

Major Research Results

RIETI Discussion Papers

• "Product-developing SMEs and State of Formation of an Industrial Cluster in the Keiji (Kyoto-Shiga) Area" (KODAMA Toshihiro, SAITO Takashi, and KAWAMOTO Shinya)