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 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.

Major Research Results

RIETI Discussion Papers

• "Innovation Process in Japan: Findings from the RIETI Inventors Survey" (NAGAOKA Sadao and TSUKADA Naotoshi)

Policy Symposium

• "Innovation Process and Performance: Findings and Lessons from Inventors Surveys in Japan, the U.S., and Europe"

Project Leader

ASAKAWA Kazuhiro, Faculty 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 liquid crystal display (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

• "Metanational Learning in TFT-LCD Industry: An Organizing Framework" (ASAKAWA Kazuhiro)
• "Driving Force That Shifted the LCD Industry in Taiwan from Sustained Progress to Rapid Growth - The Metanational Management Viewpoint" (WANG Shwu-Jen)
• "Japanese Competitiveness in Liquid Crystal Display Industry - Analysis of Causes of its Decline, and Proposal of 'Core National Management'" (NAKATA Yukihiko)

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

• "International Production/Distribution Networks and Domestic Operations in terms of Employment and Corporate Organization: Microdata Analysis of Japanese Firms" (ANDO Mitsuyo and KIMURA Fukunari)
• "Choice for FDI and Post-FDI Productivity" (ITO Yukiko)
• "Productivity in Japan, the US, and the Major EU Economies: Is Japan Falling Behind?" (FUKAO Kyoji and MIYAGAWA Tsutomu)
• "Intangible Investment in Japan: Measurement and Contribution to Economic Growth" (FUKAO Kyoji, HAMAGATA Sumio, MIYAGAWA Tsutomu and TONOGI Konomi)
• "Embodied Technological Progress and the Productivity Slowdown in Japan" (TOKUI Joji, INUI Tomohiko and Young Gak KIM)
• "Entry and Exit of Companies and Establishments, and Productivity at the Industry Level" (Young Gak KIM, Hyeog Ug KWON and FUKAO Kyoji)

Project Leader

NISHIYAMA Yoshihiko, Faculty Fellow

Sub-Leader

ICHIMURA Hidehiko, 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

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

• "Analysis of Joint Patent Applications by Universities or Public Research Institutes and Private-Sector Firms" (TAMADA Schumpeter and INOUE Hiroyasu)

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.

Major Research Results

RIETI Discussion Papers

• "Deep-seated Value Creation in Japanese Manufacturing Firms: Accumulation of Organizational Capabilities and Management of Non-functional Premium Value" (NOBEOKA Kentaro)

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 Discussion Papers

• "Increasing Complexity of Artifacts and the Response of Manufacturing Firms: Design of control systems and integration of mechanism, electronics, and software" (FUJIMOTO Takahiro)
• "Design-Based Comparative Advantage: An Explanatory Analysis" (FUJIMOTO Takahiro and OKUMA Shingo)

Project Leader

CHUMA Hiroyuki, Faculty Fellow

Overview

To effectively realize innovation in science-based industries, it is critically important to be able to combine a broad range of highly diverse expertise (knowledge) from both inside and outside the firm. In the case of Japan, although outstanding knowledge is being created in various places, the speed at which the range of combination expands declines relatively. Thus, as is typically observed in the semiconductor industry, in some cases Japanese firms have failed to remain competitive in global markets. Based on this awareness, this project focuses on the rapid rise and fall of the general-purpose DRAMs business which Japanese semiconductor manufacturers experienced during the second half of the 1990s. This project seeks to identify the principal factors in this process by comparing the R&D, mass production and marketing strategies of Japanese, U.S. and Korean manufacturers.

Major Research Results

RIETI Discussion Papers

• "Moore's Law, Increasing Complexity, and the Limits of Organization: The Modern Significance of Japanese Chipmakers' DRAM Business" (CHUMA Hiroyuki and HASHIMOTO Norikazu)

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. 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

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

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. During fiscal 2007, while studying theoretical aspects we also conducted 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 November 19, 2007 for the general public and business community.

Major Research Results

Advanced Policy Open Symposium

• "What Type of SMEs Promote Innovation? - Forming a Cluster in the Keiji Region"

Project Leader

MIYAGAWA Tsutomu, Faculty Fellow

Overview

The world economy was characterized by the "IT revolution and globalization" during the 1990s. By leading the way in incorporating the IT revolution into economic activities, the United States achieved dramatic improvements in productivity beginning in the second half of the decade. On the other hand, Japan was going through an extended period of stagnation that followed the collapse of the bubble economy. During this period, Japan focused more on the task of extricating itself from long-term stagnation rather than on global economic issues. Hayashi and Prescott analyzed this period (2002) and concluded that "declining productivity provides the backdrop for Japan's long-term stagnation." This analysis generated keen interest in the question of productivity in Japan. The Japanese economy finds itself in a vulnerable position where a return to stagnation appears unavoidable once the upward trend in world economic conditions centered on the U.S. and China comes to an end. To overcome this dependence on external demand and to create a stable and truly autonomous foundation for growth under conditions of a shrinking labor population, it is vitally important for Japan to increase productivity in its service sector, a sector that employs more than 60 percent of the workforce but continues to lag seriously behind the U.S. and Europe in productivity. There is a growing awareness that this requires the accumulation of intangible assets, which effectively utilize IT. In recent years, the roles of brand assets developed through the accumulation of advertising expenditures as well as of human capital and organization capital based on the accumulation of corporate organizational reform are drawing attention. The purpose of this project is to comprehensively research economic issues that relate to intangible assets in Japan, including micro and macro measurements of intangible assets and their impact on the entire economy.

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 NTBF creation, growth and agglomeration failed to function even in the areas with prominent research universities? What factors are obstructing the process of NTBF 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

Hyeog Ug KWON, Faculty Fellow

Sub-Leader

MATSUURA Toshiyuki, Fellow

Overview

This project focuses on Japan's non-manufacturing industries (broadly-defined service industries), which are said to be lagging behind the U.S. and Europe in productivity, and seeks to identify the following two points: (1) current levels of productivity in Japan's service industries, and (2) policy measures for boosting productivity. Regarding (1), we will review the problems related to productivity measurement in service industries, and will survey the methodologies used in various countries for this purpose. In addition, we will review the current levels of productivity in Japan's service industries by comparing the characteristics of service industries with those of the U.S. and Europe, and with those of manufacturing industries. As for (2), we will focus on regulatory reform and IT investments and analyze how industrial structures and productivity were affected in industries that experienced regulatory reform and active IT investment during the 1990s.

Major Research Results

RIETI Discussion Papers

• "What Kinds of Company Have High Productivity? Company Characteristics and TFP" (MORIKAWA Masayuki)
• "Is Productivity in the Service Industries Low? An Analysis Using Firm-level Data on the Dispersion and the Dynamics of Productivity" (MORIKAWA Masayuki)

Major Research Results

RIETI Discussion Papers

• "Network Dynamics in the 12 Regional Clusters" (SAKATA Ichiro, KAJIKAWA Yuya, TAKEDA Yoshiyuki, HASHIMOTO Masahiro, SHIBATA Naoki, and MATSUSHIMA Katsumori)

METI-RIETI-AIST-NEDO Symposium

• "R&D Partnership under the Globalized Economy - Our Experience and the Future"