Contributions of Corporate Basic Research and Research Collaboration with Academia to Innovation and Spillover Performance in Japan

Corporate basic research is important for both enhancing the R&D capability of a firm, especially in its ability to absorb scientific progress, and for improving the innovation performance of the industry through spillovers. This paper reports the findings from the following four research inquiries, all based on newly built, long-term comprehensive panel data set on the structure and performance of R&D by Japanese companies.

(1) An analysis of the contributions of internal basic research to industrial R&D performance, including its collaborative research with academia and its research commissioned by the government, based on a new model of R&D that accommodates the effect of basic research on enhancing the productivity of applied research and experimental development.
(2) An analysis of the evolution of the effects of R&D in information and communication technology (ICT) on industrial R&D performance. While ICT R&D has increased its significance globally in recent years, ICT R&D investment by Japanese industry had decreased to about two-thirds of its peak value in 2007.
(3) An analysis of how technology spillover between firms varies, depending on the structure of R&D of the utilizing and the source companies, the proximity between the two firms in terms of specialized fields of human resources, and industry configurations (within industry vs. between industry).
(4) Finally, an analysis of how the effects of the spillover pool of each firm on its R&D are affected by the interaction between the type of spillover pools and the type of R&D investment of each firm.

Based on these results, this paper demonstrates potential implications for policy.