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Introduction Why should rivals cooperate? This is the fundamental question posed by R&D consortia. There are a number of obvious reasons why collaboration among competing firms in R&D is everywhere the exception rather than the norm. After all, proprietary information is central to competition in capital- ist markets. Moreover, there is always the fear that one partner will benefit to the detriment of the other. R&D, after all, is not an end in itself. Rather, it is a way station to the ultimate goal- commercial exploitation of technol- ogy in the marketplace. Critics also fear that collaboration in R&D will lead to the growth of oligopolies or market-distorting subsidies from gov- ernment. Finally, there is a cultural explanation. Corporations have differ- ent strengths and weaknesses, different corporate strategies and cultures. Working together is not easy anywhere, particularly in the United States where the ethic of independent entrepreneurship is strong. Despite these obvious potential problems, there is another side of the picture. Even the biggest corporations now find R&D too expensive and product life cycles too short to be technologically self-sufficient. Increas- ingly, firms depend on external sources of technical information. Theoreti- cally, R&D collaboration can bring mutual benefits to participants by mobi- lizing resources for longer-term goals, speeding the deployment of technology across industry, and avoiding duplicate efforts. When there is general agreement that the development of a technology is likely to produce important benefits to a number of industries, or when an industry is seen as strategically im- portant, some believe the rationale for government support is strengthened. 1

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2 The context for R&D collaboration is even more complicated when the participating organizations come from the United States and Japan. Skep- tics, noting that American firms outside the aerospace industry have not had much experience working together, rightly wonder whether R&D collabora- tion is really viable when firms from both countries are involved. In con- trast to the situation in Japan, where joint R&D activities have been more common, up unto the mid-1980s the standard U.S. textbook on R&D man- agement dealt with "collaboration" as a problem of "collusion." Striking asymmetries in the R&D systems of the two countries make it difficult to be certain in advance that reciprocity can be ensured.) The reality is that Japan is now a technological superpower. There is no way to avoid interactions with Japan, but how can the United States as a country and U.S. partners get the most out of these interactions? If R&D collaboration provides a mechanism for learning from Japan how to im- prove access to technologies developed abroad, if it results in improved capabilities to incrementally improve technology and to manufacture high- quality goods more efficiently, there will be increasing interest in U.S.- Japan collaboration. The reality is that Japanese companies have the capital and the will to go global, and technological linkages of many types are being formed with firms in the United States. The past few years have seen growing interest in R&D consortia in the United States. There are a variety of reasons, not the least of which is a recognition of Japan's competitive challenge. Another explanation can be found in the focus on industrial policies or affirmative actions taken by governments to promote industries around the world. In this context,~there is growing interest in the organizational technologies that have contributed to Japan's technological success. R&D consortia represent an organiza- tional experiment and Japan's experience is naturally of interest.2 Since the mid-1980s both the U.S. Congress and the executive branch have favored relaxation of antitrust provisions that open the way for new forms of col ~ National Research Council, Office of Japan Affairs, Learning the R&D System (Washington, D.C.: National Academy Press, 1989-90) reports comparing the R&D systems in U.S. and Japanese universities, national laboratories, and companies. See also Frank Press, Scientific and Technological Relations Between the United States and Japan, for the Commission on United States-Japan Relations for the 21st Century, 1990. 2 For more detailed analysis of differences in the approaches to consortia in the United States and Japan, see Jonah D. Levy and Richard J. Samuels, "Institutions and Innovation: Research Collaboration as Technology Strategy in Japan," MIT Japan Program Working Paper 89-02, 1989. See also Fumio Kodama, National Institute of Science and Technology Policy, "Rivals Participating in Collective Research," paper presented at International Conference on Science and Technology Policy Research, February 2-4, 1990, Shimoda, Japan.

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3 laboration among companies. In addition, Japan's growing investments in U.S. high-technology companies present new dilemmas for U.S. policymakers in developing policies governing foreign participation in U.S. consortia, many of which were launched with government support in response to the competitive challenge of Japanese industry. Finally, Japanese government agencies, including the Ministry of International Trade and Industry (MITI), have responded to complaints from abroad concerning perceptions of a "closed" Japanese R&D system by inviting foreign participation in Japan's R&D consortia and by developing new proposals for international R&D collaboration. The Intelligent Manufacturing System (IMS) is perhaps the most discussed today, but the FSX project and plans for a new effort in optical computing also present U.S. policymakers with new challenges in forging a response. In this environment, Americans are evaluating the risks and opportunities of collaboration with Japan in R&D consortia. Today we see IBM and Thomson participating in a Japanese project on "fuzzy logic" and GE and United Technologies negotiating for participation in MITI projects. More U.S. corporations will have to decide whether to join consortia with Japa- nese competitors. Policymakers in the U.S. government are challenged not only to respond to the initiatives coming from Japan, but also to discern the actual results and consider whether R&D consortia can be used effectively in the United States. In this regard, Japan's experience may be a useful benchmark for experimentation here. This report of a workshop organized by the Committee on Japan, with assistance from the Office of Japan Affairs, brings together some of the highlights of the discussions. Chaired by Richard J. Samuels of MIT, the workshop was designed to provide a forum to explore U.S. and Japanese experiences with R&D consortia, to identify the critical cross-border issues that bear on whether mutually beneficial collaboration with Japan through consortia is possible, and to examine the policy implications of U.S.-Japan collaboration in consortia. The report was reviewed by individuals who made presentations at the workshop and whose suggestions are much appre- ciated.