National Academies Press: OpenBook
Suggested Citation:"NATIONAL LEVEL DIFFERENCES." National Research Council. 1999. New Strategies for New Challenges: Corporate Innovation in the United States and Japan. Washington, DC: The National Academies Press. doi: 10.17226/5823.
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PAST PERCEPTIONS OF U.S. AND JAPANESE INNOVATION SYSTEMS 10 2 Past Perceptions of U.S. and Japanese Innovation Systems Many observers have compared the U.S. and Japanese corporate innovation systems in order to better understand their inherent strengths and weaknesses and to ascertain which elements might be borrowed or adapted as a means of improving competitive performance. Some experts have focused on particular aspects such as R&D; others have focused on distinctive institutional and organizational features; while yet others have produced broad overviews encompassing historical as well as current developments.1 A summary of past perceptions of the U.S. and Japanese corporate innovation systems will be useful in evaluating ongoing changes. In general, observers have concluded that in the spectrum of attributes and capabilities comprising innovation, the United States is strongest in inventiveness, and Japan is strongest in manufacturing and customer feedback to enhance product quality. More specifically, as described by Lynn and others, the strengths and weaknesses of the Japanese system, in contrast to the U.S. system, are as follows: (1) an alleged unique ability to exploit technical knowledge developed in other countries; (2) speed in commercializing technology; (3) strength at incremental innovation in processes and products; (4) weakness at making breakthroughs and generally in basic research; and (5) emphasis on manufacturing process and customer feedback. 2 NATIONAL LEVEL DIFFERENCES Underlying the strategies toward innovation in each country are fundamental national level differences that influence corporate innovation choices. These fundamental differences include: • a higher share of GNP for nondefense R&D in Japan (2.74 percent) than in the United States (2.05 percent)3 • the higher percentage of total national R&D funded by industry in Japan than in the United States (72 percent in Japan [1995] vs. 60 percent in the United States [1995])4 • venture capital and strong equity markets as driving forces for innovation and competitiveness in the United States • the prominent role of U.S. universities as performers of research, especially basic research (most of which is funded from federal sources), and strong linkages between university research and private industry 5 • the prominent role of the Japanese government in establishing industrial and technology policies, disseminating information about technological needs and opportunities, assisting technology adoption, and otherwise working with Japanese corporations through trade associations, trading companies, and other intermediaries that distribute technological information6 • the increasing focus of U.S. firms on partnering

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Innovation, "the process by which firms master and get into practice product designs and manufacturing processes that are new to them," is vital for companies wishing to remain competitive in today's rapidly changing high technology industries. American and Japanese firms are among the world's most technologically innovative and competitive. However, the changing dynamics of global competition are forcing them to rethink their technological innovation strategies. The choices they make will have great impact on their futures as companies as well as on the livelihoods of their employees and the communities in which they operate.

In order to understand the ways in which Japanese and American companies are changing their technological innovation strategies and practices, the Committee on Japan of the National Research Council and the Committee on Advanced Technology and the International Environment (Committee 149) of the Japan Society for the Promotion of Science (JSPS) organized a bilateral task force composed of leading representatives from industry and academia to assess developments in corporate innovation strategies and report on their findings. Through a workshop discussion of the issues and subsequent interaction, the task force explored the institutional division of innovation in both countries: the structure and performance of technology-based industries, the role of the government in the support of science and technology, and the role of universities in the science and technology system. The task force was particularly interested in exploring the points on which the two systems are converging,-i.e., becoming more similar in strategy and practice-and where they continue to be distinct and different.

Although a comprehensive study of these trends in U.S. and Japanese innovation was not easily feasible, the task force was able to develop several conclusions based on its workshop discussion and follow-up interactions that were substantial in time and content. This report identifies a set of issues whose further elucidation should be helpful in guiding public policy in both nations. These issues include the role of external sourcing of innovation, transnational activity and globalization, the organization and performance of R&D, and the role of consortia, joint ventures and other joint activities. A call for greater international efforts to collect and analyze data on these important trends is the central recommendation of the task force.

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