National Academies Press: OpenBook

New Strategies for New Challenges: Corporate Innovation in the United States and Japan (1999)

Chapter: Precompetitive Research Partnerships, Alliances, and Consortia

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Suggested Citation:"Precompetitive Research Partnerships, Alliances, and Consortia." 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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Page 34
Suggested Citation:"Precompetitive Research Partnerships, Alliances, and Consortia." 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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Page 35

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EXTERNAL RELATIONSHIPS IN CORPORATE TECHNOLOGY POLICY AND INNOVATION STRATEGY 34 where U.S. and Japanese companies have existing joint venture or alliance relationships aimed at Asian markets or Asian procurement. In recent years, industry supported basic research has remained fairly stable in the United States (see Figure 4-2). However, some have argued that restructuring of corporate R&D of the type undertaken by a number of firms which have downsized central labs and refocused work on nearer term business needs, will result in inadequate funding of long-range, industry-sponsored, basic research in the global economy. Even if outsourcing of innovation accelerates OEM innovation rates, suppliers may have relatively short time horizons. Their access to new ideas from university research becomes a critical link in the national system of innovation, and poses a policy problem for government to find ways to enhance this linkage. Others have argued that increased focus and efficiency in U.S. corporate R&D is a fundamentally healthy response to competitive pressure. Firms that outsource increasing fractions of their innovation needs are likely to do so at the expense of their fundamental industrial research, as the scope of the latter is narrowed. This increased reliance on other institutions (universities and other public research institutions) may well result in an overall reduction in long range research investments, or it may create a clearer demand for such research. Some experts predict that the U.S. corporate central lab will increasingly play a scanning, mediating, and strategic role, quickly linking the firm's business needs to internal and external sources of necessary technology and informing technology strategies through research-based technology road maps. In this formulation, the central lab will put relatively less emphasis on internal research and relatively more on managing rapidly evolving innovation networks comprised of partnerships and alliances of various forms.12 It is also possible that firms will fail to maintain a critical mass of internal capability needed to identify and absorb the help they need. It will be important to track this trend, since the small and medium enterprises and universities to which innovation is outsourced may be innovative but may prove unable to contribute to basic industrial research. However, this also differs from industry to industry. For example, small U.S. start-up firms have played a major role in commercializing basic knowledge in biotechnology and computer software. In some industries and technical fields, industry-university partnerships, sometimes with government participation and support, appear to be effective in leveraging research efforts. Precompetitive Research Partnerships, Alliances, and Consortia In recent years the number of corporate alliances has been growing rapidly, particularly cross-border alliances (Figure 4-3). Such alliances have many purposes including gaining flexible access to the innovative capabilities of suppliers with specialized technical skills. As revealed in a recent survey of executive managements in Japan, the United States and Europe, in the case of development, alliances were second after internal R&D as a source of technology.13 For some time, support for R&D consortia has been an important element of Japan's technology policy. In recent years, the United States has expanded programs of public support for research consortia to develop civilian, precompetitive technologies. Notwithstanding continuing debate in the United States over the appropriate federal role in civilian technology development, the increasing importance of partnerships and alliances in innovation has raised several challenging questions in recent years, particularly for the United States. For example, when is public support justified? For publicly supported research consortia, when is foreign corporate participation appropriate? How should collaboration be structured and managed so that consortia are most

EXTERNAL RELATIONSHIPS IN CORPORATE TECHNOLOGY POLICY AND INNOVATION STRATEGY 35 Figure 4-2 Sources of funds for basic research in the United States. NOTE: Data are in current U.S. dollars. SOURCE: National Science Board, Science and Engineering Indicators 1998. Figure 4-3 Distribution of strategic technology alliances between economic blocs, 1990-1994. SOURCE: John Hagedoorn, Maastricht Economic Research Institute on Innovation and Technology, Cooperative Agreements and Technology Indicators database, unpublished tabulations as presented in National Science Board, Science & Engineering Indicators-1996 (Washington, D.C.: U.S. Government Printing Office, 1996).

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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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