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Suggested Citation:"DEMAND ARTICULATION." 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 39

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THEORY AND PRACTICE: DEVELOPING NEW FRAMEWORKS FOR ANALYZING SYSTEMS OF INNOVATION 39 5 Theory and Practice: Developing New Frameworks for Analyzing Systems of Innovation A number of frameworks have been developed by U.S. and Japanese scholars in recent years in order to improve analysis and understanding of systems of innovation, with implications for individual firms, industries and nations. This chapter addresses several major issues and questions concerning frameworks for research on innovation that are also central to the work of the Joint Task Force. One area of interest is the concept of national systems of innovation.1 Are systems of innovation sufficiently different from one country to another and internally coherent to justify the use of the term? If so, what are the appropriate models for evaluating them?2 In what areas are national systems converging or diverging in their essential elements? Another trend has been the increasing focus on the importance of demand aspects of R&D and technology in driving innovation forward. These efforts are aimed at understanding phenomena that are difficult to account for utilizing frameworks that emphasize the supply aspects of national R&D systems. In addition, the trend toward increasing globalization of innovation-related activities, discussed in Chapter 3, has also attracted interest from scholars. Although the literature in this area is too extensive to review thoroughly in a report of this type, the Joint Task Force discussions highlighted several approaches to the analysis of innovation of particular relevance to the U.S.- Japan dialogue. The Joint Task Force also discussed the issue of whether currently available data are adequate for international comparisons of R&D inputs and outputs, focusing on the United States and Japan. This chapter introduces key methodologies that figured prominently in the discussions. DEMAND ARTICULATION One framework for comprehending the demand aspect of R&D is demand articulation, in which product development challenges at the component and systems levels are addressed in an integrated manner.3 Industry practitioners and academic experts on innovation have long observed the key role played by the demand side in the successful development of new technologies and implementation in specific products.4 Demand articulation represents an attempt to systematize these insights into a comprehensive model. Demand articulation encompasses straightforward market research at the firm level, mission-oriented science and technology policy approaches at the national level, and the dynamic interaction between market needs, institutional capabilities, and technology development. Several of its key features are best understood by examining specific examples. One important historical case is the impact that shifts in U.S. strategic defense policies had on technology development in the 1950s and 1960s.5 The shift from a strategic stance emphasizing "massive

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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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