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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
