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Suggested Citation:"Labor-Market Practices." 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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EXECUTIVE SUMMARY 3 continued long-term growth in entitlement spending has negative implications for discretionary programs, including science and technology. In Japan, the government is said to be reducing industrial intervention. At the same time, it is increasing subsidies for research and development and continues to play a coordinating role in setting industrial policy. Also, a number of policy changes undertaken after the active portion of the Joint Task Force activity was completed reveal renewed determination on the part of the Japanese government to strengthen basic science. These changes include increased support for educational infrastructure in the supplemental budgets of recent years, as well as new and expanded programs of support for academic research by agencies other than the Ministry of Education, Science, Sports and Culture (Monbusho), such as the Science and Technology Agency (STA) and the Ministry of International Trade and Industry (MITI). In 1995, Japan passed a new Science and Technology Basic Law, and released its Science and Technology Basic Plan in July 1996. Two key elements of these initiatives are increased public support for science and technology, and systemic changes aimed at improving the environment for creative basic research.5 Encouragement of university-industry cooperation has also been a major issue, as seen in the establishment of the new Office for the Promotion of Academia-Industry Cooperation at MITI in 1995, and legislation drafted jointly by MITI and Monbusho in 1998. Continuing Fundamental Differences and Evidence Against Convergence Defense-Related R&D Spending Despite a long-term decline in the share of U.S. R&D efforts devoted to defense, defense will continue to play a major role in U.S. research and innovation, while Japan's defense R&D, although growing rapidly, continues to be relatively limited. Role of Universities Universities in the United States play a much greater role as performers of research and as partners with industry than do universities in Japan. Industry/Government Division of Responsibility Notwithstanding recent changes in Japanese policy outlined above, industry continues to be the predominant source of research and development funding in Japan. In the United States, due primarily to defense R&D, government funds a higher proportion of R&D than in Japan, although the proportion of U.S. R&D funded by industry has grown over the long-term. Labor-Market Practices The Japanese labor market is characterized by long-term employment, whereas the U.S. labor market is characterized by job mobility. These attributes lead to significant differences in corporate employee development practices, although the historic commitment to lifetime employment at some Japanese companies has given way in Japan to pressures from the recession, as it has in some U.S. companies such as IBM that were characterized by long-term employment until the 1990s.

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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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