Innovation Policy Challenges for Japan: An Open and Global Strategy Asie Visions, No. 45, November 2011
Productivity is increasingly important in the Japanese economy as an aging and shrinking population is expected to constrain labor input. Thus, the creation of innovation is critical for realizing economic growth and maintaining Japan's international competitiveness. Specifically, emerging countries such as China and South Korea are quickly catching up on Japan's level of technological prowess in electronics and other high-tech industries. For that reason, continual investment in R&D and provision of products and services that are competitive in the global market are crucial for Japan's international competitiveness.
As such competition heats up in the field of innovation, accelerating the speed of product development is becoming a vital issue for Japanese companies. At the same time, broadening the scope of R&D is also essential so as to keep up with increasingly complex products and systems that have developed as the result of technological advances. This paper examines the future of Japanese companies, with a particular focus on the "opening" and globalization of innovation that is critical to their international competitiveness.
This article also presents an overview of the policy challenges of the Japanese government in the area of a network-based innovation system. In Japan, the national innovation system is characterized by large companies, with substantial in-house R&D resources, dominating private R&D expenditure, while R&D collaboration between companies and universities is lacking. However, there is an increasing trend of R&D collaboration, particularly among small to medium-sized enterprises (SMEs). The Japanese government has also taken several policy actions to facilitate such open innovation activities, in the hope that they spread nationwide to include large companies.
What is vital for Japanese firms is to incorporate into their technology management both of the key elements - maintaining expansive R&D activities that do not sacrifice future growth potential through open innovation, and breaking into new growth markets through "globalization".