The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&D9 Japan: Internationalization of Corporate R&DKyoko Nakazato & Bogumil Hausman9.1 IntroductionJapanese companies have a tendency to conduct R&D in-house and have a much lowershare of R&D in foreign units than other developed countries (see Chapter 2). In 2001the share of manufacturing R&D under the control of foreign affiliates was only 4percent in Japan.Historically the strength of Japanese manufacturing companies was believed to bebased upon close interaction between the R&D division and manufacturing division,including suppliers (Odagiri 2005). To maintain this interaction, the functions wereinternationalized as part of an export-led strategy, which caused delay of full-fledgedoverseas production. The internationalization of R&D activities also started relativelylate (Iwasa & Odagiri 2004).The purpose of this chapter is to analyze the ongoing process of internationalization ofcorporate R&D in Japan and address the following key questions:• How strong is trend to internationalize corporate R&D in Japan? How much inwardand outward R&D investments and other forms of international collaborationare taking place?• What driving forces and barriers are specific to Japan?• What are the future trends and implications for Sweden and Swedish policymaking?Material presented in this chapter is based on interviews with companies, policymakersand researchers and on the review of existing written resources.9.2 Internationalization of Corporate R&D in Japan9.2.1 Basic ConceptsThe purpose of R&D activities conducted abroad by multinational companies can bedivided into three basic categories (see UNCTAD 2005 and the discussion in Chapter 2):• Adaptive R&D. These activities include basic production support and the modificationand upgrading of the existing technologies and products for the local market.• Innovative R&D. This includes development of new products for the local marketand eventually for the global market.207