The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&DCompetitive pressure can be perceived as one of the main forces driving the internationalizationof Japanese corporate R&D today. At the same time, the internationalizationprocess depends on a strong Japanese economy which full recovery remains to be seen.9.3.3 Need for Greater R&D FlexibilityJapanese companies are extremely efficient in developing products that require technologyintegration (in Japanese suriawase). The automobile industry provides perfectexample (Nakagawa 2004).In response to the need for a greater flexibility in R&D, the Japanese trend is drivenmainly by the concept of modularity. Modularity means that a product consists of manyindependently developed modules assembled in a specific, optimal architecture. Productsfrom the Information and Communication Technologies (ICT) industry, in particular, arebased on modularity. Japan has a long tradition of in-house product development whichhas created a corresponding, vertical industrial structure. This vertical structure has seriousdisadvantages compared to the much more efficient, modular and horizontally-orientedstructure of western companies (see Figure 9-9). The vertical model’s biggestdrawback is that the same R&D efforts are duplicated by many companies.Figure 9-9 Comparison of American and Japanese industry structures for ICT industry.JapanUSASemiconductorsIntelIBMSoftwareHitachiFujitsuNECMicrosoftComputerSun MicrosystemsNetworkCISCOLucentDigital AppliancesMatsushitaSonyMotorolaSource: METI 2003.Since ICT is a vital part of the Japanese industry, the ongoing quest for modularity isexpected to further drive internationalization of corporate R&D. However the longtradition of vertical industrial structure could significantly slow the process.219