Japan’s challenges toward network based innovation system

Kazuyuki Motohashi Department of Technology Management for Innovation, University of Tokyo and RIETI http://www.mo.t.u-tokyo.ac.jp/ Outline of presentation

• Review of national innovation system of Japan and some signs of its change • Review of university industry collaboration policies • Policy evaluation: patent analysis • Conclusion

R&D Concentrated in large firms

Honda Toyota Panasonic

Sony

Others Nissan Takeda

Hitachi

Toshiba

Cannon NEC

NTT Denso Mitsubishi Mitsubishi Astellas Sharp Daiichi Elec. Chem. Eisai Fuji film Fujitsu Sankyo Japan’s national innovation system

4 Japanese system is changing? From RIETI survey

C ollaboration with Large firm s

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

20 or under 12.2 11.6 5 years ago Present(i ncreased) 21-100 13.0 5.6

101-300 24.4 6.1

301-1000 38.8 2.3

1001-2000 46.0 12.8

2001 or over 68.1 4.3

C ollaboration with sm all firm s C ollaboratio with universities

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

20 or under 14.9 4.2 5 years ago 20 or under 23.0 10.4 5 years ago Present(i ncreased) Present(i ncreased) 21-100 11.0 5.7 21-100 21.0 15.3

101-300 16.5 4.1 101-300 27.6 14.4

301-1000 25.2 10.3 301-1000 46.6 9.5

1001-2000 22.0 13.3 1001-2000 54.0 20.5

2001 or over 51.4 5.2 2001 or over 81.9 1.0 5 What drives the trend from internal R&D to open innovation? • Globalization and intense innovation competition: Catching up and growing importance of emerging economies (such as BRICs) • Necessity of innovation speed in order to appropriate rents from R&D • Importance of scientific knowledge for industrial innovation: particularly the case for bio- pharmaceuticals • Institutional changes in science sector: PRIs and national university reforms (such as US in 1980’s, Europe and Japan in 1990’s)

6 Japan’s UI Collaboration Policy

1998 Formulation of the Act on the Promotion of Technology Transfer from

Universities to Private Industry (the TLO Act)

1999 Creation of the Small Business Innovation Research Program (“Japanese

SBIR”)

Formulation of the Act on Special Measures for Industrial Revitalization

(Japanese version of the Bayh–Dole Act)

2000 Formulation of the Industrial Technology Enhancement Act

2001 “Hiranuma Plan” announced “Plan for 1,000 university-originated ventures

in three years”

2003 Formulation of the Intellectual Property Basic Act

2004 Implementation of the National University Corporation Law

Indentifying UI patents

• Before 2004 national university incorporation, NU’s patent application was quite restricted : important to do patent inventor identifications. • Company inventors are likely to present his/her firm’s address. • Company application patents with mix of the company and individual address inventors are likely to be UI invention patents. Trend of UI patents

8000 2.0%

7000

6000 1.5%

5000

4000 1.0%

3000

2000 0.5%

1000

0 0.0%

1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 1976 1978 1980 1982 1984

Co-application Co-invention UI Share (right scale) Hypothesis 1: How about quality? Mean Wilcoxon difference signed rank Variable UIC-matched test Overall sample (obs=162303) Numbers of claims -0.321 +++ Number of inventors 1.553 +++ Number of forward citations 0.201 +++ Number of forward self-citations -0.007 --- Number of forward nonself-citations 0.223 +++ Generality index 0.021 +++ application year ~1999 (obs=102489) Numbers of claims -0.030 +++ Number of inventors 1.622 +++ Number of forward citations 0.240 +++ Number of forward self-citations -0.032 --- Number of forward nonself-citations 0.293 +++ Generality index 0.022 +++ applied after 2000 (obs=59814) Numbers of claims -0.825 Number of inventors 1.446 +++ Number of forward citations 0.142 +++ Number of forward self-citations 0.037 ++ Number of forward nonself-citations 0.103 +++ Generality index 0.009 Note: +: UIC>matched, +++: 1% level, ++: 5% level, +: 1% level statistically significant -: UIClarge, +++: 1% level, ++: 5% level, +: 1% level statistically significant -: small

Mean Mann- difference Whitney Variable inv-apply U-test Overall sample Numbers of claims 0.332 Number of inventors 0.185 +++ Number of forward citations 0.204 +++ Number of forward self-citations 0.010 ++ Number of forward nonself-citations 0.204 +++ Generality index 0.027 Note: +: inv>apply, +++: 1% level, ++: 5% level, +: 1% level statistically significant -: inv

• UI reforms: stimulated knowledge spillover from university to industry (both quantity and quality) • SME premium over LE in a sense of innovativeness of UI results disappears (lower UI hurdle for SMEs?) • University’s ownership affected firm’s incentives for UI activities Implications for policies

• Introducing flexibility in innovation organization: R&D partnership reforms in 2009 (market friendly institutional reforms ) : ex. creating new entity between LLC and LLP to conduct collaborative R&D -> generally no harmful effects) • Government lead cooperative research project (industrial policy type) : ex. creation of Tsukuba Innovation Arena (TIA) for cooperative research on nano-technology -> be careful, incentive structure of firms, universities becomes quite complicated (needs “fine tuning” of organization such as IP policy)