New Strategies for New Challenges: Corporate Innovation in the United States and Japan (1999)
Chapter: Capital Markets
Changes in Industry
Table 3-1 shows trends in Japanese and U.S. industrial R&D expenditure. Spending was constrained in both countries during the early to mid 1990s. More recent U.S. statistics show that U.S. industrial R&D performance has risen moderately over the 1995-1997 period, but comparable figures for Japanese industry are not yet available.
In some respects, large U.S. and Japanese companies appear to be adopting more similar approaches to technology strategy and management as they restructure themselves in response to new global economic conditions. U.S. firms are relying more on trusted suppliers for innovations, while Japanese suppliers are beginning to expand business with firms outside their normal business groups. Technological parity seems to have been reached in many high tech industries between the U.S. and Japan; and the rate of change of relative technical capability has slowed as U.S. firms in several industries have recovered some of the market share lost to Japan in the 1980s.6
In attempting to understand the changes in corporate innovation outlined in this chapter, it is important to keep in mind the effects of global partnering and the transnational nature of today's markets. The different approaches used by various alliances have broad implications for corporate innovation strategy. Because many alliances are multinational groupings of companies, comparative analyses must go beyond U.S.-Japan comparisons. In light of these trends, it may be less useful than it was in years past to think in terms of distinct U.S. and Japanese approaches. Corporate alliances are discussed in greater detail in Chapter 4.
Capital Markets
A major difference between Japan and the United States is that the United States has well-developed venture capital markets which provide an institutionalized system of capital for small, entrepreneurial high-tech enterprises, in combination with an active equity market that rewards successful ventures with cash for their equity interest when they sell their stock to the public.7 The U.S. business culture supports the formation and growth of technology-based firms, allowing successful entrepreneurs and their investors to reap significant rewards if successful.
TABLE 3-1 U.S. and Japanese Industrial R&D Performance, billion dollars
