The R&D process in the US and Japan: Major findings from the RIETI-Georgia Tech Inventor Survey

RIETI Discussion PaperThis paper analyzes and compares the objective, the nature and the performance of R&D projects in the US and Japan, based on the first large scale systematic survey of inventors, focusing on the R&D projects yielding triadic patents. Major findings are the following. First, the projects for enhancing the existing business line of a firm account for a large share of R&D projects in both countries, confirming the view that the R&D investment is significantly conditioned by the existing complementary asset of a firm. In both countries, the inventions from R&D for existing business have the highest in-house utilization rate but use least the scientific and technical literature for their conceptions, while the reverse is the case for the inventions from R&D for new technology base (or for cultivating seeds). R&D projects for enhancing the technology base are much more common in the US. This difference can be partly accounted for by US inventors being more likely to have a PhD, but not by the differences in the structure of finance. US government financial support is relatively more targeted to projects for existing business and US venture capital provides support mainly projects for creating new business (6% of them), but not for more upstream projects. Only about 20-30% of the projects are for process innovation in both countries, providing direct evidence for the earlier findings that were based on US patent information. Product innovation generates process patents more often in Japan than in the US (25% vs. 10%), while product innovation projects are relatively more numerous in Japan. In both countries a significant share of inventions (more than 20%) were not the result of an R&D project, and a substantial proportion of such inventions are valued among the top 10% of patents, suggesting that R&D expenditure significantly underestimates inventive activities. A US invention is more often an unexpected by-product of an R&D project (11%) than in Japan (3.4%). The two countries have surprisingly similar distributions of R&D projects in man month and the average team size. In both countries, smaller firms tend to have relatively more high-value patents. In the US, inventors from very small firms (with less than 100 employees) and universities jointly account for more than one quarter of the top 10% inventions, even though they account for only 14% of all inventions. Man-months expended for an invention has a significant correlation with the performance of the R&D projects for existing business, less so for new business and not at all for those enhancing the technology base,suggesting substantial heterogeneity by project types in the determinants of the performance and in the uncertainty. A PhD has a significant correlation with R&D project performance especially for new business

Commercialization and Other Uses of Patents in Japan and the US: Major Findings From the RIETI-Georgia Tech Inventor Survey

RIETI Discussion PaperBased on the newly implemented inventor survey in Japan and the US, we have examined the commercialization and other uses of triadic patents. Although the two countries have a similar overall level of commercialization (60% of the triadic patents), the structure is different: in Japan, we see a higher incidence of in-house use relative to the overall level of commercialization, more inventions being licensed and less used for startups. We also see more multiple uses (in-house and license/startup) in Japan. In both countries licensing plays a relatively important role for commercializing the inventions from R&D targeted to new business and to enhancing the technology base. Consistently, licensing becomes more important as a patenting reason as the invention involves more scientific knowledge. The key difference in startups between the two countries is a high incidence of the inventions of university researchers being used for startups in the US (35%). In both countries strategic holding (use of the patents for blocking and the prevention of inventing around) is one of the major reasons of non-commercialized patents. Only 20% of the internally commercialized patents can be used on a stand-alone basis in both countries, and both the incidence of cross-license conditional on license and the incidence of license itself tend to increase with the size of the bundle of the patents to be jointly used with that invention. As appropriation measures, the first mover advantage (FMA) in commercialization and the FMA in R&D are the most important in both countries, while the latter becomes more important as the invention involves more scientific knowledge. The US inventors rank patent enforcement significantly higher than possessing complementary capabilities, while the reverse is the case for Japanese inventors. In addition, enhancing the exclusive exploitation of the invention is a more important patenting reason in the US. The fact that the commercialization rate of patented inventions is quite similar between the two countries despite of the significant difference of the appreciation of exclusivity indicates that exclusivity may promote exploitation in certain areas and retard it in others. Finally, non-conventional patenting reasons are also important in both countries: blocking and pure defense are at least as important as licensing, and corporate reputation is an important reason for patenting by small firms

Organizational paths of commercializing patented inventions: The effects of transaction costs, firm capabilities, and collaborative ties

This study examines the factors affecting modes of commercializing patented inventions using a novel dataset based on a survey of U.S. inventors. We find that technological uncertainty and possessing complementary assets raise the propensity for internal commercialization. We find that R&D collaboration with firms in a horizontal relationship is likely to increase the propensity to license the invention. In addition, the paper shows that macro-level environment conditions that affect exchange conditions, such as technology familiarity, influence the effects of capabilities on governance choice.transaction cost economics; knowledge-based view; collaboration ties; commercialization; innovation; patent

Intra-organizational integration and innovation: organizational structure, environmental contingency and R&D performance

It is widely thought that intra-firm integration has a positive effect on organizational performance, especially in environments characterized by complex and uncertain information. However, counter arguments suggest that integration may limit flexibility and thereby reduce performance in the face of uncertainty. Research and development activities of a firm are especially likely to face complex and uncertain information environments. Following prior work in contingency theory, this paper analyzes the effects of intra-organizational integration on manufacturing firms’ innovative performance. Based on a survey of R&D units in US manufacturing firms and patent data from the NBER patent database, we examine the relation between mechanisms for linking R&D to other units of the firm and the relative innovativeness of the firm. Furthermore, we argue that the impact of integration may vary by the importance of secrecy in protecting firms’ innovation advantages. We find that intra-firm integration is associated with higher self-reported innovativeness and more patents. We also find some evidence that this effect is moderated by the appropriability regime the firm faces, with the benefits of cross-functional integration being weaker in industries where secrecy is especially important. These results both support and develop the contingency model of organizational performance.Innovation; Organizations; Contingency theory;

Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (or Not)

Based on a survey questionnaire administered to 1478 R&D labs in the U.S. manufacturing sector in 1994, we find that firms typically protect the profits due to invention with a range of mechanisms, including patents, secrecy, lead time advantages and the use of complementary marketing and manufacturing capabilities. Of these mechanisms, however, patents tend to be the least emphasized by firms in the majority of manufacturing industries, and secrecy and lead time tend to be emphasized most heavily. A comparison of our results with the earlier survey findings of Levin et al. [1987] suggest that patents may be relied upon somewhat more heavily by larger firms now than in the early 1980s. For the protection of product innovations, secrecy now appears to be much more heavily employed across most industries than previously. Our results on the motives to patent indicate that firms patent for reasons that often extend beyond directly profiting from a patented innovation through either its commercialization or licensing. In addition to the prevention of copying, the most prominent motives for patenting include the prevention of rivals from patenting related inventions (i.e., patent blocking'), the use of patents in negotiations and the prevention of suits. We find that firms commonly patent for different reasons in discrete' product industries, such as chemicals, versus complex' product industries, such as telecommunications equipment or semiconductors. In the former, firms appear to use their patents commonly to block the development of substitutes by rivals, and in the latter, firms are much more likely to use patents to force rivals into negotiations.