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With most information about new research and technology being available on the public domain because of the nature of the market and legal constraints, the basic advantages of developing new fundamental technology was largely negated by companies, which had superior manufacturing and marketing technologies. This is because these companies with more expertise in “applied” research were able to transfer technology from the lab to the marketplace faster. This is evident when we consider most successful new businesses founded in the late 20th century. These businesses were not those who developed the most innovative or fundamental technologies. Instead these were those firms who were able to effectively utilize and exploit these technologies by making them into commercially successful products. As their market strength grew, they diversified into different product lines based on their applied research labs, which could develop innovative uses for existing technology. This is apparent when we consider that Japanese companies went from being regarded worldwide as mere “copycats” of American technology to being regarded as major innovators of the use of technology. This paper attempts to explain the success of Japanese technological firms in relation to the Global research and development strategy adopted by them as tries to show that this is a direct result of the Japanese nemawashi and its judicious investment in long term technology that appears promising. The emergence of new, previously untapped scientific nodes around the world led to technology becoming truly global. Even though, the United States remained the leader in developing new fundamental technology, there was emerging, an increased source of potentially relevant knowledge across the globe. Because of this emerging information, companies felt a need to establish a presence in these areas to effectively utilize and access this new research from foreign universities and research labs. Previously, research and development organizations were located close to the corporate base because most of the decisions regarding R&D were made there. This would no longer possible if these firms were to effectively utilize and commercialize new research on a truly global scale. This led to this new model of managing global research and development, to either provide the home base with new sources of technology or to be used to transfer technology into a foreign market to gain competitive advantage. For years, “Japanese companies have come to the US, bought or borrowed the best American technology and sold it back as finished products (Susan Moffat 84).” In this context, the Japanese have been incredibly successful in managing their global industrial research and development labs and the scientific networks that they formed. After the end of World War II, with the Japanese economy and industrial research laboratories in shambles, the Japanese looked to the US for new innovative ideas and technical expertise. With the wealth of information available in the US in the public domain and licensing agreements with some major companies such as RCA, the Japanese were able to commercialize innovative American ideas and bring them to the market before its American counterparts. For example; The VCR was licensed out to the Japanese because the parent American company did not realize its potential and later ended up competing against its own technology that had been improved by the Japanese. The reasons the Japanese were able to identify key technologies and bring them onto the market faster are threefold. One, it had a huge advantage over its American counterparts in that it had switched to using the “applied” model of industrial research a lot longer. This was before the failings of the traditional model of industrial research became apparent in the United States and top American companies such as AT&T and GE started to move away from it. One of the primary reasons they made the switch was because after the end of World War II, the Japanese were not in a position to spend big dollars on fundamental research. They instead concentrated on improving their manufacturing processes and making their product lines, better and easier to use. This was done by using the applied research model and talking to the actual customers to improve the products. This is the main reason IBM’s technical entourage led by Gomory was surprised when it found that the Japanese manufacturing processes were vastly superior to those used in American plants even though the technology was lagging behind the United States. These superior processes gave the Japanese firms a price and quality advantage over their competitors. In addition, because of the close relationship between the manufacturing and the research division, technology transfer between the two was much faster. This led to a decrease in product development time. Hence, new products were introduced to the market faster. They also tend to locate their research plants near their manufacturing centers for a more market oriented development. This is one of the main reasons for their faster development time while maintaining the quality of the finished products. This approach was suited on improving products using technology that was already available. However, this model is not very helpful in coming up with innovative product ideas. To get around this problem, Japanese companies looked American research institutions and universities. They established home-base augmenting research laboratories on American shores near these regional clusters of technology to transfer technology to their central research organizations. They also established various agreements with American firms for technology transfer, which would let them use American technology. This technology was used as a starting point in their applied research labs to develop new products or improve existing ones. This approach was extremely successful, which is evident when we consider the difference in terms of the dollars paid by Japanese companies in royalties and licensing fees to American companies and the value of the products, developed with this technology, imported into America by Japanese firms. Another factor that played an important role was the Japanese philosophy of industrial research, keisan – constant incremental improvement. They did not tend to focus on only adding dramatic improvements to their products. Instead, they talked with actual customers and added features that they felt were the most important to them. Their applied research labs were especially suited for this task, something that was realized in the United States in PARC when it conducted the survey to operate its copiers and took this approach to solve the problems found. In conclusion, the advantage the Japanese firms had in using the applied research model before most of the US electronic firms gave them the initial big lift. They were able channel and use their limited research resources more effectively to develop better quality and cheaper products by focusing their research on improving their manufacturing processes. This helped them gain market share. After they had a strong market position, they could effectively use that to diversify and launch different product lines. These products ideas were also for the most part built using borrowed or licensed foreign technology, which they built upon. In addition, the presence of their home base augmenting research labs abroad helped them identify key product technologies they could use and their emphasis on long range planning has seemingly paid off. Bibliography: Word Count: 1203
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