Innovation in Japan: What Role for University Spin-offs?

Abstract

Japanese public authorities are concerned that Japanese industry is losing its competitive advantage in high technology industries. Moreover, there is a strong concern about the hollowing out of the local industrial basis during a period where the population is ageing and there is a need for the development of new fiscal resources locally. Public authorities still count on large companies to be the main source of innovation. However, the economic model of innovation and product development has reached its limit. For the first time since the 1950s there is a strong belief that innovative start-ups in manufacturing industries and/or having R&D activities that can lead to possession of high value patents need to play an important role in the industrial structure. The perception exists that Japan lost its competitiveness with the USA (and is likely to have similar problems also with China and India in the coming years) precisely because it had fallen behind in terms of creating the type of R&D-oriented companies that would create knowledge-intensive employment, develop global branding strategies and manage efficiently tangible and intangible assets. In this context, national and regional universities are expected to play an active role as providers of knowledge and technologies in collaboration with public administration and business. This could be achieved as usual through traditional means such as technology transfers together with commissioned and common research for and with private companies. However, since the beginning of the 2000s, university spin-offs (USOs) are beginning to play an increasingly significant role in the revival of Japanese economy in terms of attracting venture capital and promoting innovation. This article will describe and analyze the situation of the university spin-offs in Japan: the importance and origin of the phenomenon, and the characteristics and performance of those spin-offs. It will identify the obstacles they encounter and the opportunities they have in the current Japanese business environment, and assess the impact of the public policy supporting them. Finally, it will propose a possible scenario of their evolution in view of the domestic and international changes in the business environment.