I have put in the introduction and conclusion . US-Japan cross-border R&D in electronics industry

[David Farber <farber@central.cis.upenn.edu>]

From:
 Dr. David K. Kahaner
 US Office of Naval Research Asia
 (From outside US):  23-17, 7-chome, Roppongi, Minato-ku, Tokyo 106 Japan
 (From within  US):  Unit 45002, APO AP 96337-0007
  Tel: +81 3 3401-8924, Fax: +81 3 3403-9670
  Email: kahaner@cs.titech.ac.jp
Re: US-Japan cross-border R&D in electronics industry
03/05/94 (MM/DD/YY)
This file is named "j-us-rd.94"


ABSTRACT. A comparative study of 14 Japanese electronics companies on
their R&D investments in the US, and of 18 US electronics companies on
their R&D investments in Japan.


The following report was prepared Prof M.G.Serapio, U-Colorado, Denver.
A complete, printed version can be obtained by writing to the author at
the address given below. I have extracted the most important sections
for this electronic distribution. The tables mentioned are attached at
the end of this report in a simplified format. Note, for a published
paper by the same author on a related topic, see "Macro-Micro Analysis
of Japanese Direct R&D Investments in the US Automotive and Electronics
Industries", Management International Review, Vol. 33, 1993/2,
pp209-225.




   A COMPARATIVE STUDY OF U.S.-JAPAN CROSS-BORDER DIRECT
        R&D INVESTMENTS IN THE ELECTRONICS INDUSTRY


             Professor Manuel G. Serapio,, Jr.
    Department of Management and International Business
         College of Business and Administration
            University of Colorado at Denver
            Campus Box 165, P.O. Box 173364
              Denver, Colorado 80217-3364
      Phone: (303) 628-1232; Fax.: (303) 628-1299


ABSTRACT
    U.S.-Japan cross-border direct R&D investments in the electronics
industry have increased significantly during the last decade. This paper
investigates, compares, and contrasts the investment motives, research
activities, and research foci of Japanese R&D facilities in the United
States and U.S. R&D facilities in Japan in the electronics industry
using data collected through an interview study of eighteen U.S.-based
R&D facilities of Japanese companies and fourteen Japan-based R&D
facilities of U.S. companies.


     In a recent article, Cheng and Bolon [1993] called attention to the
shortage of research in the international business literature on the
subject of international direct investments in research and development
(R&D). They noted that "despite the growing involvement of multinational
companies in foreign-based R&D during the past fifteen years, there has
been little research done on why and how multinational firms
internationalize their R&D... [Cheng and Bolon 1993, p.1]" A case in
point is the paucity of studies on cross-border direct R&D investments
by Japanese and U.S. multinational companies. Japanese direct R&D
investments in the United States and U.S. direct R&D investments in
Japan comprise two of the fastest growing segments of international
direct investments in R&D. Despite this growth, there have been only a
handful of studies on U.S. direct R&D investments in Japan [e.g.,
Westney 1990; Westney and Sakakibara 1988] and Japanese direct R&D
investments in the United States [e.g., Serapio 1993].


    The purpose of this paper is to investigate, compare, and contrast
the investment motives, research activities, and research foci of
Japanese R&D facilities in the United States and U.S. R&D facilities in
Japan in the electronics industry. This paper seeks to make two unique
contributions to the small amount of available literature on this
subject. First, to the author's knowledge, this paper is the first
attempt to empirically compare and contrast U.S.-Japan cross-border
direct R&D investments in the electronics industry.  Second, the sample
size of this study is substantially larger than any previous interview
study on U.S. direct R&D investments in Japan and Japanese direct R&D
investments in the United States. While some studies have focused on
international direct investments in R&D, their utility is limited by
their small sample size or by statistical aggregation so large that
in-depth analysis is precluded.


    The plan of this paper is as follows. It begins with an overview of
the growth of U.S.-Japan cross-border direct R&D investments in general
and direct R&D investments in the electronics industry in specific. The
second section outlines the research design and objectives. Next, the
findings of an interview study of fourteen Japanese R&D facilities in
the United States and eighteen U.S. R&D facilities in Japan are
discussed. The final section summarizes the key findings of this study
and addresses areas for future research.


************** [main part available on request .. djf]


CONCLUDING REMARKS


     The findings reported in this paper illustrate a number of key
similarities and differences in the investment motives, research
activities, and research foci of the Japanese R&D facilities in the
United States and U.S. R&D facilities in Japan interviewed for this
study. The following summarizes six key findings of this study.


     1. The Japanese and U.S. companies' decisions to establish R&D
facilities in each other's markets have been influenced by several
factors. The three most important motives of both Japanese R&D
facilities in the United States and U.S. R&D facilities in Japan were:
(1) "to assist the parent company in meeting host country customer
needs," (2) "to monitor technological developments," and (3) "to
acquire/generate new technology."


     2. The investment motives of Japanese R&D facilities in the United
States and U.S. R&D facilities in Japan differed in three respects. The
two investment motives rated as important by Japanese R&D facilities in
the United States and unimportant by U.S. R&D facilities in Japan were:
(1) "to employ host country R&D personnel" and (2) "to cooperate.with
other host country laboratories." The investment motive rated as
important by  U.S. R&D facilities in Japan and unimportant by Japanese
R&D, facilities in the United States was "to establish an R&D base in
the region [see note 6 below].


    3. The majority of the Japanese R&D facilities in the United States
and U.S. R&D facilities in Japan in this study focused .  primarily on
applied research or development. The R&D facilities that conducted basic
research or some type of basic research implicitly targeted
commercialization of the technology in certain broad product areas.


    4. U.S. R&D facilities in Japan tended to work on more projects per
facility than Japanese R&D facilities in the United States. The
multifocus orientation of the former has been largely influenced by
economic considerations and the recruitment/employment systems in Japan.
The specialized orientation of the latter reflects a strategic decision
by these companies to locate an R&D facility in close proximity to key
technology centers in the United States.


    5. Both Japanese R&D facilities in the United States and U.S. R&D
facilities in Japan have demonstrated a keen interest in conducting R&D
in certain emerging and leading edge technologies. In addition, each
group tended to stress those technology areas where the host country has
been known to originate some of the most advanced research.


    6. Japanese R&D facilities in the United States have engaged in more
cooperative R&D arrangements with other host country research
organizations than U.S. R&D facilities in Japan. These collaborative
arrangements included joint R&D with U.S. research universities and
private organizations.


    The findings reported in this study offer new and fundamental
insights into the investment motives and functioning of Japanese R&D
facilities in the United States and U.S. R&D facilities in Japan in the
electronics industry. Future researchers could shed more light on the
subject of U.S.-Japan cross-border direct R&D investments by addressing
the following research issues. First, how are U.S. and Japanese
companies' performance affected by having Japan-based and U.S.-based R&D
facilities, respectively? How do the costs compare to the benefits for
U.S. and Japanese parent companies of performing R&D in Japan and the
United States, respectively? A study focusing on how U.S. and Japanese
companies tap their overseas R&D subsidiaries for competitive advantage
would substantially enhance our understanding of the organizational
functioning and competitive strategies of U.S. and Japanese
multinational companies. second, the growth of U.S.-Japan cross-border
direct investments in R&D provides an interesting opportunity for
international business researchers to test existing theories of foreign
direct investment or to develop new ones. In particular, future
researchers can use the case of international direct investments in R&D
as a basis for further exploring the link between foreign direct
investment, business strategy, and technological development. Finally,
future researchers could address the policy implications of the
expansion of U.S.-Japan cross-border direct R&D investments in the
electronics industry. This study would be timely and important for those
who are interested in technology transfer issues, especially government
policymakers who shape technology and R&D policy. It would also add to
ongoing research efforts [National Research Council 1992 (a) and (b)]
focusing on Japanese and U.S. cooperation in technology and R&D.