Between Policies and Practice
Juan Jiang, Yuko Harayama, and Shiro Abe
The need to strengthen the knowledge-based economy and its underly-ing research and development (R&D) activities has prompted the Japa-nese government to introduce a number of technology policies. These policies especially focus on a more active role by universities. In support of the policies, the Basic Law for Science and Technology of 1995 was introduced. The 1995 law gives the government legal power to promote the advancement of science and technology (S&T). This legislation set the stage for the introduction of fi ve-year S&T basic plans.1 The under-lying motivation for introducing the fi ve-year plans was to vitalize the Japanese economy through the creation of spinoff and start-up compa-nies, as well as through the opening of new industries that were induced by technology transfers from universities and research institutes.
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1 The fi rst basic plan covered the period from 1996 to 2000, and the second one covered 2001 to 2005. The cabinet adopted the third plan on March 28, 2006.
140 How Universities Promote Economic Growth
However, the need for university-industry links (UILs) has been voiced at other times in Japan’s history also. Throughout the past century, Japa-nese universities have interacted with industries. However, the rationale for such interaction and the way in which it took place have differed in specifi c periods. For example, UILs have encompassed the training of engineers; the development of generic technologies; and, most recently, the building of innovation capability that is based on the accumulation of knowledge.
This chapter attempts to identify the evolutionary path of UIL-related policies in Japan through a historical analysis of Japanese technology pol-icy and a case study based on Tohoku University. We start, in the follow-ing section, with a brief history of the Japanese technology policy in the post–World War II period (late 1940s to mid-1990s), with an emphasis on the expected role of universities at that time. Then we look at the past ex-periences of UILs in the Japanese context, through a historical analysis of Tohoku University, which was established in 1907 and which pioneered the movement toward the entrepreneurial university. This movement in Japan coincided with the period during which, in the United States, the Massachusetts Institute of Technology (MIT) created the model of the entrepreneurial university—an institution that combined teaching and research with the capitalization of knowledge. In the following section, we describe the policies introduced to stimulate UILs since the end of the1990s. These recent UILs can be termed government-led UILs. We con-clude by reassessing the role of the government in encouraging UILs.
A Brief History of the Japanese Technology Policy
Modern Japanese technology policy was launched shortly after World War II; the early focus was on the assimilation of foreign technologies.
The First White Paper on Technology
The end of World War II marked the shift away from defense-oriented technology policies and toward economic ones stressing social issues. The fi rst white paper on technology, The State of Our Country’s Industrial Technology (ITA 1949), set the tone and oriented later policies. It ex-pressed the concern of Japanese offi cials over the state of technological capabilities and contained pragmatic proposals for improving them.
The white paper identifi ed a number of the weaknesses of Japanese industry, including:
University-Industry Links in the Japanese Context: Between Policies and Practice 141
• A lack of domestically developed technology. This weakness was part-ly attributable to the myopic attitude of Japanese industrialists, who would foresee short-term returns and who preferred to import tech-nology rather than to invest in costly R&D activities.
• Diffi culty in translating the research results accumulated within aca-demia into industrial products. This weakness was attributable to the lack of applied R&D.
The white paper proposed to enhance applied R&D and to solicit the active engagement of universities in technology transfer. The idea of an innovation system that was based on the patent system, standardization, quality control, contributions of academic societies, and high-level train-ing of engineers was already present, and the white paper urged strong political support to develop a technology-based economy.
Large-Scale Industrial R&D System
During the 1950s, the import of technologies gathered momentum.
Japan was successful in assimilating, adapting, and improving imported technologies. During the 1960s, the production process greatly improved, backed by a strong focus on quality control. A new trend in Japanese in-novation system appeared during that period: private companies started to set up research laboratories. Known as central research laboratories, these labs were devoted to developing their own technologies. However, despite their efforts to develop indigenous technology, few technologi-cal breakthroughs actually emerged. The efforts of industry concentrated mainly on improving existing or imported technologies.
After this start, in 1966 the Ministry of International Trade and Indus-try (MITI) implemented the Large-Scale Industrial Research and Devel-opment System. Commonly called “Big Projects” (Group for Promoting the Commemoration of the 20th Anniversary of Big Projects 1987), the system had the aim of supporting high-cost, long-term, and high-risk re-search projects, with a potential to produce technological breakthroughs and large spillovers, but with little chance of being initiated by private companies in the absence of government intervention. By selecting a few technological areas and making available substantial subsidies on one hand, and by combining the resources of private companies, universities, and national research laboratories on the other, the government sought to consolidate Japan’s technological base in promising industries and sub-sequently to increase the economy’s competitiveness. It is worth noting
142 How Universities Promote Economic Growth
that the concept of Big Projects was based on explicit commissioning of research. Each fi rm or research entity would individually execute one part of a research project, so no on-site research collaboration was planned.
Also, key actors were private companies, not universities, though univer-sities were expected to provide expertise on some fundamental issues.
Thus, under the umbrella of Big Projects, universities, national research laboratories, and private companies were partners and collaborators, but only limited interaction took place in reality.
Besides MITI, two other government agencies also promoted UILs. The Science and Technology Agency (STA) introduced the System for Promo-tion of Coordinated and Creative Science and Technology in 1981 (Nihon Keizai Chosa Kyogikai 1988), and the Ministry of Education (Monbusho) implemented cooperative research with the private sector in 1983 and began establishing centers for cooperative research in 1987.2 The STA’s system consisted of contract-based fi ve-year joint research projects involv-ing industry, the universities, and the state. The projects sought to create technological seeds. The Ministry of Education, which is the regulatory authority on higher education, focused on stimulating research coopera-tion between nacoopera-tional universities and industry. The program to develop cooperative research with the private sector gave private sector research-ers and engineresearch-ers open access to univresearch-ersity laboratories, and the centresearch-ers for cooperative research provided the space within national university campuses to carry out cooperative and commissioned research, as well as provided training for private sector engineers. All these policies under-scored the need for university-industry research cooperation.
Toward a Nation Based on the Creation of Science and Technology The 1990s, a period in which Japan faced prolonged economic stagna-tion, are often called “the lost decade.” This period of stagnastagna-tion, howev-er, prompted the enactment of the Basic Law for Science and Technology of 1995. This legislation enabled the government to pursue and elaborate the concept of a nation based on the creation of S&T. The law required the costly and long-term engagement of the public sector. It emphasized cooperation among national research laboratories, universities, and the private sector, as well as the right balance among basic research, applied R&D, and training of researchers.
The idea for such a law was conceived in 1968, when the Council for Science and Technology recommended that the government
formu-2 In 2000, 53 centers had been founded within national universities.
University-Industry Links in the Japanese Context: Between Policies and Practice 143
late a basic law for S&T (Group for Promoting the Commemoration of the 20th Anniversary of Big Projects 1987). However, the effort failed, because academia strongly opposed the idea of more formal university-industry cooperation (Haseda 1996).
In the 1990s, social pressure on academia to become more effi cient and accountable increased. In that context, closer ties with industry were used to justify public support for university-based research activi-ties. Also, Japan’s shift from being a follower to a pioneer in the innova-tion race required stronger complementarity between basic and applied research, which in turn argued for greater cooperation between uni-versities and industry and collaboration among S&T-related ministries.
The 1995 law, accompanied by these forces, led to the foundation of an integrated innovation system based on the industry-university-state tripartite cooperation.
Some Facts from the History of Tohoku University
Given this unfolding of policies, how have Japanese universities man-aged their relations with industry in the past? To better understand the process, we focus on the case of Tohoku University.
A Movement toward an Entrepreneurial-Type University
Tohoku University was founded by the Imperial Order of 1907 as the third imperial university in Japan after the University of Tokyo and Kyoto University. It is located in Sendai, a key regional city serving as the node for the Tohoku (northeast Japan) region.3 Tohoku University catered to the rising demand for skilled workers in the aftermath of World War I and acquired a number of specialized colleges, such as the College of Agriculture and School of Engineering.
During this period of expansion, the academic seeds that had been planted by the founding fathers of Tohoku University blossomed in terms of inventions, such as KS magnetic steel (1917) by Kotaro Honda and the Yagi antenna (1926) by Hidetsugu Yagi, and in terms of the establish-ment of two engineering research institutes: the Institute for Materials Research (IMR) and the Research Institute of Electrical Communica-tion (RIEC). Financed with contribuCommunica-tions from private companies, the precursor of IMR started out in 1915 as a pioneer institution affi liated
3 Other imperial universities were also established in key regional nodal cities, such as Osaka and Nagoya.
144 How Universities Promote Economic Growth
with the Tohoku University and became a part of the university in 1922.
IMR attracted research funds from the industrial sector, and its research proved to be unusually fruitful. RIEC was established in 1935.
Because Sendai was not an industrial center, these two schools could pursue research alongside teaching. The research contributed substan-tially to the development of Japan’s materials and electronic industries.
This approach was an embodiment of the ideas of professors Honda and Yagi. Honda asserted that no real industrial development could be attained without basic research in major scientifi c fi elds (Tohoku Uni-versity 1966). Yagi claimed that only the pursuit of new and creative research would allow Japan to achieve technological parity with the West (Yagi 1953).
In both institutes, although the emphasis was on basic research, many of the fi ndings were patented, and several achieved commercial success.
Also, the local spillovers were signifi cant and resulted in the formation of businesses such as Toyo Blades (1921), Japan Heat Wire Limited Partner-ship (1926), Tohoku Metal Industry (1933), and Tohoku Steel (1937).
Support for High Economic Growth
In the post–World War II period, after the reconstruction of basic infra-structure, Japan resumed the path of economic growth in the mid-1950s.
In the Sendai area, two major initiatives were launched in the early 1960s.
In accordance with the central government’s plan to increase the number of students in the fi elds of the science and engineering, the science and engineering faculties of Tohoku University were expanded. Also, Tohoku Industrial Technology Development Society, the fi rst incubator in Japan that was based on the American model, was established within the cam-pus of Tohoku University (Development Bank of Japan 1989).
In the case of MIT, the university-industry dynamic continued in the post–World War II period, fostering entrepreneurial enterprises and advancing the university’s research capabilities and technical expertise (Rosegrant and Lampe 1992). By contrast, Tohoku University needed to determine how to extend and reconstruct the creative tradition of the prewar period. One step in this direction was the establishment of the Semiconductor Research Promotion Association (1961), which derived its impetus from a patented coinvention by professors Yasushi Watanabe and Jun-ichi Nishizawa and which was supported by the major Japanese electronics companies. The research institute was committed to Hon-da’s philosophy of “verifi cation through experiments and reverifi cation through university-industry cooperation” (Nishizawa 1992).
University-Industry Links in the Japanese Context: Between Policies and Practice 145
A Strategy for Regional Development
By the 1980s, some professors at Tohoku University who had been con-ducting comparative regional studies devised a strategy for the construc-tion of a future industrial society—a bottom-up and innovaconstruc-tion-oriented regional development project for the Tohoku region (Abe 1997). The strategy won regional support and was instrumental in bringing togeth-er 7 prefectural govtogeth-ernments, 7 fedtogeth-erations of chambtogeth-ers of commtogeth-erce and industry, and 10 national universities in the Tohoku region. It also convinced the business world, members of parliament, and the central government. According to the professors’ strategy, the mission of the uni-versity was to pursue enhancement of the region’s capabilities in the area of science and technology but also to augment intellectual skills in other areas, and to forge new regional-based industrial dynamics. It was, in ef-fect, a renaissance movement to revive a tradition of exploring new disci-plines, which would connect scientifi c training and research to practical application in a globalized knowledge economy. Implementation of the strategy has entailed developing a systematic institutional structure, as well as designing a research-friendly environment. From these academic initiatives, 14 R&D corporations have been established through joint in-vestments by the national government and private companies.
The case of Tohoku University illustrates that the notion of an entrepreneurial-type university was present in the Japanese university system from the early stages and that, in certain cases, some universi-ties moved a step ahead of the government initiatives.
Government-Led UILs
In the confused aftermath of the bursting of the economic bubble at the beginning of 1990s, the Basic Law for Science and Technology of 1995 laid down the framework for Japan’s S&T policy for the 21st century (Omi 1996), as noted earlier. It marked the fi rst step toward the technology-transfer model of UILs.
Advent of the Technology-Transfer Model
The fi rst S&T basic plan, which was adopted by the government in 1996, proposed (a) raising investment in R&D to the level of Western coun-tries, (b) creating a competitive R&D environment, (c) improving R&D capability in the private sector, and especially (d) reinforcing university-industry cooperation. Indeed, universities were expected, as knowledge-creating institutions, to become major players and to leave behind their
146 How Universities Promote Economic Growth
ivory tower image. The measures taken by the government along this line included the development of various legal frameworks to promote UILs and a number of policy programs propelled by those links, such as the Japanese versions of the technology licensing offi ce (TLO), the U.S.
Bayh-Dole Act, and the U.S. Small Business Innovation Research Pro-gram (Jiang and Harayama 2005a).
Promotion of technology transfer from universities was government based. The government observed that inventions made within univer-sities were underexploited and recognized that valorization of these dormant technologies in terms of new products or creation of frontier industries would be of social value. In general, technology transfer takes place on the basis of a case-by-case contract or an informal agreement between a faculty member and a private company, which results in a limited return to the inventor and his or her affi liated institution. Thus, the Law for Promoting University-Industry Technology Transfer, often called the Law on TLOs, was implemented in 1998 to create a “virtuous cycle of technology transfer” by facilitating the patenting and licensing of privately patentable inventions to generate a fi nancial return that could be reinvested in research activities within the university.
The second S&T basic plan, covering 2001 to 2005, built on the fi rst plan and on a number of reports on the promotion of UILs that were presented by various ministerial commissions (Omi 2003). In making the case for UILs, these ministerial reports emphasized the need for transfer-ring university technologies to industrial use, for patenting intellectual property of universities, and for commercializing university research re-sults. They paved the way for policies to strengthen industrial technology and create new industries and helped promote such measures as Fos-tering University-Launched Ventures Businesses (2001), the Industrial Cluster Project (2001), and the Knowledge Cluster Initiative Project (2002) (Jiang and Harayama 2005b).
Reactions of Tohoku University
On the basis of those policy lines, new frameworks for UILs have been constructed and programs for promoting R&D and creating new enter-prises have been put forward. At Tohoku University, for example, the New Industry Creation Hatchery was established in April 1998 to spur domestic industries by leveraging the intellectual resources accumu-lated at the university. The Fluctuation Free Facility for New Informa-tion Industry (an industry-oriented research facility) and the Hatchery Square (an incubator) were dedicated in 2000 and 2002, respectively,
University-Industry Links in the Japanese Context: Between Policies and Practice 147
and Tohoku Technoarch Co., Ltd. (a TLO) was established in 1998. In 2004, when Tohoku University became an independent legal entity, the university established the Offi ce of Research Promotion and Intellectual Property.
Within the framework of government-led UILs, the number of col-laborative R&D projects between Tohoku University and companies throughout Japan has grown since the late 1990s, and it almost doubled between 1998 and 2002. But the vast majority of collaboration part-ners are large enterprises, and the number of collaborative projects with companies in the Sendai area remains limited, amounting to around 10 percent of the total. Similarly, a number of spinoff fi rms emerged during this period, and Tohoku University ranks among the top fi ve universities in Japan with regard to the number of spinoff companies (METI 2005).
However, those companies do not always stay in the Sendai area (Tohoku University 2002).
Conclusion
The evolution of Japanese technology policy shows that it is not limited to technological advancement; rather, economic and institutional implica-tions are signifi cant. Although a clear philosophy was expressed as early as 1949 in a white paper, the Japanese technology policy has often been dic-tated by the catch-up imperative. The economic stagnation of the 1990s, however, propelled a shift in technology policy.
Our historical study of the Tohoku University has several implications.
Tohoku University originated a movement toward an entrepreneurial-type university that can be an effective and creative inventor and trans-fer agent of both knowledge and technologies through the alignment of industrial development and that has both research and teaching as its principal academic missions. These UILs have been initiated by entrepre-neurial faculty members, within a framework of government technology policies encouraging links.
The government policies and the initiatives of universities themselves have opened the door of university links with small and medium en-terprises by clarifying the rules of game and by ensuring strong govern-ment support for UILs, including those between start-up companies and small local universities. It is evident that Japanese universities, including Tohoku University, are responding positively to the government incen-tives to strengthen UILs; all UIL-related indicators, such as the number of collaborative research projects, spinoffs, and licensing contracts, have
148 How Universities Promote Economic Growth
increased since the end of the 1990s. We also observe that economic contribution, in particular through UILs, is now recognized as the third mission of Japanese universities, after education and research; that recog-nition represents a major shift in attitudes.
The Japanese government has played a dominant role in strengthening UILs. Once a UIL-friendly environment has been created, what should be the next step? Should the government maintain the pressure on UILs, or switch its role from initiator to catalyst? What is certain is that the way the Japanese government steers UILs will have a deep effect on the capacity of the nation to innovate.
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