Homogenization of Japanese Industrial Technology From the Perspective of R&D Expenses

Introduction

The players who promote Japanese research and development (R&D) are generally companies, universities, and governments—wherein companies play a central role in this. Companies pursue private profits, and promoting R&D is an important issue for them. Companies must create technology internally, acquire it externally, or use a combination of both to develop new technology and connect it to private profits. It is meaningful to discuss the main factors of R&D issues, such as “it is difficult to produce original and new results” and “excellent technological results do not lead to profits.” In this study, to empirically grasp the current state of companies’ internal R&D efforts, the expenses used mainly to support the internal R&D activities for technological creation are analyzed. Yamada (2018, 2019, 2020) reveals that R&D in-house expenditures do not contribute to corporate profits.

Focusing on the changes in the allocation ratio of R&D in-house expenses from 1972 to 2017, technological structure changes within the Japanese industry during that period are clarified. By doing so, the author will consider the reasons for the decline in Japanese R&D profitability. In this paper, changes in the technological structure refer to whether the technical knowledge possessed by the industry is diversifying or homogenizing. Consolidation means that R&D investment is concentrated in a particular technical field, and homogenization implies that the types of technical knowledge are reduced by consolidation. If the technical structure is homogenized, the author clarifies which technical areas are concentrated. The allocation of R&D expenses in a company is determined according to the business policy of the company. In other words, changes in the distribution of R&D expenses reflect management decisions. Industry-based R&D allocation indicates the area of research focused on by the industry. In addition, the allocation changes over time show the difference in the degree of concentration of the industry in the relevant research fields. This study derives data from the Ministry of Internal Affairs and Communications annual “Science and Technology Research Report” article titled “In-house research expenses by industry, product/service field (companies with capital of 100 million yen or more).” The distribution ratio of R&D expenses is calculated based on the technical field, and changes in the technological structure from 1972 to 2017 are empirically analyzed. Japanese R&D profitability is declining, and this study determines the reasons for this decline to improve profitability.