Macro-Micro Analyses of Japanese Direct R&D Investments in the U.S. Automotive and Electronics Industries
Serapio, Manuel G., Jr., Management International Review
Japanese direct investments in research and development (R&D) have increased significantly during the last five years. By 1990, over 100 Japanese private companies with capitalization of over 10 billion yen have established R&D facilities in over 180 overseas locations (Japan Science and Technology Agency 1991 and 1989). The rapid growth of Japanese direct R&D investments abroad is reflected in the expanding presence of Japanese R&D facilities in the United States -- the single largest country host to Japanese direct R&D investments. About 80% of Japanese overseas R&D facilities is located in the United States (Choy 1990). By 1992, Japan's largest multinational companies, such as Toyota, Nissan, Matsushita, and NEC, had established multiple R&D facilities in the United States.
What is the magnitude of Japanese direct R&D investments in the United States? What is the nature and scope of operations of these Japanese R&D facilities? What are the factors influencing the Japanese companies' decisions to invest in R&D in the United States? How do these firms select the location of their facilities in the United States? This article examines these and other related issues using macro-level data and data collected through an interview study of Japanese R&D firms in the U.S. automotive and electronics industries. The plan of this article is as follows. The following section uses macro-level data to analyze Japanese direct R&D investments in general and Japanese direct R&D investments in the U.S. automotive and electronics industries in particular. Next, the findings of an interview study of twenty-three Japanese R&D facilities in the U.S. automotive industry and twelve Japanese R&D facilities in the U.S. electronics industry are discussed. The final section addresses areas for future research.
Macro Data Analysis
The Growth of Japanese Direct R&D Investments in the United States
Japanese direct R&D investments abroad expanded significantly between 1986 and 1991. The Japan Science and Technology Agency conducted a large-scale survey of 879 Japanese private companies in 1989 and reported that about 14.2% of these companies had set-up or acquired R&D facilities abroad. Over 42.9% of the Japanese companies surveyed with capitalization of over 50 billion yen had established overseas R&D facilities (Japan Science and Technology Agency 1991). Japan's Ministry of International Trade and Industry (MITI) estimates that the number of overseas research institutes owned by Japanese companies increased 86.6% between 1986 and 1989 and the number of researchers employed by these facilities more than doubled from 3,300 to 6,975 researchers during the same period (MITI News 1991).
Likewise, Japanese direct R&D investments in the United States have increased rapidly during the last five years. Japanese firms have established at least 150 R&D facilities in the United States since 1980. (For a list of the electronics R&D firms, see Dalton and Serapio 1993). Of these, approximately 70% was established between 1986 and 1992 and about 50% between 1990 and 1992. These R&D facilities are predominantly in three industries: electronics (including computers and computer software), automotive, and biotechnology. Some thirty-five Japanese electronics companies (e.g., NEC, Matsushita, Fujitsu, Sony, Canon) own approximately 100 R&D centers in the United States; the seven Japanese automobile companies (Honda, Isuzu, Mazda, Mitsubishi, Nissan, Subaru, and Toyota) have set up over thirty U.S. R&D facilities; and about a dozen Japanese companies (e.g., Eisai, Hitachi, Kuraya, Kirin) have established or acquired biotechnology laboratories in the United States since 1990.
The expansion of Japanese direct R&D investments in the United States took place amid two related developments. The first is Japan's emergence as one of the world's leaders in science and technology. …