Overseas Innovations by Japanese Firms: An Analysis of Patent and Subsidiary Data

This paper examines patent and overseas subsidiary data of 231 large and medium-sized Japanese electronics firms to analyse the characteristics and determinants of foreign research and development (R&D) activities. A number of medium-sized firms have highly internationalised R&D operations, whereas most large Japanese electronics firms remain strongly dependent on domestic R&D. Statistical analysis of the firm-level determinants of the number of overseas innovations established positive and significant effects of R&D intensity, export intensity, overseas manufacturing intensity, operating experience in greenfield manufacturing subsidiaries overseas, and the relative importance of acquisitions in overseas manufacturing, while a nonlinear relationship between firm size and overseas innovations was found. The results support the notions of a technology exploitation motive for overseas R&D as well as a substantial additional role for a technology sourcing motive. Support is also found for the hypothesis that part of the explanation for the low degree of R&D internationalisation of Japanese firms must be sought in their relatively late and rapid overseas expansion since the mid-1980s.