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Large-Scale Public-private Partnerships in Japan and the U.S.

Large-Scale Public-private Partnerships in Japan and the U.S. Mariko Sakakibara Associate Professor Anderson Graduate School of Management University of California, Los Angeles. Overview. Government-Sponsored R&D consortia Potential benefits When do we need them

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Large-Scale Public-private Partnerships in Japan and the U.S.

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  1. Large-Scale Public-private Partnerships in Japan and the U.S. Mariko Sakakibara Associate Professor Anderson Graduate School of Management University of California, Los Angeles

  2. Overview • Government-Sponsored R&D consortia • Potential benefits • When do we need them • Summary of the past studies • Formation • Performance evaluation • Project execution • Lessons

  3. Government-Sponsored R&D Consortia • Japanese R&D consortia - imitated and emulated • SEMATECH • Alvey, ESPRIT, EURECA in Europe • Current policy issue • National Cooperative Research and Production Act of 1993 • Advanced Technology Program by Commerce Dept. since 1990 • Public policy concern • OECD, ATP

  4. What stimulates innovation? (Firm, Industry) • Technological opportunity • Expected demand size • Appropriability conditions

  5. Potential Benefits of R&D Consortia • Cost sharing • Economies of scale • Skill sharing • Learning • Cooperation -- Correct market failure and underinvestment in R&D • Spence (1984) as a means to internalize externalities • Katz (1986) examined relationship between R&D cooperation and product market competition

  6. R&D Consortia in Japan: Why Important? • Limited researcher mobility • R&D consortia as a means of information exchange • M&As are rare • Limits quick acquisitions of research capabilities • Weak university research • Internal diversification

  7. Formation of R&D Consortia (Japan) • Skill-sharing motive dominates cost-sharing motive (Sakakibara, SMJ 1997) • Relationship between “origin” industries and “destination” industries (Sakakibara, RP 2001) • Analogous to the motives for diversification

  8. Effect on R&D Spending (Japan) • Key concept: diversity (Sakakibara SMJ 1997, JIE 2001) • Skill-sharing R&D consortia are associated with the increase of R&D spending by participants • Cost-sharing R&D consortia are associated with the decrease of R&D spending by participants

  9. Problem of Performance Evaluation • Sample selection problem • Certain consortia perform better, or • Only good firms participate in certain consortia • Common problem of past research to measure the impact of public technology programs (Klette, Moen and Griliches, 2000)

  10. How to Deal with the Selection Problem • Need to utilize multiple dimensions of the data • Firm • Consortium • Time • Participants and non-participants • Same firm, before and after participation • Same firm participate in different consortia

  11. Performance Evaluation (Japan) • Impact on research productivity of participating firms • Note many levels to evaluate performance (project, participants) • Overall impact is positive but small • From econometric analysis (Branstetter and Sakakibara, JIE 1998) • From survey results (Sakakibara, RP 1997)

  12. Performance Evaluation (Japan) • Branstetter and Sakakibara (AER 2002) find: • Spillover potential, measured as technological proximity among member firms, has a positive effect • Product market competition, measured as product market proximity of member firms, has a negative effect • Basic technology -- positive effect

  13. R&D Consortia in the U.S. • Sakakibara and Branstetter (MDE 2003) find: • Consortia have a positive and persistent impact on the ex-post research productivity of participating firms • Consortia outcomes and their characteristics • Positive: potential knowledge spillovers • Larger firms with higher R&D budgets tend to benefit more from participation • These findings are consistent with that obtained from the Japanese consortia

  14. R&D Consortia in the U.S. (cont.) • Dyer, Powell, Sakakibara and Wang (2007) compares alliance formation factors and alliance execution factors • Performance measured as • patent generation • financial contribution • qualitative success • Alliance execution factors explain performance better than alliance formation factors

  15. Lessons • Large-scale PPP is only one of many means to promote innovation • Need to consider available alternatives • Skill-sharing, knowledge spillover potential important • R&D consortia with close competitors or cost-sharing motive are not effective • Good execution is important to facilitate knowledge transfer

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