Sources of structural stagnation in R&D intensity in Japan's electrical machinery industry - An analysis of mismatching with IT functionality development

In light of a paradigm shift from an industrial society to an information society that emerged in the 1990s, electrical machinery is expected to play a leading role in the advancement of information technology (IT). Notwithstanding this expectation, the R&D intensity of Japan's electrical machinery industry, which accounts for one-third of total industry R&D investment, stagnated throughout the 1990s. Contrary to manufacturing technology, the specific functionality of IT is formed through dynamic interaction with institutional systems that leads to a subsequent self-propagating behavior. While electrical machinery played a significant role in Japan's high-technology 'miracle' in an industrial society of the 1980s, due to structural differences in features between manufacturing technology and IT, it is considered that it did not match well with institutional systems in an information society, resulting in a growing mismatch with IT functionality development. This has in turn stagnated the inducement of R&D activities in Japan's electrical machinery industry, resulting in a structural stagnation of R&D intensity. This paper, on the basis of a comparative empirical analysis of fifty-four R&D intensive Japanese electrical machinery and pharmaceutical firms, attempts to demonstrate the foregoing hypothetical view with respect to the sources of structural stagnation of R&D in Japan's electrical machinery industry.