Global technology spillover and its impact on industry's R&D strategies

A dramatic increase in the transboundary flow of people, goods and information together with an increase in technology complementarity with capital stock and labor forces has accelerated the growth and spread of global technology spillovers. Facing the R&D stagnation, effective utilization of technology from the global marketplace gathered from multiple sources has become an important competitive strategy leading to greater concern for assimilation capacity of spillover technology (the ability to utilize this spillover technology). In fact, how to effectively utilize this substitution potential has become one of the most crucial R&D strategies for industry. Notwithstanding its strong assimilation capacity up until the 1980s, Japan's capacity has deteriorated in the 1990s and the remediation of this problem has become urgent. This paper, uses both theoretical and empirical analyses of the mechanisms of (i) technology spillover contribution to production increase, and (ii) the role of assimilation, in addition to numerical analyses of the trends in assimilation capacity and the governing factors of this capacity. Furthermore, this investigation attempts to identify the sources and mechanism governing assimilation capacity, in order to extract suggestions for restructuring industry's R&D strategy. (C) 2001 Elsevier Science Ltd. All rights reserved.