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

A dramatic increase in the transboundary flow of people, goods and informat ion together with an increase in technology complementarity with capital st ock and labor forces has accelerated the growth and spread of global techno logy spillovers. Facing the R&D stagnation, effective utilization of technology from the glo bal marketplace gathered from multiple sources has become an important comp etitive strategy leading to greater concern for assimilation capacity of sp illover technology (the ability to utilize this spillover technology). In f act, 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 proble m has become urgent. This paper, uses both theoretical and empirical analyses of the mechanisms of (i) technology spillover contribution to production increase, and (ii) t he role of assimilation, in addition to numerical analyses of the trends in assimilation capacity and the governing factors of this capacity. Furtherm ore, this investigation attempts to identify the sources and mechanism gove rning assimilation capacity, in order to extract suggestions for restructur ing industry's R&D strategy. (C) 2001 Elsevier Science Ltd. All rights rese rved.