The Role and the Limitations of the Private Sector in
Innovation. Some theoretical insights and a comparison
between France/Europe and Japan

Sébastien Lechevalier(EHESS)“Science and Technology Policy at a Turning Point”
International Webinar organized by the Tokyo Foundation
Tokyo, 17. February 2022

Setting the scene: Flow of R&D
expenditure in France and in Japan
France 2017
OriginDestination

OriginDestination

Privatesector 55%

Privatesector 65%

Privatesector 77%

Privatesector 78%

Gov.
35%

Gov.
13%

Gov.
16%

Gov.
8%

Univ.
1%

Univ.
28%

Univ.
6%

Univ.
13%

NPONPONPONPO
Foreign8%2Japan 2018

Foreign
0.4%

Source: NISTEP Japanese Science and Technology Indicators 2019

Business Expenditure of R&D in Japan, about
10 years ago (2014)

13.6
trillion \3

Source: Toyo-Keizai Online, http://toyokeizai.net/articles/-/115008
and NISTEP “Japanese Science and Technology Indicators 2016”

Two characteristics of the Japanese innovation system:
historical perspective and international Comparison

Active involvement of industries–

Proportion of R&D exp. funded by industries
Japan 73% (1991) -> 69% (2001)
USA 57% (1991) -> 69% (2001)–

Proportion of R&D exp. funded by government
Japan 18% (1991) -> 21% (2001)
USA 39% (1991) -> 27% (2001)

Larger role played by big firms–

Proportion of industrial R&D by large firms (with 10,000+employees)
Japan 69%, USA 55%–

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Proportion of biotechnology patents by large firms in 2000
(among the top 100 applicants)
Japan 72%, USA 21%

The dominant view on innovation

The dominant view regarding innovation and its
role in the prosperity of advanced nations

1.
2.

3.
4.

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Major Hypotheses/conclusions:Innovation is the driving force of growth and this is all
the more true in the emerging knowledge-economy
The Silicon Valley “model (entrepreneurship, venture
capital, collaboration firms/universities) has been thebest set of institutions to promote innovation in the newtechnological environment (ITC or biotech ) that has
emerged from the 1980s-1990s
In particular, startups are the drivers of innovation andshould be the focus of public policies
Universities and public research institutes can play arole if they are able to marketize their scientificcontribution

The dominant view regarding innovation inFrance and Japan
1.

2.
3.

4.

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Japan and France are lagging behind in termsof innovation because of their backward
institutions
Their innovation capabilities have declined
The symbol is the lack of entrepreneurship, thelow rate of startups creation, their low survival
rate and their low growth rate
To put it differently, inadequate innovation
system explains the poor performance of Japanand France in the manufacturing industries
related to the “new economy”

A Neo-Schumpeterian view
 Beyond the creative desruction view, several

hypotheses:
1. All social problem have technological solution
2. Private actors are the drivers of innovation
3. Among private actors, startups are the mostimportant; importance of entrepreneurship
4. Role of the state should be limited to thedefinition of IPR and eventually « infrastructure »(including education)8

Limitations of the dominant view oninnovation

Four limitations and an alternativeframework
(The truth about the SV model: a government (military) driven systemof innovation)

Back to the reality of innovation: importance ofcollaboration and role of public support to promote it Increasing science linkages and the importance ofindustry/university collaboration Rediscovering industrial and innovation policies and theirbenefits : Innovation Union strategy and EIC No one best way: the Japanese case1.
The true meaning of Toyotism;
2.
The intrapreneurial regime of innovation in the case of personal
robotics10

An alternative framework : National innovation systems

World-wide Increase in R&D Partnerships(Hagedoorn, Research Policy, 2002)

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Where Do Innovations Come From?
by Block and Keller, UC Davis

Collaboration dominates

R&D Magazine’s top 100 innovations of the year (1971-2006)

12The origin and funding supports, external collaborationWhere Do Innovations Come From?
by Block and Keller, UC Davis

Public support dominates

13> the public support for collaborations with external organizations
should be the priority

Increasing Science Linkages (e.g. numberof scientific paper quotation per patent)

 Citation of scientific papers by patents has

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increased globally, but much more in the US
than in Japan
 Particularly conspicuous in science-basedindustries, e.g., biotechnologies based on life
sciences, Environmental sciences, Nanotechnology and materials
 It requires stronger relations between
industries and universities

Trends in Patent Applications by Universities in Japan

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Patent applications from university has grown quickly from the 1990s

Rediscovering industrial andinnovation policies and their benefits:
Innovation Union strategy and EIC
 Innovation Union strategy:– Overall EU wide strategy– Integrating research and innovation policies, all forms ofinnovation (including social, public sector)– Setting direction based on societal challenges; European
Innovation Partnerships to include all ecosystem

16 European Innovation Council:– Creating of a first dedicated EU innovation programme– Focus on “deep tech”, startups and scale ups– Pro-active role: taking investments, Programme Managers todirect fundingNo one best way: the true meaning of
Toyotism (Lechevalier, Nikkei,2019.11.21)




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The success of Japanese firms did mainly rest on a model oforganizational innovation, rather than technological innovation.
“Toyotism” is a model based on corporate investment in training workers
and fostering their commitment to the firm; its core is not robotics ormechanization or automation.
Japanese firms appeared to forget the lessons from their past success,and even more so during the 1990s when the concept of New Economy.
They have committed to a technological race, with massive investments
in R&D, and a HRM race-to-the-bottom, including wage reductions.
Disappointing results: Over-investment in R&D has led to poor returns(OECD, 2005); some Japanese companies have discovered that having
the best technology is not a guarantee of gaining market shares, ifconsumer needs or tastes are not well taken into consideration.

No one best way: the true meaning ofToyotism (Lechevalier, Nikkei,2019.11.21)

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No one best way: The intrapreneurial regime ofinnovation in the case of personal robotics

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An alternative framework:
National innovation systems (NIS)
Innovation is not “in the air”… It is deeply conditioned byand embedded in diverse institutions (education system,labor market, finance, etc.)
 To put it differently, innovation is not only a matter of R&Dexpenses; this is also a matter of organization and ecosystem (innovation system) ►importance of therelations between science and society
 This is why one observes different patterns ofinnovation and innovative capabilities acrosscountries This is why, when you compare countries, you cannot do
it for specific domains. You need to adopt a systemic
approach

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The NIS view on the French and Japanesecases



1.

2.

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The dominant view underestimates the changes that occurred in
the French and Japanese innovation systems during the last 20years
The right “model” (e.g. Silicon Valley) for innovation does not exist:
it depends on the sector, the technology and the overall
environment of the economy
Innovation capabilities in France and Japan have not declined ingeneral
However, we should recognize that:
The global competition is more intense than ever and somecountries/firms are rapidly catching up. It requires developing somespecific answers
There were some problems in these two systems; reforms thathave been done should be continued in a coherent mannerBeyond Schumpeter:
Innovation beyond technology

Innovation beyond technology. Science forSociety and Interdisciplinary approaches

23Deconstructing some myths about
innovation: Beyond Schumpeter

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MYTHS

OBJECTIONS/PROBLEMS

Innovation is always good

There is a possibility of destructive
creation (Soete, 2013)

Actors who contest innovation are laggard

Role of controversies and contestations in
the innovation process (Callon, 1981)

The solutions will be found in newtechnology, not improvements to old ones

Frugal innovation, grassroots innovation,
reverse innovation or innovation from thebottom of the pyramid (Prahalad 2005)

Focus on technological innovation

In many cases, solutions are to be foundin the society (societal changes), not newtechnologies

“Beyond the science bubble”(Nature,2017)
For a better alignment between the outputs of scientificresearch and innovation and the needs and expectationsof society “The needs of millions of people in the United States are
not well enough served by the agendas and interests thatdrive much of modern science. (…) Research leaders in
the United States and elsewhere should address theneeds and employment prospects of taxpayers who haveseen little benefit from scientific advances”.
> governments, in the name of public good,
Should have their say25

The paradox of innovation introubled times (1/2)
During the last decade, which can be considered as theGolden Age of innovation, from an ideological viewpoint,
there have been rising doubts about the pertinence of
this model:

1.

Gap between the increasing resources dedicated to innovation anddecreasing well-being observed in many cases (case of well-being inhospital)
Contribution of innovation to rising inequalities
Various technology related scandals
Some problems related to the use of technologies

2.
3.
4.

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The paradox of innovation in troubled times (2/2)
We started off by embracing (technological) innovation as
the solution to the crises of our times, but ended up
seeing our model of innovation become yet anotherproblem to solve.
 It should not lead to throw away new technologies but
rather to invent a better articulation between societal
needs and new technologies
1. New technologies can help envisioning the society of thefuture
2. But contemporary societies are not always a laggard27The crisis of innovation is the crisis of therelationship between technological innovationand society
Technology may affect social dynamics and society may
influence the direction of technological change However social and technological dynamics are largely
disconnected How to reconnect them?
 This question is not new: see the Budapest declaration(1999 World Science Conference) famous pour its motto:‘science in society and science for society’

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Innovation beyond technology29Technology is a critical source of differentiation for companies (i.e.
a source of competitiveness). However, it is not enough in the longrun, it will be a source of comparative advantage only if it affects
positively the well being of consumers and/or the productivity ofprocesses“Technologies are neither neutral instruments not passive objects:
they rather do materialize norms and values; they shape thebehaviors, the actions, and the perception of human beings” (Dalibert2016)
A way to specify well-being: care-led innovation
A definition of social innovation: “New social practices that aim tomeet social needs in a better way than the existing solutions”(Howaldt & Schwarz, 2010)

Social innovation and innovation beyond
technology : some examples
How to face environmental challenges: the role ofbehaviors
 How to deal with rising inequalities (and social
discontent): building an inclusive society Which answers to demographic challenges: robotics canhelp but is not the ultimate solution
 How to realize fully the potential of AI, while limiting thedestructive parts?
 How to develop personalized medicine in dealing properlywith personal health data?
30

The potential role of SSH in a time of crisis– well being as the ultimate criterion31The questions the SSH ask are not intended to hinder
scientific progress, nor to criticize the other sciences.

SSH can be used as a tool to introduce an ultimate
criterion to help choosing into different directions ofresearch. The ultimate criterion should be well-being,
which is in fact related to the question of progress

Conclusion: for an active role of all
stakeholders in innovation

Involving all the stakeholders in theprocess of innovation
 Role of industries
 Role of universities and public research

institutes

 Role of governments
 Role of society in its diversity

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Thank you for your attention

Sébastien LECHEVALIER
sebastien.lechevalier@ehess.fr
https://sebastienlechevalier.wordpress.com/
http://ffj.ehess.fr/

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