16 IP System and Corporate R&D Activities- Empirical Analysis of the Effect of Worker Mobility on Innovation - (*)
Research Fellow: Ayano FUJIWARA
The purpose of this research is to study worker mobility and gain policy implications to create an IP
system that can effectively prevent technology leakage caused by worker mobility. Specifically, focusing on theworkers who moved from Japanese companies to companies in emerging countries, an analysis was conducted
as to what types of researchers tend to move to non-Japanese Asian companies such as Korean companies andChinese companies from the perspective of career, research field, network index, etc. Furthermore, in order toanalyze what types of researchers, among those who moved from Japanese companies to non-Japanese Asiancompanies, have contributed to innovative activities of non-Japanese Asian companies, an analysis was
conducted using panel data. The analysis results have revealed that the Japanese researchers who moved to
non-Japanese Asian companies tend to be more competent than those who did not and tend to be in positions
where information accumulates. It has also been revealed that, after moving to non-Japanese Asian companies,
young researchers with research experience in a specific field have contributed to innovative activities
quantitatively, while older researchers with experiences in a wide range of technical fields have contributed toinnovative activities qualitatively.
Based on these findings, it may be presumed that among companies in emerging countries such as South
Korea and Taiwan that have been strategically recruiting former workers of Japanese companies who can fill
those companies' needs, large companies expect these Japanese workers to bring their accumulated information
with them, whereas small and midsize companies expect them to bring technology and know-how with them.
From the perspective of protecting important technologies owned by Japanese companies, in order to prevent
leakage of competent workers, it is necessary to devise measures and systems such as a remuneration system toprovide inventors with more incentives. Regarding an IP strategy, since not only the option of seeking patents for
R&D results but also the option of keeping their secrecy as know-how will become increasingly important forcompanies, the policy to protect trade secrets, etc. should be enhanced.

Introduction
Since the burst of the bubble economy at the
beginning of the 1990s, the Japanese economy has
been sluggish for more than 20 years. In particular,
the slowdown of the electronics industry has been
obvious. Since the 1990s, the Japanese electronics
industry has lost its global competitiveness andseen the rise of new companies in emerging
countries such as South Korea and Taiwan.
One of the reasons why the Japaneseelectronics industry has lost its industrial
competitiveness may be the failure to have its
R&D activities create new business and increase
profits. So far, Japan has been making profits by
taking advantage of its technical superiority andexporting sophisticated products mostly todeveloped
countries.
However,developed
countries, which have been experiencing the rapid
aging of population and decline in the birth rate,
have recently been replaced by emerging countries
in terms of the importance as a market. For thisreason, companies in many countries have been

focusing on manufacturing products targeted at
emerging markets, competing to grasp local needs
and release locally customized products in a timely
manner. Despite this trend, Japanese companies
have often established R&D bases in Japan orother developed countries and have rarely chosenemerging countries as the locations for their R&D
bases. In this respect, Japan has been lagging
behind other countries in devising effective
strategies for conducting business in emerging
countries.
However, in the future, as Japanesecompanies will be more likely to choose emerging
countries not only as manufacturing bases or sales
bases but also as R&D bases and also to make useof local researchers. If Japanese companies deepen
their ties with emerging countries to promote local
R&D activities, they will face the following two
difficult problems. The first problem is technology
leakage due to technology transfer and worker
mobility between companies. The second problem
is the difficulty in recruiting talented local workers
who could make innovations.

(*) This is an English translation of the summary of the report published under the Industrial Property Research
Promotion Project FY2013 entrusted by the Japan Patent Office. IIP is entirely responsible for any errors in
expression or description of the translation. When any ambiguity is found in the English translation, the original
Japanese text shall be prevailing.

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In this research, by using patent bibliographic
information, an attempt was made to ascertain how
many workers moved from Japanese companies toemerging countries and what types of workers
moved to those countries. Then, using panel data,an analysis was conducted as to what types ofJapanese researchers have contributed to innovative
activities of companies in non-Japanese Asian
countries. The results of these analyses haverevealed the current state and issues related toworker mobility between companies and the types
of workers who could contribute to innovative
activities.

I

Background and purpose of thisresearch

1

Background of this research(1) R&D activities in emerging countries
Since the burst of the bubble economy at the
beginning of the 1990s, Japanese companies haveseen their business activities slowed down for
more than 20 years. While Japanese companies
have been restructuring themselves by cutting
personnel, costs, etc. in an effort to revitalize theirbusiness, they have seen their sales flatten andhave been overtaken by Samsung, LG, Hon Hai,
and other companies in emerging countries.1
In recent years, it has been pointed out thatthe profitability of the Japanese manufacturingindustry has been on the decline. For example,
Genba (2012)2 conducted research and concluded
that a higher ratio of the sales to R&D costs has anegative effect on profitability. This suggests that a
serious problem exists in the process of turning
R&D results into profitable business, or in otherwords, monetization of innovations. Moreover, it
has been pointed out that, while IP strategies play
important roles in the process of monetization of
R&D results, it has become difficult to identify aclear correlation between patents and enterprisevalue in recent years (Osaki, 2011). Against thisbackground, there has been an argument that thepromotion of R&D activities in emerging countries
is an effective innovation strategy. For instance,
reverse innovation, which has become famous as aresult of its use by GE, has attracted a lot of
attention as a growth strategy. Reverse innovationmeans conducting R&D activities in emerging
countries and marketing the resulting products indeveloped countries as well (Usami, 2011).3 In thisway, an R&D strategy for emerging countries will
be an indispensable element of the future revivaland growth of Japanese companies.

Based on patent data, with a focus on the R&D
activities in emerging countries that could
contribute to the monetization of R&D results, ananalysis was conducted as to how Japanesecompanies use R&D bases in emerging countries
and use researchers and engineers in emerging
countries within the framework for their IP
strategies (Fujiwara, Watanabe, 2012).4 To conduct
this analysis, the first step is to examine the extent towhich Japanese companies and Korean companies
depend on the bases and workers in Japan or South
Korea respectively or use overseas bases andworkers when those companies conduct R&D
activities and file patent applications. In this analysis,
the Herfindahl-Hirschman Index (HHI) was used.
This index indicates the level of concentration andmakes it possible to conduct a comparison between
those companies and examine a strategic differencesuch as some companies adopting the strategy ofconcentrating R&D bases and R&D workers in one
place, whereas other companies adopted thestrategy of pursuing diversification in this respect.
Regarding the nationalities of R&D workers, data
was collected based on the nationality of each
inventor recorded in the U.S. patent registry.
Similarly, regarding the addresses of applicants, thenationality of each applicant recorded in the U.S.
patent registry was used as a substitute index. The
reason for using the number of registered patents
is that the registered patents are considered to be
the R&D results that are used most frequently as ameans for boosting corporate sales. The
information registered and publicized by the
USPTO as of September 2012 was used as the U.S.
registered patent information. The electronics
industry was chosen as an industry subject to thisresearch because electronics companies file patentapplications most actively.
Next, an examination was conducted as to theextent to which each company uses R&D bases inemerging countries and uses R&D workers inthose countries. The five countries subject to thisexamination are Brazil (the world's 7th largest
GDP in 2010), which is the most rapidly growing
emerging country and expected to become a greatpurchasing power, as well as Russia (the world's11th), India (the world's 10th), China (the world's2nd), and South Africa (the world's 29th).
(2) Diversification of R&D bases and R&D
workers
Since many Japanese companies havedeveloped under the principle that they should be
self-reliant, they have been reluctant to use
talented researchers overseas (Fukagawa, 2012).5

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This approach has affected their R&D capabilities,
raising three issues as follows. First, although theJapan's R&D level was said to be high, the qualityof Japanese researchers has been deteriorating invarious fields as pointed out in the research
conducted by the National Institute of Science andTechnology Policy, etc.6 In contrast, the quality of
researchers in emerging countries has been
improving. Japanese companies might have failed
to make full use of these R&D human resources inemerging countries. Second, with the globalizationof corporate activities, R&D activities are also
expected to be globalized and diversified. However,it has been pointed out that the headquarters ofJapanese companies are lagging behind overseas
companies in fostering workers with a global visionand that in overseas bases, local workers are notgiven responsible positions in the upstream
manufacturing process such as development anddesigning (Furui, 2010). 7 For example, out of a
total of 221,726 employees of Samsung, 119,753
employees are working overseas, accounting for
more than 50%8 of the total (as of 2012).9 On theother hand, in Fujitsu, out of a total of 173,000
employees, 107,000 employees work in Japan,
while the employees working overseas account forless than 40% of the total (FY2011). Third, in
global business terms, markets in emerging
countries have been increasing their value asconsumer markets with a rapidly rising disposable
income. This indicates that the promotion of R&D
activities in emerging countries has become
important as a localization strategy (Kobayashi,2007).10 For example, the five countries subject tothis research have established bases in BRICS. LG
and NEC are ranked top in terms of the number ofbases, followed by Samsung (Fig. 1).11
BRICSにおける拠点
Bases in BRICS
30
25
20
15

12

19

19

1
3
2
1

1

LG
LG

日立
Hitachi

10
2
5
0

3
1
2

4
1
2

1
2
1
3

富士通
Fujitsu

サムスン
Samsung

NEC
NEC

South
南アフリカ
AfricaRussia
ロシア

India
インド

Brazil
ブラジル

9

China
中国

[Fig. 1 Bases in BRICS]
However, the actual contribution of thosebases to R&D activities should be measured in

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R&D results. Therefore, a comparison was
conducted by using the Herfindahl-HirschmanIndex (HHI), which indicates the level ofconcentration, from the perspective of to what
extent Japanese companies have used R&D
resources in emerging countries. In conducting
this comparison, the HHI was determined based on
the addresses of applicants and investors. If
applicants have foreign nationalities, it indicatesthe possibility that R&D activities are conducted
overseas and that applications were filed byoverseas researchers to whom the authority to filepatent applications had been delegated. The factthat inventors have foreign nationalities indicatesthe possibility that overseas researchers are
utilized in R&D activities.
Fig. 2 shows the level of concentration of theaddresses of applicants. The higher the HHI, themore the nationalities of applicants areconcentrated in the home county. This indicatesthe possibility that R&D activities and the filing ofpatent applications are not conducted overseas.
The lower the HHI, the more the companies havediversified in terms of the countries where they
have R&D bases. In short, the HHI determinedbased on the addresses of applicants shows thelevel of diversification of the R&D bases and thelevel of concentration and deconcentration of IP
control. As clearly shown in Fig. 2, as far as
Samsung and LG in the beginning of the 1990s areconcerned, the ratio of applicants with foreign
nationalities was relatively high. However, sincethe 2000s, the nationalities of applicants have been
concentrated in South Korea. This suggests thatthose companies were conducting R&D activities
overseas in the 1990s and filed patent applications
from those overseas countries based on the R&D
results obtained therein whereas, since the 2000s,
those companies started to have their
headquarters
centrally
managepatent12
applications.
On the other hand, as far as
Japanese companies, namely, Fujitsu, NEC, andHitachi in the 1990s and the early 2000s, areconcerned,
theaddresseesofapplicants
concentrated in Japan, indicating their strong belief
that they should be self-reliant. However, in recent
years, the concentration level of all of the fivecompanies has been on the decline, indicating theirincreasing reliance on overseas bases for patentapplication filing. In particular, since around 2004,
Hitachi has increased the number of applications
filed from overseas bases, indicating that it
abandoned the self-reliance principle relatively
earlier.

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increased concentration in terms of the addresseesof applicants, it has consistently been using
overseas R&D workers. This suggests that
Samsung has introduced stronger headquarters
control over intellectual properties since around2000.13

Level of concentrationof the nationalities of applicants
出願人国籍の集中度
Fujitsu

富士通
LG
NEC
NEC

サムスン
Samsung

Hitachi

日立

N
・
0
9
9
1

N
・
1
9
9
1

N
・
2
9
9
1

N
・
3
9
9
1

N
・
4
9
9
1

N
・
5
9
9
1

N
・
6
9
9
1

N
・
7
9
9
1

N
・
8
9
9
1

N
・
9
9
9
1

N
・
0
0
0
2

N
・
1
0
0
2

N
・
2
0
0
2

N
・
3
0
0
2

N
・
4
0
0
2

N
・
5
0
0
2

N
・
6
0
0
2

N
・
7
0
0
2

N
・
8
0
0
2

N
・
9
0
0
2

1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2008
2009
2010

HHI

10000
9800
9600
9400
9200
・ 90008800
・ 8600w
I・ 8400
H 8200H 8000
7800
7600
7400
7200
7000
6800

N
・
0
1
0
2

[Fig. 2 Level of concentration of the nationalities ofapplicants]
Next, with regard to R&D activities, acomparison was made from the perspective of thedegree of reliance on the researchers in the homecountry and in other countries. As shown in Fig. 3,
in the 1990s, Samsung was actively using overseas
researchers. On the other hand, Fujitsu and Hitachi
were actively using overseas researchers in theearly 2000s. Since around 2010, Samsung, LG, andNEC have increased their use of researchers withforeign nationalities.

10000
9800
9600
9400
9200
・ 90008800
w
・ 8600I・ 8400
H 8200H 8000
7800
7600
7400
7200
7000
6800

LG
LG

NEC
NEC
サムスン
Samsung

富士通
Fujitsu
Hitachi
日立

N
・
0
9
9
1

N
・
1
9
9
1

N
・
2
9
9
1

N
・
3
9
9
1

N
・
4
9
9
1

N
・
5
9
9
1

N
・
6
9
9
1

N
・
7
9
9
1

N
・
8
9
9
1

N
・
9
9
9
1

N
・
0
0
0
2

N
・
1
0
0
2

N
・
2
0
0
2

N
・
3
0
0
2

N
・
4
0
0
2

N
・
5
0
0
2

N
・
6
0
0
2

N
・
7
0
0
2

N
・
8
0
0
2

N
・
9
0
0
2

1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2008
2009
2010

HHI

Level of concentrationof the nationalities of inventors
発明者国籍の集中度

N
・
0
1
0
2

[Fig. 3 Level of concentration of the nationalities ofinventors]
Fig. 4 shows the chronological changes ineach company's concentration and diversification of
R&D bases and R&D workers. As far as the upper
two companies are concerned, the HHI determinedbased on the addresses of applicants and the HHI
determined based on the addresses of investors
show different chronological changes, whereas thelower three companies show the same
chronological changes. This difference may be
attributable to the fact that, when using overseas
bases and workers, some companies manage
human resources separately from intellectual
properties, while others do not separate the two.
For example, while Samsung has relatively
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富士通
Fujitsu

サムスン
Samsung

10000

10000

HHI

9500
9000
・ 8500・w
・I 8000
H
H 7500

HHI

9500
9000
・ 8500・w
・
I 8000H
H 7500
7000

7000
6500

6000

N
・
1
9
9
1

N
・
2
9
9
1

N
・
3
9
9
1

N
・
4
9
9
1

N
・
5
9
9
1

N N
・ ・
6 7
9 9
9 9
1 1

N N
・ ・
8 9
9 9
9 9
1 1

N N
・ ・
0 1
0 0
0 0
2 2

N
・
2
0
0
2

N
・
3
0
0
2

N
・
4
0
0
2

N N
・ ・
5 6
0 0
0 0
2 2

N N
・ ・
7 8
0 0
0 0
2 2

N N
・ ・
9 0
0 1
0 0
2 2

1990
1990
1991
1991
1992
1992
1993
1993
1994
1994
1995
1995
1996
1996
1997
1997
1998
1998
1999
1999
2000
2000
2001
2001
2002
2002
2003
2003
2004
2004
2005
2005
2006
2006
2007
2007
2008
2008
2008
2008
2009
2009
2010
2010

N
・
0
9
9
1

6000

N
・
1
9
9
1

N
・
2
9
9
1

N
・
3
9
9
1

N
・
4
9
9
1

N
・
5
9
9
1

N
・
6
9
9
1

N N
・ ・
7 8
9 9
9 9
1 1

N N
・ ・
9 0
9 0
9 0
1 2

N N
・ ・
1 2
0 0
0 0
2 2

N N
・ ・
3 4
0 0
0 0
2 2

N
・
5
0
0
2

N
・
6
0
0
2

10000

9500

9500

9500

9000
・ 8500・w
I・ 8000
H
H 75009000・ 8500・w
I・ 8000
H
H 75009000・ 8500・w
I・ 8000
H
H 7500
6500

6000

6000

N
・
4
9
9
1

N
・
5
9
9
1

N N
・ ・
6 7
9 9
9 9
1 1

N N
・ ・
8 9
9 9
9 9
1 1

N N
・ ・
0 1
0 0
0 0
2 2

N
・
2
0
0
2

N
・
3
0
0
2

N
・
4
0
0
2

N N
・ ・
5 6
0 0
0 0
2 2

N N
・ ・
7 8
0 0
0 0
2 2

N N
・ ・
9 0
0 1
0 0
2 2

1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2008
2009
2010

N
・
3
9
9
1

N
・
0
9
9
1

N
・
1
9
9
1

N
・
2
9
9
1

N
・
3
9
9
1

N
・
4
9
9
1

N
・
5
9
9
1

N
・
6
9
9
1

N N
・ ・
7 8
9 9
9 9
1 1

N N
・ ・
9 0
9 0
9 0
1 2

N N
・ ・
1 2
0 0
0 0
2 2

N N
・ ・
3 4
0 0
0 0
2 2

N
・
5
0
0
2

N
・
6
0
0
2

N
・
7
0
0
2

N
・
8
0
0
2

N
・
9
0
0
2

1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2008
2009
2010

7000

6500

N
・
2
9
9
1

N
・
0
1
0
2

HHI

HHI

7000

6500
N
・
1
9
9
1

N
・
9
0
0
2

10000

7000

N
・
0
9
9
1

N
・
8
0
0
2

日立
Hitachi

10000

6000

N
・
7
0
0
2

LGLG

NEC
NEC

HHI

N
・
0
9
9
1

1990
1990
1991
1991
1992
1992
1993
1993
1994
1994
1995
1995
1996
1996
1997
1997
1998
1998
1999
1999
2000
2000
2001
2001
2002
2002
2003
2003
2004
2004
2005
2005
2006
2006
2007
2007
2008
2008
2008
2008
2009
2009
2010
2010

6500

N
・
0
1
0
2

HHI of applicants[Fig. 4 HHI of applicants and HHI of investors of each company]

As pointed out above, in recent years, both
Japanese companies and Korean companies haveincreased the use of overseas R&D bases andoverseas researchers. Next, regarding BRICS, i.e.,
the emerging countries that are especially
expected to grow in the future, a comparison wasmade from the perspective of to what extent
companies have used those countries as overseas
bases and used R&D workers in those countries.
Fig. 5 and Fig. 6 show the extent to which eachcompany used BRICS as its bases. As shown in Fig.
5, it was only Samsung that used BRICS as its
bases in the 1990s. Samsung continued using
Russia and China as its bases even after the 2000s.
On the other hand, from the 2000s, NEC, Fujitsu,
and LG started using Russia, India, and China as
their bases.
Number of patent grants involving anapplicant with a BRICS nationality (1990-2000)

Fujitsu
Samsung

NEC
LG
HitachiBrazilRussia

India

China

South Africa[Fig. 5 Number of patent grants involving anapplicant with a BRICS nationality (inthe 1990s)]

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HHI of investors

Number of patent grants involving an applicant
with a BRICS nationality (2001-2012)

Fujitsu
Samsung

NEC
LG
HitachiBrazilRussia

India

China

South Africa[Fig. 6 Number of patent grants involving anapplicant with a BRICS nationality (the2000s and after)]

Next, an examination was conducted as to theextent to which the researchers in emerging
countries have been used. Fig. 7 shows that, in
1990s, Samsung used researchers in Russia, while
Hitachi used researchers in Brazil, India, and South
Africa. In the 2000s, Samsung greatly increased theuse of R&D workers in India and China. From theperspective of the use of workers in China, Fujitsu
ranked top, followed by Hitachi and NEC. However,each of them owns only less than half the numberof patents owned by Samsung. 14 While both
Samsung and Fujitsu have used overseas workers
for the R&D activities, Samsung is ahead of Fujitsu
especially in terms of the level of utilization ofworkers in emerging countries. On the other hand,even in the 2000s, no companies have used
researchers in Brazil and South Africa. Thesefindings have revealed that Samsung has been
unsurpassed when it comes to strategically using
overseas workers, especially in emerging

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countries.
Number of patent grants involving an inventor
with a BRICS nationality (1990-2000)

Fujitsu
Samsung

NEC
LG
HitachiBrazilRussia

India

China

South Africa[Fig. 7 Number of patent grants involving an
inventor with a BRICS nationality (inthe 1990s)]
Number of patent grants involving an inventor
with a BRICS nationality (2001-2012)

Fujitsu
Samsung

NEC
LG
HitachiBrazilRussia

India

China

South Africa[Fig. 8 Number of patent grants involving an
inventor with a BRICS nationality (the2000s and after)]

As described above, the data shows that theJapanese companies have adopted the R&D system
of using workers in Japan and conducting R&D
activities in Japan. On the other hand, the datashows that, while Samsung has pursued
concentration in terms of the R&D bases, it haslong used important countries such as BRICS as
R&D bases and has long used people with various
nationalities including emerging countries as R&D
workers. However, as shown by the example of
Hitachi, more and more Japanese companies thatare hoping to increase their presence in the marketof emerging countries are expected to establish
R&D bases in emerging countries and increase theuse of local workers to conduct R&D activities inthose countries.
(3) Leakage of workers
Japanese companies have been conducting
R&D activities with the belief that they should be
self-reliant. As shown by the examples of Hitachi
and Samsung, Japanese companies will be expected
to abandon the conventional business model where
the products developed for the market of the homecountry are exported to other countries and to
adopt a new business model where R&D activities
are conducted overseas in collaboration with local
researchers in order to produce products
customized according to the local needs. For theJapanese companies planning to establish R&D
bases and use R&D workers in other countries,
their greatest concerns are the risk of leakage oftechnology and know-how that they haveaccumulated so far. In general, there are three
types of technology leakage. 15 First, technology
leakage could occur through "goods" that embody
technologies in the form of products, parts, etc.
Second, technology leakage could occur through"data" that embody technologies in the form ofdrawings, documents, and electronic files. Third,
technology leakage could occur through "people"
who embody technologies in the form of
manufacturing know-how of skilled workers, ideasof developers, etc. 16 An example of technology
leakage through "goods" is the case where a final
product is subject to reverse engineering. An
example of technology leakage through "data" isthe case where a worker takes a drawing, etc. outof his/her workplace. An example of technology
leakage through "people" is the case where an
employee or a retiree gives technical guidance orchanges jobs, etc. Such technology leakage through"people" is difficult to detect. Furthermore, since
the line often blurs between legal job changes andtechnical guidance and illegal ones, it is extremely
difficult to obtain accurate information. In thisrespect, as mentioned above, Japanese companies
have been promoting large-scale downsizing forthe last few decades. It has been said that many
non-Japanese Asian companies are interested in
the victims of the restructuring carried out by
Japanese major manufacturers.
Fujiwara & Watanabe (2013)17 identified theworkers who moved from Japanese electricmanufacturers to companies in South Korea, China,
and Taiwan by using the patent data from Japan,
South Korea, China, and Taiwan and analyzed thetendency among those workers. In this research,about 270,000 cases of patent grants to Japaneseelectronic manufacturers, about 50,000 cases ofpatent grants in China, about 70,000 cases ofpatent grants in South Korea, and about 50,000
cases of patent grants in Taiwan were analyzed.
The researchers identified the names of all of theinventors involved in those patent grants and thenretrieved the inventors whose names appeared inconnection with both a patent granted to a
Japanese company and a patent granted to acompany in South Korea, China, or Taiwan because

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it suggests the possibility that those inventors
moved from a Japanese company to a company in
any of those countries. However, there is apossibility that, even if the same name appears inconnection with two patents, i.e., a patent granted
to an overseas company and a patent granted to a
Japanese company, it could simply mean that there
are two different persons sharing the same name.
In order to increase the possibility that there is
only one person indicated by that name, the namewould be considered to be indicating the same
person only if it satisfies the criteria for similarity
in IPC numbers. The first step is to identify theinventors whose names appear in connection withboth a Japanese company and an overseas company.
The second step is to choose from those inventors
any inventor who is considered to be an identicalperson who has moved from a Japanese company toan overseas company because the similarity
criteria for IPC numbers is satisfied. In order todetermine the direction of the move of each
inventor, an analysis was made to identify thecompany each inventor originally belonged to andthe company he/she newly belongs to after the
move. In this way, the move of every inventor was
tracked. Furthermore, based on the information on
the timing of the last patent application filed fromthe pre-move company and the timing of the firstpatent application filed from the post-movecompany, the most probable timing of the move of
every inventor was calculated.
Fig. 9 shows the chronological changes in thenumber of researchers who moved from Japanesecompanies to Samsung. As shown in the figure, themove to Samsung peaked in 2004 and has rapidly
declined since then.18 A closer examination of thepatents that the Japanese researchers obtained
after moving to Samsung has revealed that it isextremely common that a few Japanese
researchers belong to the same group and engage
in R&D activities. The data on the Japanesecompanies to which those researchers originallybelonged show that, in some cases, those members
used to belong to the same Japanese company andengage in R&D activities in the same group. 19
While the timing of the move of each researcher
varies within a range of 2 to 3 years, it may bepresumed that the researchers who had conducted
R&D activities as colleagues in a Japanesecompany moved to Samsung at the same time orwith some time lag and jointly conducted R&D
activities at Samsung.20

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Number of Japanese researchers who moved toSamsung[Fig. 9 Number of Japanese researchers who
moved to Samsung]Fig. 10 shows the chronological changes in thenumber of Japanese researchers who moved to a
Korean company other than Samsung. The number
reached a small peak in around 2000 and hit thegreatest peak in around 2003. This shows the same
pattern as the number of inventors who moved toSamsung.
Number of Japanese researchers who moved toa Korean company other than Samsung[Fig. 10 Number of Japanese researchers who
moved to a Korean company other thanSamsung]Fig.11 shows the chronological changes in thenumber of Japanese researchers who moved to
Taiwanese companies. While the number ofJapanese researchers who moved to Korean
companies showed a rapid increase from around2000 and has been on the decline in recent years,
the number of Japanese researchers who moved to
Taiwan has shown relatively small changes andstayed almost the same since the 1990s. The
decline since around 2007 may be attributable tothe time lag that inevitably occurs in this analysis
due to the use of patent data. A detailed analysis of
the R&D activities conducted by Japanese
researchers after moving to Taiwan has revealed
that it is very common for Japanese researchers to
conduct R&D activities as the only Japanese
researcher in a local research group consisting of

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several researchers. The Japanese researchers
who moved to Taiwan to conduct R&D activities
are expected to play a leadership role for local
researchers.21
Number of Japanese researchers who moved to Taiwan[Fig. 11 Number of Japanese researchers who
moved to Taiwan]
Fig. 12 shows the chronological changes in thenumber of Japanese researchers who moved toChina. As shown in the figure, the number ofJapanese researchers who moved to China has
been on the rise. The number of Japanese
researchers who moved to Samsung and other
Korean companies peaked in 2003 to 2004 and has
been on the decline since then. In contrast, thenumber of Japanese researchers who move to
China is expected to further increase in the future.
Number of Japanese researchers who moved to China[Fig. 12 Number of Japanese researchers who
moved to China]
As explained above, the number of Japanese
researchers who moved to South Korea
significantly increased from 2000 and has been on
the decline in recent years. On the other hand, thenumber of Japanese researchers who moved toChina could further increase in the future.
However, whether or not the number of Japanese
researchers who move to Chinese companies
increases may depend greatly on the state of the
R&D systems of Chinese companies and thetreatment of researchers as well as the level of IP
protection, etc. in China, etc. The following section
will examine the relationship between worker
mobility and the IP protection level in eachcountry.
(4) Relationship between worker mobility
and the IP protection level
With the globalization of R&D activities, theIP system in each country is an important factor
for securing local workers and also for facilitating
the move of researchers to that country. However,no specific research has been conducted withregard to the effect of the IP protection level on
the securing and mobility of workers.
In this section, patent data was used toanalyze the relationship between the changes in
the IP protection level in each country and the
inflow and outflow of workers to and from thatcountry. This analysis was conducted targeting a
total of eight countries that are expected to groweconomically in the future, i.e., South Korea, China,
India, Brazil, Russia, Thailand, Indonesia, andVietnam. The U.S. patent data about the patentapplications filed by the companies in those eight
countries was used. More specifically, I retrieved
the inventors' names on all the patents filed by thecompanies in those eight countries and matchedinventors' names in parings of all these countries
and extracted the inventors whose names made aperfect match on patents in the parings. Based on
the IPC numbers, I considered the matching
inventors as identical if they obtained patents inthe same technical field and found them to bedifferent persons if they obtained patents indifferent technical fields. In this way, for each of
the aforementioned eight countries, I counted thenumber of workers secured in other countries (in)and the number of inventors who moved to othercountries (out). As the indicator of the IP
protection level of each country, I used the Index of
Patent Rights (IPR) developed by Park. The IPR is
the index publicized by Park every five years basedon his research on the following five factors,
namely, (i) the scope of patent protection, (ii)
accession to international treaties, (iii) whether thecountry has the legal authority to demand the grantof a compulsory license for a patent or to preventthe non-use of patent rights, (iv) strict punishment
for patent infringement, and (v) the guarantee of
20-year patent protection period.

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Average in 1960 to 1990
1995
2000
2005

China
1.33
2.12
3.09
4.08

India
1.03
1.23
2.27
3.76

Brazil
1.22
1.48
3.59
3.59

Russia
3.48
3.68
3.68

Thailand
0.95
2.41
2.53
2.66

Indonesia
0
1.56
2.47
2.77

Vietnam
1.38
2.09
2.9
3.03

[Table 1 Index of patent rights of each country22]
Fig. 13 shows the relationship between theoutflows of workers and the IPR of each country. As
shown in Fig. 13, workers tend to move fromcountries with a high IP protection level. On theother hand, Fig. 14 shows the relationship between
the inflow of R&D workers and the IP protectionlevel of each country. This indicates that workers
tend to move to countries with a high IP protectionlevel, in other words, the higher the IP protectionlevel is, the easier it would be to attract overseas
researchers. While the data shows that South Korea
is separated widely from other countries andattracted an extraordinarily large number of workers,
this is presumed to be attributable to the fact that
South Korea intentionally invited talented workers
from other countries.

As described above, in recent years, there has
been a drastic increase in the number of workers
moving from one country to another. An increasing
number of workers are expected to move between
emerging countries and developed countries. This
has raised two issues in relation to Japanesecompanies. First, it is important to accurately
grasp how many and what types of R&D workers
have moved from Japanese companies to which
companies. Even though it is impossible forcompanies to prohibit their employees frommoving to other companies, some measures would
be necessary to reduce the risk of the outflow ofimportant workers and technologies. Second, forJapanese companies planning to promote the use ofoverseas workers in the future, it is important toaccurately grasp what types of workers they should
hire and what types of R&D systems they should
build in order to promote corporate growth, inother words, what types of R&D workers willcontribute to their innovative activities inemerging countries. This issue is importantbecause companies would be able to increase theirmarket shares in emerging countries by hiring
overseas researchers and making effective use ofthem.
2[Fig. 13 Relationship between the outflow of
workers and the IP system of eachcountry]South Korea[Fig. 14 Relationship between the inflow of
workers and the IP system of eachcountry]

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Purpose of this research

As described above, many R&D workers havealready moved from Japanese companies to other
non-Japanese Asian companies. In particular, many
workers have moved to Korean companies, whichhave been growing significantly. However, it isexpected that more and more Japanese researchers
will move to China, India, Thailand, etc., with theenhancement of the IP systems in those emerging
countries in the future.
What Japanese companies must do to become
innovative and competitive again is to reconstructtheir innovation approach from two aspects, i.e.
"leakage" and "acquisition" of technology. Morespecifically, there is a call for a new strategy with aview to preventing the leakage of technologies thatJapanese companies will need to achieve growth,
while actively acquiring technologies that they willneed to enhance their market shares in emerging
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countries in the future.
This research pays attention to the fact thatworker mobility has a great impact on technology
transfer and innovation, and aims to empiricallyanalyze such impact of worker mobility on
innovation. To this end, an attempt was made to
first grasp what types of workers move fromJapanese companies to non-Japanese Asiancompanies, and then analyze the difference
between those who moved and those who
remained among workers of the same company, interms of factors such as the number of years ofcareer, R&D achievements, and specialized
research fields. An empirical analysis was also
conducted as to Japanese workers who moved to
non-Japanese Asian emerging companies, with afocus on what types of workers contributed toinnovative activities of the companies to which
they moved.
Thus far, research on innovation results had
been conducted using a knowledge production
function in order to analyze the impact of R&D
investment and human capital on innovative
activities of companies (Pakes and Griliches (1984),
Griliches (1990)). These earlier research efforts
can be evaluated as placing the focus on the extent
to which innovation can be created by inputting
financial capital or human capital in R&D activities.
On the other hand, this research is interested inanalyzing how knowledge workers of companies indeveloped countries would affect the innovation
activities of companies to which they moved, withthem embodying the technologies and knowledgeof their former companies. In order words, theobjective of this research is to clarify the impact ofknowledge workers on innovation, rather thanmerely watching the relationship between thefinancial capital and human capital as an input andthe innovation results as an output.
In order to analyze the process wherein theknowledge embodied in knowledge workers spills
over to the companies to which they moved andplay a role in the innovation and growth of thesecompanies, several indices were used in thisresearch as those representing the quality ofworkers. One such index is a network index. In
this research, an analysis was conducted as to thecorrelation between the positions that workers
held before moving and the contribution that they
made at the companies to which they moved, basedon the data of workers who moved from companies
in developed countries to companies in emerging
countries. There are few research results
accumulated thus far with regard to such
relationship between the in-house network and thespillover of knowledge through worker mobility.
This research aims to reveal that human mobility
and the existence of an informal network play animportant role in the innovation process. Morespecifically, a quantitative analysis was conducted
as to the impact of individual workers' attributes,
such as their network index, number of years ofcareer, R&D achievements and specialized
research fields, on worker mobility and innovation.

Ⅱ Review of preceding researchand setting up hypotheses
1

Review of preceding research

A representative research that was previously
conducted to examine the impact of investment in
R&D activities and human capital on innovation
was Pakes and Griliches (1984), which conducted
an analysis of patent data using a knowledge
production function.23
In the preceding research, the amount of R&D
investment and the number of patents obtained
were frequently used as a proxy variable to indicate
innovation. While an increase in the amount of
R&D investment can be understood as theoutcome of successful innovation, it is natural toconsider the R&D expense as an input. For thisreason, patent data was used as a proxy variable toindicate innovation in this research. Furthermore,in addition to the number of patents, the quality ofpatents was taken into consideration as a proxyvariable to measure innovation because, when
examining how the movement of workers fromdeveloped countries to emerging countries could
contribute to innovation, as is attempted in thisresearch, the aspect of improvement of the qualityof innovation cannot be ignored.
2

Hypotheses(1) Hypothesis (i)As mentioned above, Japanese companies
have undergone a major restructuring since around2000. If all of the engineers laid off by thesecompanies were unnecessary personnel, thecompanies could have reduced costs by such
downsizing and improved their businessperformance. However, in the past two decades,
Japanese electronics manufacturers do not seem tohave succeeded in improving their profitability
through creating innovation, despite their decision
to sell off their unprofitable divisions such as
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choice regarding workers whom they should havelaid off and workers whom they should haveretained. In other words, there is a possibility thatJapanese companies might have laid off talented
workers who could have contributed to creating
innovation if they had remained, while retaining
common workers without such innovative
capability instead.
This research attempts to compare, among
researchers who once worked at the same
Japanese company, those who moved to
non-Japanese Asian companies and those who
remained, and analyze the comparison results,
using data of the number of years of career, R&D
achievements and specialized research fields. For
this analysis, the following hypotheses were set
up.
Hypothesis (i): Researchers who had achieved
superior achievements at Japanese companies
moved to non-Japanese Asian companies.
In this research, this hypothesis was tested
through the comparison between researchers who
moved from Japanese companies to non-JapaneseAsian companies and those who remained at
Japanese companies.
(2) Hypothesis (ii)
Hypothesis (i) was set up to examine whattypes of researchers tend to move and what typesof researchers tend to remain, on the basis of thedifference in quality between, among researchers
who once worked at the same Japanese company,
those who moved to non-Japanese Asiancompanies and those who remained at the company.
However, whether Japanese researchers would
move to non-Japanese Asian companies andwhether they would be successful after moving to
non-Japanese Asian companies are issues ofdifferent levels. Then, another attempt was madeto examine what types of Japanese researchersamong those who moved would be successful at
non-Japanese Asian companies. When Japanese
researchers move to non-Japanese Asiancompanies, they would be expected to develop new
fields of research that the non-Japanese Asiancompanies have not worked in, by making use of
the high technological capabilities that they havecultivated at the Japanese companies, rather thanbeing merely expected to serve as part of theworkforce. In order to ascertain whether Japanese
researchers are successful at the non-JapaneseAsian companies to which they moved, the degreeof change in the quality or quantity of patents

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obtained as a result of their involvement would bea more appropriate barometer than the degree ofchange in the amount of sales. Accordingly, thefollowing two hypotheses were set up.
Hypothesis (ii)-1: Japanese researchers who cancontribute to innovative activities of non-JapaneseAsian companies on a quantitative basis are those
who have knowledge in a wide range of technicalfields.
Hypothesis (ii)-2: Japanese researchers who cancontribute to innovative activities of non-JapaneseAsian companies on a qualitative basis are those
who are young.
Based on Hypotheses (ii)-1 and (ii)-2, thecreation of innovation at non-Japanese Asiancompanies was measured in terms of both quantityand quality and an analysis was attempted to findout what types of Japanese researchers could
contribute to such innovation.

Ⅲ Analysis of Hypothesis (i)1Data(1) Data used for analysis
For the analysis in this research, US patent
data from 1976 to 2013 was used. Specifically, fromamong data of US patents held by electronics
manufacturers of Japan, South Korea, China andTaiwan, the names of inventors, the number of
inventors, the numbers of backward and forward
citations of the relevant patent, the IPC number,the year of application and other items wereextracted.
Since this research aims to grasp worker
mobility accurately, the identity of the inventor wasdetermined by setting a criterion in terms oftechnical field and confirming the movement ofeach inventor. Then, for each such identified
inventor, factors such as the number of years of theinventor's career, the numbers of backward andforward citations of the relevant patent in which
the inventor was involved, the HHI of the IPC
number, and the network index were calculated.
Furthermore, based on the assumption thatcompanies that have achieved rapid growth may
have preferentially hired workers from developed
companies, Samsung (South Korea) and Hon Hai(Taiwan), which are said to have experienced most
rapid growth in recent years, were analyzed
separately from other non-Japanese Asiancompanies as the destinations to which Japanese
inventors moved.

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(2) Explained variable
The explained variable used for analyzing
what types of inventors, among those who worked
at Japanese companies, tended to move to
non-Japanese Asian emerging companies was abinary variable which took on 1 if each inventor
moved to a non-Japanese Asian company and 0 if
he/she did not move.
(3) Explanatory variable
In order to examine the impact of worker
mobility and human network on each company's
innovation, the worker quality index and the
network index were used as an explanatory
variable. For example, in order to measure thequality of each worker who moved to a
non-Japanese Asian company, variables such as thenumbers of backward and forward citations of therelevant patent in which the worker was involved,
the HHI of the IPC number, the size of theJapanese company to which the worker originallybelonged, the number of years of the worker's
career, and the network index were used.
2

Analysis method

In order to examine the difference in terms ofcharacteristics between, among researchers who
worked at the same Japanese company, those who
moved to non-Japanese Asian emerging companies
and those who remained at the company, a logit
model was built using, as an objective variable, abinary variable which took on 1 if each inventor
moved to a non-Japanese Asian company and 0 if
he/she did not move. The model is expressed by
the following formula.

Ⅳ Analysis of Hypothesis (ii)1Data(1) Data used for analysis
In the analysis of Hypothesis (ii) as well, US
patent data from 1976 to 2013 was used. As forJapanese companies, the same data as that used for
Hypothesis (i) was used. Since Hypothesis (ii) was
set up to analyze what elements in Japanese
inventors contributed to innovative activities of the
non-Japanese Asian companies to which they
moved, an attempt was made to track Japanese
researchers who moved to five companies in Asia
(China, Taiwan, and South Korea). In order toanalyze how the inventors who moved fromJapanese companies contributed to innovative
activities of these five companies, a panel data

analysis was conducted using the patent data andfinancial data on the 22 years from 1990 and 2011.
(2) Explained variable
Regarding the explained variable, patents
were used as the index to measure innovation. As
mentioned above, the number of patents has been
conventionally used as the index to measure
innovation.24 In this research, however, in orderto take the quality of innovation into consideration,
not only the number of patents but also the numberof citations of each patent were included as a proxyvariable for the quality of innovation.
(3) Explanatory variable
Regarding the explanatory variables, thefollowing indices were used: the R&D costs foreach term of each company; the numbers of
researchers and Japanese researchers utilized ineach term; and indices that indicate the quality ofeach researcher utilized, such as the numbers ofbackward and forward citations of the relevant
patent in which the researcher was involved, thenumber of years of the worker's career, the HHI of
the IPC number, and the network index.
2

Analysis method

In other to prove the effect of introducing
knowledge workers from companies in developed
countries to companies in emerging countries suchas China and South Korea, a knowledge production
function, which was proposed by Griliches andShankerman (1984) and Griliches and Regev(1995), was used. The knowledge production
function is used to measure the effect of R&D
investment on knowledge increase.
By using variables relating to the quality ofknowledge workers, this research aims to see theimpact of Japanese inventors on the innovation at
the non-Japanese Asian companies to which they
moved.
Regarding an explained variable, the numbersof patents and the number of forward citations
were used as a proxy variable to indicate
innovation. In order to control the bias due to theeffect peculiar to each company, 25 estimations
were made based on the fixed effect model and therandom effect model in this research.

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Ⅴ Analysis results and consideration
1

Analysis of Hypothesis (i)(1) Analysis results
Table 2 shows the results of a binary logistic
analysis regarding Hypothesis (i), in which thecase where a researcher moved from a Japanesecompany to a Korean, Chinese, or Taiwanesecompany is considered as "1," and the case where a
researcher did not move is considered as "0."The results of this analysis has revealed thatthe evaluation of research performance of eachresearcher is positive as far as the researchers who
moved to Samsung or any other Korean company
are concerned, while the evaluation is negative as
far as the researchers who moved to Hon Hai areconcerned. Regarding the size of the company aJapanese researcher originally belonged to, thevalue is significantly negative as far as the Korean
companies and Hon Hai are concerned. Regarding
the number of years of experience, the value isinsignificantly positive as far as Korean companies
are concerned, while the value is insignificantly
negative as far as Chinese and Taiwanesecompanies are concerned. Regarding the degree ofconcentration of technical fields, the value isnegative as far as Samsung and Hon Hai areconcerned, while it is positive as far as other
Korean companies and Chinese companies areconcerned. Regarding the eigenvector centrality,
the value is significantly positive as far as Korean
companies are concerned.

South Korea

Other non-Japanese Asian countries

Researchers who

Researchers who

Researchers who

moved to otherResearchers who

moved to Samsung

Korean companies

moved to Hon Hai(e.g. LG)
Originality+

Evaluation of research
performance+

Size of the company aJapanese researcher
originally belonged to

moved to other
non-JapaneseAsian companies

+

*

+

+

*

+

***

-

+

*

-

-

***

-

Number of years ofexperience

+

+

-

-

Degree ofconcentration oftechnical fields

-

+

-

+

In-house network

+

***

***

+

***

+

***

*

+

+

***

*significant at the 10% level, **significant at the 5% level, ***significant at the 1% level[Table 2 Logistic regression analysis](2) Consideration
With regard to the evaluation of research
performance represented by the number of forward
citations, the analysis results has revealed that, as
far as Korean companies are concerned, the value
is significantly positive for both Samsung and other
Korean companies, which indicates that only theJapanese researchers who had been involved in
obtaining high-quality patents were selected andinvited to move from Japanese companies to
Korean companies. On the other hand, as far as theJapanese researchers who moved to Hon Hai areconcerned, the value is insignificantly negative,
which indicates that the researchers who moved to
Hon Hai had not necessarily been involved in
obtaining high-quality patents. Regarding thenumber of years of each researcher's experience,

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are relatively old, whereas the researchers thatmove to Taiwanese or Chinese companies are
relatively young. Regarding the degree ofconcentration of technical fields, although thevalue is insignificant, the analysis results indicatethat Samsung and Hon Hai need workers withexperience in a wide range of technical fields,
whereas other Korean companies and Chinesecompanies need inventors specialized in a small
number of technical fields. Finally, regarding the
eigenvector centrality, the value is significantly
positive as far as Korean companies and Hon Hai
are concerned. This indicates that inventors who
were likely to accumulate information thanks totheir relatively important position in a company are
more likely to move.

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2

estimation show that, if the innovation is measured
by the number of patents, contribution to
innovation is made by researchers who have been
engaged in research in specific technical fields.
The right column of Table 3 shows the resultsof estimation made by using the innovation
measured by the quality of patents as an explained
variable. The values for the number of years ofexperience and the eigenvector centrality are
positive.

Analysis of Hypothesis (ii)

(1) Analysis results
The middle column of Table 3 shows theresults of estimating a knowledge production
function by using the fixed effect model and therandom effect model based on Hypothesis (ii). A
knowledge production function is determined byusing the innovation measured by the number ofpatents as an explained variable. The results of

Innovation measured by the
number of patents

Degree of concentration of technical fields++

Size of the company a Japanese researcher
originally belonged to--Originality

+
-

+
+
+

R&D costs
Japanese researchers

Evaluation of research performance
Number of years of experience
In-house network

***
**
**

Innovation measured by thequality of patents

+
+
-

***

**
**

*significant at the 10% level, **significant at the 5% level, ***significant at the 1% level[Table 3 Panel data analysis regarding innovation measured by the number and quality of patents](2) Consideration
Based on Hypothesis (ii) set up to examine
the types of researchers who have contributed toinnovative activities of non-Japanese Asiancompanies after moving from Japanese companies
to those destination companies, it may be said
that the type of researchers who are likely tomake such contribution is different depending onwhether the innovation is measured by the
number of patents or by the quality of patents.
First of all, in the case of innovation
measured by the number of patents, the inventors
who move from Japanese companies andcontributetoinnovative
activities
of
non-Japanese Asian companies are likely to beinventors with a high HHI, in other words, those
who have been specialized in R&D activities in asmall number of technical fields. In the case ofinnovation measures by the number of patents,
the number of years of experience has a negative
effect. This suggests that younger researchers
are more likely to contribute to obtaining many
patents at the destination companies.
On the other hand, in the case of innovation
measured by the quality of patents, it is revealed
that, among the inventors who moved fromJapanese companies to non-Japanese Asiancompanies, the researchers with rich experiences
are more likely to contribute to the improvementof the quality of inventions at the non-JapaneseAsian companies.

Ⅵ Summary and policy implications
1

Summary

In this research, empirical analyses wereconducted on the relationship between worker
mobility and innovation. Research on mobility ofJapanese researchers has not been sufficiently
accumulated thus far. Furthermore, althoughinnovation has been addressed in earlier researchusing a knowledge production function, most of
the preceding research attempts were made to
analyze the impact of R&D investment andhuman capital on innovation, or in other words,
they focused on the number of workers but did
not focus on the quality of workers.
In this research, an empirical analysis wasmade based on Hypothesis (i), from theperspective of the quality of workers who moved
from Japanese companies to non-Japanese Asiancompanies and the informal network they have.
The analysis results show that companies inemerging countries which experienced rapid
growth preferentially hire, among researchers
working at companies in developed countries,
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competency.
Another empirical analysis was made basedon Hypotheses (ii) to examine the impact of thequality of Japanese workers on the innovation at
the non-Japanese Asian companies to which they
moved. The analysis results show that if
innovation at companies in emerging countries ismeasured by the number of patents, young
researchers and highly specialized researchersamong those from companies in developed
countries made greater contribution to innovation.
It is also revealed that if innovation is measured
by the quality of patents, innovation is promoted
at companies which hire more workers fromcompanies in developed countries, and amongsuch workers, those who have longer R&D
experience made greater contributions toinnovation.
2

Policy implications

As described above, it is revealed that many
Japanese researchers have already moved tooverseas companies in South Korea, China,
Taiwan, etc. and have attained certain R&D goals
at the destination companies and that the
researchers who moved to overseas companies
had attained a much higher level of R&D
achievements in the past and had richer
experiences in comparison with those who did not
move. In the future, the IP systems will befurther improved in emerging countries as wellsuch as China, India, and Thailand. As shown in
the analysis on the relationship between the
inflow and outflow of workers and the level of IP
protection offered under the IP system, theimprovement of the IP system tends to increase
the inflow of workers. Therefore, the number ofJapanese researchers who move from Japanesecompanies to Chinese, Indian, or Thai companies
is expected to further increase in the future.
Having conducting this research, I would like tomake two policy proposals.
First, it will be important to adopt effective
policies and systems in order to prevent theleakage of highly skilled workers and securenecessary workers who are essential to Japan.
Japanese companies have not taken any action
against the leakage of competent researchers toother countries although those researchers would
contribute to the innovative activities of Japanesecompanies. The risk of losing competent Japanese
researchers to Chinese and Indian companies, etc.
could significantly increase in the future. In orderto prevent the leakage of researchers who are

IIP Bulletin 2014 Vol.23

essential to Japanese companies and workers, etc.
in certain technical fields where the increasingpresence of non-Japanese Asian companies would
threaten Japanese companies, it is necessary tooffer more incentives to inventors by taking suchmeasuresasestablishinganeffective
remuneration system.
The second policy proposal would be theearly establishment of a system to provide broadprotection for trade secrets. Companies areconstantly deciding whether they should seek
patents for their R&D results or keep their R&D
results secret as know-how (Watanabe, 2012).
Patents alone would be no longer able to provide
sufficient protection for companies. Now, it has
become increasingly important to maintain a goodbalance between seeking a patent and keeping
secrecy as know-how. This trend is partiallyattributable to the fact that the quality of R&D
workers in emerging countries has improved tosuch an extent that they are quite capable of not
only understanding patented inventions by simply
reading publicized patent applications but also
developing improved technologies based thereon.
As shown by this research, it is possible toanalyze patent data and select competentinventors out of the inventors who belong toJapanese companies. This means that patent data
could be used by other companies as the mostreliable tool to secure competent workers. In thisrespect, when the company devises its R&D
strategy and IP strategy, the option of not seeking
a patent but keeping secrecy as know-how would
become more important than before. As a next
step, it would be necessary to conduct further
discussion on how to protect trade secrets inorder to redesign IP systems.

Conclusion
As discussed above, it is revealed thatworkers who moved from Japanese companies to
non-Japanese Asian companies tend to be morecompetent than those who did not move. Thisfinding suggests that non-Japanese Asiancompanies hire Japanese researchers strategically,
after obtaining an accurate understanding of theirabilities and positions, and it also suggests thatJapanese companies failed to prevent theircompetent workers from leaving.
As this research has made clear, since the2000s, in particular, many Japanese researchers
moved to Korean and Taiwanese companies. The
significant growth that Korean and Taiwanesecompanies achieved in the past decade may be

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thanks in no small part to the contribution madeby the Japanese researchers who moved to thesecompanies. In the coming decade, Chinese andIndian companies will attempt to acquire talented
Japanese researchers to attain growth. If Japan
maintains the same policies and systems as
before, Japanese companies might be overtaken
and surpassed by Chinese and Indian companies
in the not so distant future, as they had been
overtaken and surpassed by Korean andTaiwanese companies.
As proposed in this research, it is hoped thatJapanese companies will take measures as soon as
possible to prevent the leakage of theircompetent workers, while the Japanese
government will re-design the IP system byintroducing a system for protecting technology bymeans other than patents, such as protection of
trade secrets, so that Japanese companies willregain their global competitiveness.
1

On the basis of the exchange rate as of December 31,
2011, 1KRW=0.06633JPY, Samsung's sales wereapproximately 10.9445 trillion yen and LG's sales wereapproximately 3.5988 trillion yen. Hon Hai's sales also
exceeded ten trillion yen.
2
Kiminori Genba, Seizō Kigyō no Sābisuka no Teiryō
Bunseki (Quantitative analysis of service industry by
manufacturing companies), 2012.
3
Nobukazu Usami, "BOP Shijō ni okeru Bijinesu Moderu
Kōchiku ni kansuru Kōsatsu" "(Study on building
business models in the BOP market), Sangyo Keizai
Kenkyu (journal of Japan Society of Industry andEconomy), 2011.
4
Ayano Fujiwara & Toshiya Watanabe, "Inobēshon no
Shūekika ni okeru Chizai no Yakuwari—Nihon Kigyō toKankoku Kigyō no Sinkōkoku ni okeru Kenkyū Kaihatsu
no Hikaku—" (Role of IP in monetization of
innovation—Comparison of R&D activities of Japanesecompanies and those of Korean companies in emerging
countries—), Nihon Chizai Gakkai (journal of theIntellectual Property Association of Japan), 2012.
5
Yukiko Fukagawa, Nihon no Kokusai Kyōsōryoku
Saikōchiku to Gurōbaru Jinzai Ikusei (Reconstructing
Japan's international competitiveness and developmentof human resources with a global vision), 2012.
6
National Institute of Science and Technology Policy,
Kagaku Gijutsu Bunya no Kadai ni kansuru
Daiissen-kyū Kenkyūsha no Ishiki Teiten Chōsa(Fixed-point survey on first-class researchers'
awareness of issues in science and technology), 2010.
7
Hitoshi Furui, Nihon Takokuseki Kigyō ni okeru Keiei
Genchika (Localization of management by multinational
corporations originating in Japan), Kokusai Kankei Kiyo
(Journal of International Relations, Asia University), Vol.
19, 2010.
8
Of a total of 221,726 employees, 54% work overseas
and 101,973 employees work in South Korea.
9Samsung Electronics Sustainability Report 2012.
10
Tetsuya Kobayashi, Nihon Jidōsha Sangyō ni okeru

IIP Bulletin 2014 Vol.23"Kaihatsu no Genchika" ("Localization of development"in the Japanese automobile industry), 2007.
11
The number of bases includes the total number of
production bases, sales bases, local bases and anyother bases of each company publicized in its annual
report or website.
12
How these companies manage their IP is an issue thatneeds to be investigated separately by holding
interviews or other methods in the future.
13
How this company manages IP is an issue that needs
to be investigated by holding interviews or othermethods in the future.
14
The number of patent grants involving an inventor
with a Chinese nationality is 86 for Samsung, 43 for
Fujitsu, 28 for Hitachi, and 27 for NEC.
15
Knowledge spillover.
16
Ministry of Economy, Trade and Industry, Wagakuni niokeru Gijutsu Ryūshutsu oyobi Kanri no Jittai ni tsuite(Actual state of technology leakage and management inJapan), 2007.
17
Ayano Fujiwara & Toshiya Watanabe, “The effect of
researcher
mobilityonorganizational
R&D
performance: researcher mobility and innovation” The
6th ISPIM Innovation Symposium – Innovation in the
Asian Century, in Melbourne, Australia on 8-11
December 2013.
18
The year of move of inventors was estimated based on
patent data. Since some of the inventors who moved tooverseas companies quite recently might not have
filed a patent application at the destination companies
yet, the number of inventors who recently moved
could be slightly higher.
19
Aayano Fujiwara (2013), "Gijutsu Ryūshutsu to Gijutu
Kakutoku no Hazama de—Shinkōkoku ni Idō suru
Hatsumeisha no Bunseki—" (Between technology
leakage and technology acquisition—Analysis ofinventors who move to emerging countries) [openseminar at Toshiya Watanabe Laboratory, the Graduate
School of Engineering, the University of Tokyo, "IPManagement by Innovators" (2013)].
20
Why these Japanese researchers moved to Samsung is
an issue that needs to be investigated separately byholding interviews or other methods in the future.
21
What activities these Japanese researchers areengaged in after moving to Taiwan is an issue thatneeds to be investigated separately by holding
interviews or other methods in the future.
22
JC Ginarte, WG Park, "Determinants of patent rights:
A cross-national study," Research policy 26 (3),283-301, WG Park, "International patent protection:
1960–2005," Research policy 37 (4), 761-766.
23
Source: Griliches (1990), Figure.13.3.
24
Pakes and Griliches (1984), Hausman, Hall andGriliches (1984), Hall, Griliches and Hausman(1986),Griliches (1990), Kortum and Lerner (1998),
Crepon, Duguet and Mairesse (1998),Hall and Ham(1999).
25
Hall and Mairesse (1995) conducted an analysis of the
manufacturing industry in France, using the
fixed-effect model. Mairesse and Hall (1996) analyzed
the manufacturing industry in the United States andHarhoff (1998) analyzed the manufacturing industry inGermany.

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