The Role of Japanese Start-ups in High-Tech Innovation

This policy brief describes the current state of start-ups in the Japanese electronics industry and suggests ways Japan can support innovative start-ups that complement the innovation already provided by its large electronics companies. Relative to other countries, particularly the United States, Japan depends more on its large companies and less on start-ups for innovation. In the electronics sector, the last Japanese start-up to grow to more than $1 billion in sales was Sony, which began as a self-funded company in 1946. By contrast, many of the major electronics companies in the United States are much younger, including Intel (1968, venture-funded) and Cisco (1984, venture-funded from 1987). The important role of smaller companies in the innovation process in the U.S. is highlighted by the fact that NSF data show companies with less than 250 employees account for 9% of manufacturing RD • some ideas are not related to the company’s core capabilities; • some ideas compete with the company’s existing products; or • the potential market appears too small, and so the company’s high overhead costs make the project unprofitable. Discussion that focuses only on the relative merits of large companies versus start-ups for innovation misses the important point that