Abstract To many Western observers, it has seemed that collaborative research schemes organised by Japan's Ministry of International Trade and Industry (MITI) have played an important role in the country's rapid development of its computer and semiconductor component industries. Japan's 1981 announcement of its Fifth Generation Computer Systems initiative prompted a number of Western attempts to match Japan's competitive performance by using "Japanese-style" collaboration to support research in the various constituent areas of information technology (IT). However, there is evidence to suggest that many of these Western schemes failed to take full account of a number of special features associated with the Japanese environment. The present paper considers why governments intervene to support IT and presents a classification of different types of support policies. This model is used to assess the changing role that collaboration has played within the development of Japan's computer and related industries. Comparisons with Western versions of collaboration are then used to help identify factors that affect the relative success of collaborative research projects as mechanisms for promoting increased competitiveness. A central message that follows from these comparisons is that the use of collaboration as a "market modifying mechanism", should take appropriate account of the complex nature of market structures and the ways in which these structures vary between different national environments. Japan's collaborative schemes evolved gradually and their development has been shaped by many factors that are specific to Japan. If these factors are ignored, there is a strong possibility that attempts to transplant the collaboration model to different national environments will suffer from adaption problems and a failure to function in the way that was intended.