I Introduction 

	In recent years the extent to which R&D directly influences business results within the 
manufacturing industry has steadily increased, and views such as "business expansion 
cannot be achieved without building up R&D capabilities" and "companies that control 
R&D control the market" have become firmly established among the senior management 
echelons at companies.
	The current sluggish business environment suffers from intense international 
technological competitiveness, the downturn in profits brought about by the maturation of 
technology, products and markets, the diversification of market needs and the expansion of 
operational range through business diversification. This is making it extremely difficult for 
the manufacturing industry to break though the present barrier erected by technology that 
has reached maturity and become stagnant. companies within the industry are now being 
forced to choose specific themes on which to focus because of the growing diversity of new 
technology seeds and basic technologies, and the sharp rise in the amount of R&D 
investment and the increasing research time required to obtain results from R&D. Thus there 
is an intensifying need for the Japanese manufacturing industry to place greater importance 
on "strategy" and "strategic management" in order to deal with such a chaotic and highly 
uncertain business environment.
	During Japan's high economic growth period companies had relatively clear ideas about 
what they should manufacture and how, and there was no pressing need for senior 
management to emphasize the setting of goals to this end. Individual employees strove to 
improve the quality and performance of whatever they were manufacturing with the common 
aim of "expanding business by mass-producing better quality products in shorter periods at 
a cheaper cost". Needless to say, the long-established structure was efficient and played an 
absolutely vital role in the realization of this aim. 
	During this period private-sector companies assigned most of their business resources 
to product development and manufacture, while their research effort focused mainly on 
applied research aimed at improving product quality or performance, so R&D then was 
perhaps closer to "R&D" in its general lack of balance. This research-development-
production process was an extremely efficient means to achieve the mission mentioned above 
in a short period. 
	Companies that strengthened their business foundations during the high economic 
growth period poured considerable effort into R&D during the series of booms in 
establishing central research institutions in an effort to enhance their technological 
capabilities, and through this, continued to expand and became highly competitive in 
international markets. During this process, research and development by Japanese 
companies steadily took on a much more balanced emphasis, changing from the one-sided 
"R&D" to the more proportional "R&D". 
	As companies continue to change "from producing to thinking organizations"I it is 
becoming increasingly important for them to clarify their strategies by way of a direction 
that employees should follow and goals at which employees should aim, that is, "what they 
should manufacture and how" and "what they should do to achieve this". In today's society 
we are constantly being inundated with information, so there is a growing need for systems 
which enable us to choose only that information which is of use to us, which facilitate the 
timely vertical, lateral and 
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1 Reference Document: NISTEP REPORT No.15 "From Producing to Thinking 
Organisations" 
 
interdepartmental flow of information, and which promote strategic R&D management that 
is mindful of differentiation and the allocation of priorities. 
	If Japanese companies were pressed to choose organizational reform (to a dynamic and 
wellcoordinated system) or formulation and execution of strategies or both to deal with 
today's highly uncertain environment, then what kind of action would they take? 
	This report brings together the results of a survey of Japanese companies that forms a 
part of a wider survey which seeks to compare the R&D management systems of Japanese, 
United States and European companies. 
	We should like to take this opportunity to express our sincere appreciation for the 
invaluable guidance we received from Dr. Ikujiro Nonaka, Director in the 1st Theory-
Oriented Research Group, NISTEP, and for the many extremely helpful suggestions we 
received from Dr. Kinji Gonda, Director in the 2nd Theory-Oriented Research Group, and 
Dr. Masahiro Kawasaki, Executive Director of the J R D C (former director-general of 
NISTEP) when planning and drawing up the survey and preparing this report. 



July 1993