It appears that much of the production, investment, and research and development activity in Japan's optoelectronics industry takes place in firms and establishments considerably smaller than their U.S. counterparts. In particular, this in an industry, at least as it is organized in Japan, where economies of scale in R&D activities do not appear to be important. While initiative in the Japanese optoelectronics industry is widely dispersed, these small firms and establishments are typically tied through equity or long-term contractual relationships to much larger firms.

A careful attempt has been made to assess the role the Japanese government has played in the development of the optoelectronics industry. While it is an article of faith among both researchers and business in the U.S. optoelectronics industry that the Japanese government's role has been critical, there appears to be little concrete evidence to support such views. Direct Japanese government support for optoelectronics R&D is very small, and overall tax incentives quite modest by comparison with U.S. government practice. It is true that much U.S. government support for optoelectronics underwrites the development of specialized products useful for national security purposes. Nevertheless, it is widely acknowledged that this support also funds the research underlying many products sold to the private sector.

The Japanese government's role as a catalyst for the optoelectronics industry's development appears to be no more significant than its role as a funding source. Almost uniformly, Japanese firms engaged in optoelectronics appear to view government-sponsored cooperative R&D projects as very marginal to the industry's development.

Published: February 1996; WTEC Hyper-Librarian