As such competition heats up in the field of innovation, accelerating the speed of product development is becoming a vital issue for Japanese companies. At the same time, broadening the scope of R&D is also essential so as to keep up with increasingly complex products and systems that have developed as the result of technological advances. This paper examines the future of Japanese companies, with a particular focus on the "opening" and globalization of innovation that is critical to their international competitiveness.

This article also presents an overview of the policy challenges of the Japanese government in the area of a network-based innovation system. In Japan, the national innovation system is characterized by large companies, with substantial in-house R&D resources, dominating private R&D expenditure, while R&D collaboration between companies and universities is lacking. However, there is an increasing trend of R&D collaboration, particularly among small to medium-sized enterprises (SMEs). The Japanese government has also taken several policy actions to facilitate such open innovation activities, in the hope that they spread nationwide to include large companies.

What is vital for Japanese firms is to incorporate into their technology management both of the key elements - maintaining expansive R&D activities that do not sacrifice future growth potential through open innovation, and breaking into new growth markets through "globalization".