Organizational Innovation in the Japanese Basic Research : Challenges and Problems

While Japan is becoming a leader in engineering or development, it still lags behind western countries in the field of basic research. One of the most critical reasons ,for this lies in organizational characteristics and management styles in basic research institutes in Japan. Most of Japanese basic research institutes can be characterized as bureaucratic organizations which primarily pursue stability and continuity of researchers and research activities at the sacrifice of flexibility and fiuidity. Much of the literature on R&D management has argued that such a lack of flexibility and fluidity in organizations has negative effects on performance as a result of the decrease of technical communication among researchers In the case , of basic research organizations, the decrease of external communication accompanied with excessive organizational ability is especially problematic in terms of research performance. Recently, however, totally new types of basic research institutes called dynamic network organizations have been increasingly established in Japan. The dynamic network organizations can be characterized by exceptional flexibility and fluidity in management systems. The most substantial example of the experiment of the dynamic network organization in ERATO (Exploratory Research for Advanced Technology), a government sponsored lab. By comparing ERATO and one of the most distinguished basic research institutes, MITI Iaboratory, which is a typical representative of bureaucratic organizations, this paper explores the effectiveness of the emerging dynamic network organization and the problems of the bureaucratic organization in Japanese basic research in terms of researchers' communication behavior and performance. l . Introductron Problems and Challenges m Japanese Basic Research Organizations Recently, sources of competitive advantage of Japan have been shifting from manufacturing to R&D (Porter, 1990). Japan is now becoming a leader not only in manufacturing but also in engineering such as product and process development (Okimoto, 1986). On * I appreciate comments received from participants of the International Conference on Science and Technology Policy into the Next Century hosted by the MIT Japan Science and Technology Program, January 7-9, 1993, at which this paper was presented. I would also like to thank Tish Robinson, Doctoral Candidate of MIT Sloan School, for her help in improving my English. 38 HITOTSUBASHI JOURNAL OF COMMERCE AND MANAGEMENT [Decembcr the other hand, still lagging behind western countries, Japanese contributions in the field of basic research are less significant (Sakakibara, 1991).1 One of the most critical problems of Japanese basic research lies in management styles in basic research organizations in Japan. Most of Japanese basic research organizations, especially universities and national laboratories can be characterized as bureaucratic organizations which pirmarily pursue stability and continuity of research staffs and activities at the sacrifice of organizational fiexibility and fluidity. For example, considering human resource management in Japanese basic researcs organizations, almost all of them basically hold lifetime employment and uni-dimensional promotion systems based on seniority. Under such bureaucratic management systems, once entering particular organizations, most of Japanese researchers stay with the same research organizations throughout their careers.2 Bureaucratic organizations which are now dominant in Japanese basic research include some advantages in the sense that it becomes easier to carry out basic research activities in accumulative, systematic, and continuous ways, in order to learn from and catch up with basic research in western countries. At the same time, however, bureaucratic organizations obviously include some serious problems since they exclude organizational flexibility and fluidity which are essentially important in basic research activities. Considering theoretical aspects of R&D management, much of existing literature has consistently argued that such a luck of flexibility and fluidity in bureaucratic organizations has negative effects on research performance as a result of the decrease of professional communication among researchers. In R&D activities, it is quite important for professionals to collect and process information from a variety of sources. R&D professionals spend a large amount of their time to collect and process information through various media such as technical reports, publications, discussion with others, and so forth (Allen, 1977). Among them, face-to-face oral communication through personal contact is especially important, because it permits timely information exchange, rapid feedback, and critical evaluation, as well as the opportunity for real-time recording and synthesis of information (Allen, 1970; Allen, 1977; Tushman, 1979). Professional communication can be categorized into two types : internal communication among professionals in the same organization, and external communication with those who belong to other organizations (Katz and Tushman, 1979). The importance or effectiveness of either type of communication varies depending on charactetistics of R&D tasks. In the field of basic research, external 'professional communication becomes critically important in terms of research performance, while engineering activities such as development and technical service need internal communication rather than external (Hagstrom, 1965 ; Allen, Tushman, and Lee, 1979). One explanation for this heavy reliance of basic research on external communication is that, compared with more organizationally specific tasks such as engineering, basic research can be defined as a more universal task, and therefore it becomes impossible and inefficient ~ to secure information self-sufficiently within individual organizations (Thompson, 1967; Mansfield and Wagner, 1975; Allen, 1977). In this sense, external coml For instance, according to The White Paper on Science and Technology (1992), a survey by STA reports that, among 12 important areas of technology development, Japan has advantages over U.S. in 6 areas. At the same time, however, among 1 3 important areas of basic research, U.S, is superior to Japan in 9 arcas. 2 Nagata (1991) shows that more than 85 % of Japanese researchers whose ages are less than 40 have never changed their organizations. 1993] ORGANIZATIONAL lNNOVATION IN THE JAPANESE BASIC RESEARCH 39 munication among professionals has been recognized as a key variable in exploring the relationship between organizational behavior and performance in the field of basic research. However, existing literature shows that, as organizations lose flexibility and fluidity, both internal and external professional communication decrease under such stable situations, and after all, this tendency results in a significant decline of performance (Pelz and Andrews, 1976; Smith, 1979; Katz, 1982). In the case of basic research, the decrease of external communication accompanied with excessive organizational stability is especially problematic since it leads to a serious decline in research performance. This kind of organizational phenomenon is often called a Not Invented Here (NlH) syndrome (Katz and Allen, 1982), and suggests the limits of Japanese basic research within bureaucratic organizations which inevitably exclude organizational flexibility and fluidity. Recently, this kind of organizational problem has been often argued in Japan. A number of researchers and managers in Japanese basic research organizations have claimed that the bureaucratic management systems foster some introversive mentalities of researchers which discourage professional interactions over boundaries of organizations, and become obstacles in strengthening Japanese basic research (Iinuma, Iinuma, and Kusunoki, 1991). On the other hand, however, some interesting organizational experiments to overcome such Japanese problems in bureaucratic basic research organizations have come into operation. Recently, basic research organization with totally new management styles have been increasingly established in Japan. These newly established basic research organizations can be characterized by exceptional fiexibility and fluidity in management systems. I Iabel them dynamic network organizations. The creation of dynamic network organizations includes an aspect of "organizational innovation" in basic research in Japan. The most substantial case of the dynamic network organizations is ERATO (Exploratory Research for Advanced Technology), which was founded by government. Science and Technology Agency (STA). Paying attention to the organizational innovation in Japanese basic research, this paper explores the effectiveness of emerging dynamic network organizations and problems in bureaucratic organizations in Japanese basic research in terms of professional communication and performance. The research is based on a comparative case analysis on ERATO and one of the most distinguished basic research institutes in Japan, a laboratory of MITI which is a typical representative of bureaucratic organizations.