Local R&D support as a driver of network diversification: A cross-regional comparison in Japan

Abstract

Abstract This study compares the effects of local research and development (R&D) support programs on firm performance in three neighboring prefectures in the same district in Japan. Particularly, we focus on the regional and industrial diversification of transaction networks as the outcome to evaluate regional innovation policies for higher competitiveness. One of these prefectures has a large industrial agglomeration around world-leading manufacturers, which is not applicable to the other two prefectures. Empirical evaluation based on a firm-level dataset confirms only weak and partial effects of local R&D support on business diversification, but provides evidence of different consequences of local innovation policies, reflecting the differences in industrial structure, geographical positions, and policy schemes.