Promoting Startups and Technological Development: How Do We Pursue Both?

How can we promote entrepreneurship and technological development? For entrepreneurship, advances in technological development are crucial because they are a source of new business opportunities. However, the development of institutions that enhance entrepreneurship may slow the progress of technological development. Since the introduction of the SBIR system in the U.S. in 1982 to promote entrepreneurship, it has been observed that many innovations have been generated from start-ups in the U.S., while the level of basic research and development has been dampened. It is possible to suppose that SBIR pushed spin-out scientists to pick easily harvestable low-hanging fruits. The government has played a significant role in future fruits that startups can pick by investing in novel and versatile technologies. National defense, in particular, underpins startup R&D in the U.S. Finally, when the cost of innovation is divided into two categories, private and social costs, the way the cost of innovation is borne in Japan and the U.S. is very different. In Japan, the cost of innovation is borne relatively largely by corporations, while in the U.S., the cost of innovation is borne by the government and the public.