Investing in R&D and Competing through R&D: Are There Inter-Country Differences?

The two largest market economies in Asia, Japan and Australia, share important macro level characteristics. However, a striking disparity exists between their private sector R&D:GDP ratios. Exploiting survey data from the two locations, we test the empirical significance of country differences when technology-based firms compete through R&D. Data analysis showed that under the fundamental competitive-strategic directions of cost leadership, product differentiation and high added-value, Japanese technology-based firms attach greater importance to product differentiation and higher added-value over a wide range of markets while their Australian counterparts attach greater importance to higher added-value in specific markets or market segments. The implication follows that other things being equal, R&D:GDP ratios differ between Japan and Australia because R&D:GDP ratios differ in a key business sector as a result of different market orientation when competing through R&D. The finding that market ambit widens or narrows under clearly identifiable conditions is offered to empirically support decision-making in marketing management.