Current Situations and Issues in the Management of Japanese University Spinoffs

Abstract

University spinoffs in Japan only started to gain momentum in the latter half of the 1990s. While there were only approximately 30 startup companies in 1990, this number soared to 1, 800 in 2008 (Japan Economic Research Institute, 2009). Supporting policies such as the "Hiranuma Plan" have assisted in the setting-up of over 1, 000 university spinoffs in the 3 years since 2001. However, university spinoffs in Japan have appeared to reach a tipping point in the latter half of 2000. The number of university spinoffs that have closed or become bankrupt has increased to the point that they surpass the number of newly-founded companies. Observations of yearly transitions show that the number of university spinoffs that reach IPO status have plateaued, and are in fact in a decreasing trend (Venture Enterprise Center, 2009). Furthermore, even among the university spinoffs that reach the IPO stage, there are many companies that experience sudden drops in stock prices immediately following IPO. It is therefore extremely rare for university spinoffs in Japan to mature in the same manner as those in the U.S., such as Global Enterprise. The increase in the number of university spinoffs being founded fulfills policy objectives; however, from the perspective of the subsequent maturation and development of these companies, there appears to be a wall deterring the success of Japan’s university spinoffs. In this study, a questionnaire survey was used targeting university spinoffs from Japan, and to a certain extent the U.K. and the U.S., in order to elucidate the main managerial challenges faced by Japanese university spinoffs: including "finding customers", "raising finances", "recruiting", and "utilizing external resources". In addition, I characterize the implications of these findings to the management of Japan’s university spinoffs.