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The challenges and issues with nanotechnology at the product development stage

1. Introduction
Nanotechnology1is expected to trigger
explosive growth in many new industries in
Japan. As a trigger for new industry, there are
three broad reasons as to why nanotechnology
receives such great attention in Japan. First,
nanotechnology is a fundamental technology that
will have a great impact on industries and society
in the next generation. For this reason, over 30
countries have already implemented
nanotechnology-related R&D programs.
Government R&D fundings have dramatically
increased in many countries over the recent
years. For example, in the U.S., the expenditure in
R&D was 102.4 million dollars in 1997 and
increased to 293 million dollars by 2000. Also, in
that same time period, nanotechnology-related
expenditure in the EU increased from 114.4
million dollars to 210.5 million dollars and from
0.935 million to 189.9 million dollars in Japan
OECD, 2003 : 44
45). Secondly, Japan recognizes
the existence of an international comparative
advantage in basic research sectors. In Japan, a
number of scientific papers dealing with the topic
of nanotechnology ranks second in the world, only
after the U.S.(OECD, 2003 : 44). Finally, the
gaining of regional economic power by East-Asian
countries such as China and Korea makes
Japanese manufacturing sector have to evolve and
develop production capabilities that strongly
The Challenges and Issues with Nanotechnology
at the Product Development Stage
Tetsuya KirihataAssociate Prof., Kyoto University, and Visiting Associate Prof.,
Nara Institute of Science and Technology)
日本知財学会誌〉Vol.5 No.2 ― 2008 : 65
Many experts predict nanotechnology-related businesses to become one of the leading new industries in Japan. There
are several reasons as to why nanotechnology is attracting such attention in Japan. For one, nanotechnology is a
fundamental technology and as such has a big influence on the existing industry and society. Furthermore, in the fields
of fundamental nanotechnology research, Japan is seen as having an international comparative advantage.
In this paper, to examine the challenges and issues of nanotechnology commercialization in detail, I classify the
process for commercialization into three stages : basic research stage, product development stage and commercialization
stage. The challenges and issues at the product development stage of nanotechnology are discussed based on a
questionnaire survey with nanotechnology businesses. This paper reveals that “funding”, “external collaboration”, and
“extracting visions and conceptualizing market needs” are the main challenges at the product development stage of
nanotechnology business.
Finally, I conclude the paper with policy recommendations regarding the commercialization of nanotechnology,
especially in terms of “funding” and “external collaboration”.
KEYWORDS Nanotechnology, Commercialization, Product Development Stage, Financing,
External Cooperation, Extracting Visions, Conceptualizing Market Needs
ISSN 1349
2008 IPAJ All rights reserved.
enhance its value creation. Japan once had the
greatest market share in the world for many
products such as TVs and VCRs, however, these
advantages have recently shifted to the East-
Asian countries. As a consequence, the
development of value added products in which
nanotechnology is utilized is important in helping
Japans manufacturers receive greater recognition
and outdistance other East-Asian countries.
2. Classification of the
Commercialization Process
Although there are a number of ways to look
into the commercialization process, this paper
classifies it into three stages : basic research,
product development, and commercialization. In
the basic research stage, basic science is turned
into technologies symbolized by patents and other
intellectual properties.2In the product
development stage, prospective technologies
derived from basic research are further developed
and a product prototype is produced. Finally, in
the commercialization stage, the sale of the newly-
developed product is expanded so as to create a
sustainable new market.3There are various
difficulties that must be overcome in
commercializing nanotechnology, as is the case
with all new technology.
This paper focuses on the product development
stage. With regard to this phase, Day and
Schoemaker(2000)discussed the significance in
high technology commercialization. Day and
Schoemaker(2000 : 52)remarked that the
product development stage provides the biggest
challenge for management and went on to state
that the success of the product development stage
requires continuing support from senior
management, creation of new ventures from
ongoing business activities, organizational and
strategic flexibility, as well as willingness to take
risks and learn from experience. Inoue, Nihei and
Hunabiki(2003)argues that the Japanese
manufacturing industry experiences a severe
difficulties in the product development stage and
raises several causal factors that have been
recognized by the companies in which they
researched. These include issues with extracting
visions and conceptualizing market needs,
human resources,and Intra-organizational
linkage. Based on an interview survey of 20
companies in Switzerland which have introduced
nanotechnology to their products, Bucher,
Birkenmeier, Brodbeck, and Escher(2003 : 162)
argued that to create success in nanotechnology
product development stage, the assessment and
repeated introduction of new technology,
participation of top management, and
implementation of an interdisciplinary team for
the project are essential to success.
3. Methodology
For this paper, I conducted a questionnaire
survey regarding challenges and issues in the
product development stage of nanotechnology
commercialization, mainly with those who
participated in the Osaka Science and Technology
Centers Kansai Nanotechnology Promotion
Conference. The questionnaires were sent at the
beginning of December 2003 and collected at the
beginning of January 2004. A total of 329
questionnaires were sent out with 132 valid
responses received. Among valid responses, 88
companies indicated that they have been working
on nanotechnology commercialization. Regarding
the company type, 54 were listed companies
whereas 34 were unlisted companies. The
questions were identical to those conducted by
Inoue et al.(2003), which were sent to 3,626
manufacturing listed companies(491 listed
companies responded). This papers contribution
日本知財学会誌〉Vol.5 No.2 ― 2008
is, as a consequent, a provision of comparative
research of challenges and issues at the product
development stage between nanotechnology and
the whole manufacturing industry in Japan.
4. Results
4.1. The challenges and Issues at the Product
Development Stage
In reply to the question How much difficulty
are you having in the production development
stage?, 50.0 percent answered facing some
difficulties, 12.5 percent answered facing a fair
number of issues and challenges, and 5.7 percent
answered facing a significant number of
difficulties. The results show that nearly 70
percent of companies revealed some difficulties in
the product development stage.
The survey further asked companies who face
some, a fair number of, or a significant number of
difficulties how they would classify the causes of
such difficulties. Extracting visions and
conceptualizing market needswas the highest
58.3 percent), followed by funding41.7
percent), human resource(35.0 percent), and
external collaboration(28.3 percent). It is
remarkable that fundingand external
collaborationare recognized as one of the major
challenges. With regard to funding, the whole
manufacturing industry marked approximately
twice as high the percentage as the result by
Inoue et al.(2003), and external collaboration
marked 3 times higher. When focusing only on
listed companies, fundingand external
collaborationindicates approximately twice the
percentage of those by Inoue et al.(2003). I will
later discuss about fundingand external
collaborationwhich are both peculiar to
nanotechnology business, and also about
extracting visions and conceptualizing market
needswhich is recognized as the highest
challenge faced by nanotechnology-related
4.2. Funding
In response to the question, Is R&D
expenditure, as a percentage of total investment,
higher for nanotechnology-based businesses than
other businesses?, the total percentage of
companies answering very highor slightly
highwas 40 percent, exceeding those answering
slightly lowand very lowby 10 percent. There
is a tendency for the percentage of R&D
expenditures in nanotechnology-based businesses
to exceed that in other businesses.
Regarding the source of capitalization for R&D
with nanotechnology, 62.5 percent or the majority
of the respondents replied funding from the
government or municipalities, while funding
from own businesses not directly connected to
nanotechnology businessescame second with 56.8
percent, followed by sales from the
nanotechnology business itselfat 31.8 percent.
The Challenges and Issues with Nanotechnology at the Product Development Stage
Nanotechnology Inoue et al.
Table1:Challenges of nanotechnology commer-
cialization at the product development
1)Figures show percentage of respondents who responded to-
ward the challenges of nanotechnology commercialization at the
product development stage
2)Multiple answers allowed
3)EVC=Extracting visions and conceptualizing market needs,
FUN=funding, HRE=human resource, ECN=external collabora-
tion, CCE=corporate culture, IOL=Intra-organizational linkage,
MON=motivation, OTS=others
Research expenditure from business partners
and revenue from patent and license saleseach
took 12.5 percent. It seems that the
nanotechnology business itself is unable to cover
the cost of R&D and commercialization. A high
expectation of subvention from the government
and local municipalities is characterized. This
tendency is probably due to the expensive
equipment needed for nanotechnology
4.3. External Collaboration
This section discusses collaboration with other
industries and collaboration with universities and
institutions regarding external collaboration.
4.3.1. Collaboration with Other Industries
Regarding relationship with other industries,
four alternatives were given for respondents to
choose from, namely, already have relationship,
making up relationship, not making up
relationship, and wont have relationship. More
than half of the companies replied already have
relationshipor making up relationship. Aside
from this, four choices were provided in response
to the necessity of collaboration with other
industries which were very necessary, fairly
necessary, not very necessary, and not at all
necessary. Almost 80 percent replied very
necessaryor fairly necessary. Compared to the
results by Inoue et al.(2003), it shows that
companies engaging in nanotechnology
commercialization are more enthusiastic in
collaborating with other industries.
4.3.2. Collaboration with Universities and
More than 80 percent of the companies
answered already have relationshipor making
up relationshipregarding relationship with
universities and institutions. Also more than 80
percent responded very necessaryor fairly
necessaryregarding the necessity of
collaboration with universities and institutions.
Compared to the results by Inoue et al.(2003), it
shows that companies engaging in nanotechnology
commercialization are also more enthusiastic in
collaborating with universities and institutions.
4.4. Extracting Visions and Conceptualizing
Market Needs
Extracting visions and conceptualizing market
needs are recognized as the most critical
challenges to nanotechnology business at the
production development stage. The following
sections discuss top-down managementin
relation to extracting visions and describing
market needsin relation to conceptualizing
market needs.
日本知財学会誌〉Vol.5 No.2 ― 2008
Nanotechnology Inoue et al.
Table2:Collaboration and the necessity of collab-
oration with other industries
1)Figures show percentage of respondents who answered“al-
ready have relationship”or“making up relationship”with regard
to the relationship with other industries
2)Figures show percentage of respondents who answered“very
necessary”or“fairly necessary”with regard to the necessity of
collaboration with other industries
Nanotechnology Inoue et al.
Table3:Collaboration and necessity of collabora-
tion with universities and institutions
1)Figures show percentage of respondents who answered“al-
ready have relationship”or“making up relationship”with regard
to the relationship with universities and institutions
2)Figures show percentage of respondents who answered“very
necessary”or“fairly necessary”with regard to the necessity of
collaboration with universities and institutions
4.4.1. Top-down Management and its
To the question to what extent top-down
management are engaged in the product
development stage?, 14.8 percent answered very
engaged, 58 percent replied engaged only with
companys direction, while 14.8 percent claimed
not at all engaged. On the other hand, to the
question is top-down management needed for
innovative product development?, more than 80
percent answered very necessaryor fairly
necessary. The results from this study regarding
both implementation and necessity of top-down
management. are a little lower than the results by
Inoue et al.(2003).
4.4.2. Describing Market Needs and its
Regarding the implementation of describing
market needs, respondents were to choose among
five choices : very described, fairly described,
fifty percent described, not very described,
and not at all described. To the question do you
describe the market needs clearly and concretely
in writing or charting for your own company?,
59.1 percent answered very described, fairly
describedand fifty percent described. On the
other hand, more than 90 percent answered very
necessaryor fairly necessaryregarding the
necessity of describing market needs. This
indicates that, regarding the implementation of
describing market needs, this survey reveals a
slightly higher result than that of Inoue et al.
5. Summary and Discussion
5.1. Summary
This paper reveals that major challenges with
nanotechnology in the product development stage
are funding, external collaborationand
extracting visions and conceptualizing market
With regard to funding, a high expectation of
subvention from the government and local
municipalities is the characteristic of
nanotechnology business. Compared to the survey
conducted by Inoue et al.(2003), regarding
external collaboration, this research shows that
companies engaging in nanotechnology
commercialization are more enthusiastic in
collaborating with other industries, universities
and institutions. Also, concerning extracting
visions and conceptualizing market needs, the
implementation of top-down managementis
lower but describing market needsis higher
than the result of Inoue et al.(2003). The
companies that pursue nanotechnology
commercialization seem to emphasize the
development of products based on market needs
The Challenges and Issues with Nanotechnology at the Product Development Stage
Nanotechnology Inoue et al.
Table4:Implementation and necessity of top-
down Management
1)Figures show percentage of respondents who answered“ve-
ry engaged”and“engaged only with company’s direction”re-
garding the implementation of top-down management
2)Figures show percentage of respondents who answered“ve-
ry necessary”or“fairly necessary”regarding the necessity of
top-down management
Nanotechnology Inoue et al.
Table5:Implementation and necessity of describ-
ing the market needs
1) Figures show percentage of respondents who answered“ve-
ry described”, “fairly described”, and“fifty percent described”
regarding the implementation of describing market needs
2)Figures show percentage of respondents who answered “ve-
ry necessary”or“fairly necessary”regarding the necessity of
describing market needs
throughout the R&D phase. However, when it
comes to getting top management involved in
extracting visions for commercialization, it seems
that nanotechnology businesses put less emphasis
on this issue than the overall manufacturing
5.2. Discussion
Within Japan, the expectation will continue to
grow in nanotechnology commercialization. For
this reason, it is important to identify the
challenges and issues within the nanotechnology-
based businesses, not only on the product
development stage, but also on the basic research
and commercialization stage. Aside from this,
comparative researches in high technology
between nanotechnology, IT, biotechnology, and
the likes are essential.
Based on the additional interviews with
companies which work on nanotechnology
commercialization, I would like to conclude this
paper by discussing the public support required
and its effects on the direction of nanotechnology
commercialization especially regarding the
fundingand external collaboration.
5.2.1. Public Support for Funding
In the U.S., the funding issue is recognized as a
high-priority issue for the commercialization of
new technology. For this reason, in the 1980s, to
eliminate the funding gap in the basic research
stage, R&D assistance systems targeting medium
and small companies such as Advanced
Technology Program, and Small Business
Innovation Research were introduced in the U.S.
However, it has been observed that companies
that do receive public funding for R&D should be
allowed to reroute the money to promising
business other than that which was initially
funded(Lerner, 2000 : 91). Companies must
respond flexibly as business environmental
changes over time. It is argued that there is a lack
of flexibility with public funding. The same lack of
flexibility of public funding found in the U.S. is
also found in Japan according to the interviews
conducted. The improvement of flexibility in
public fundings will be a high-priority policy in
fostering nanotechnology-related businesses.
In the interviews concerning nanotechnology
venture, there were multiple responses expressing
the desire for the improvement of partner
relations with venture capital firms that provide
investment funds. One president of a
nanotechnology venture said that The cost of
truly innovative nanotechnology product
development will be over one billion yen.
However, venture capital firms in Japan have a
shortsighted business philosophy. They are
unwilling to provide the funds on a billion yen
scale. In this case, the public sector, namely, the
national government and local municipalities need
to establish public policies to assist venture capital
films that can support nanotechnology ventures.
5.2.2. Public Support for External
An executive of a nanotechnology venture
claimed that For product development in
nanotechnology, it is important to present
preproduction prototypes to other companies
besides existing partners. Dramatic and
unexpected new applications may be found
through this process. It can be stated that an
interdisciplinary approach can be an advantage
and collaboration with different fields and
businesses are essential for innovative product
development. Within the public sector, the
encouragement and prioritization of R&D projects
with participation from many different businesses
are required. Policies that prioritize the use of
public research facilities must be established to
promote projects that contribute to partnerships
日本知財学会誌〉Vol.5 No.2 ― 2008
across various fields and businesses.
The questionnaire survey for this paper was entrusted to Osaka
Science and Technology Centers Kansai Nanotechnology
Promotion Conference. I would like to express my gratitude to all
those involved at the Center and Conference.
1OECD(2003)defines nanotechnology as a range of new
technologies that aim to manipulate individual atoms and
molecules in order to create new products and processes :
computers that fit on the head of a pin or structures that are
built from the bottom up, atom-by-atom. This paper follows
OECDs definition of nanotechnology. Richard P. Feynman and
Eric K. Drexler are representatives of the scientists who
originally suggested the possibilities of nanotechnology.
Feynman, who is known as the father of nanotechnology,
defined its potential by implying the possibility of writing the
entire contents of a large encyclopedia on the tip of a needle.
He also promoted the idea of finding a way to physically
synthesize chemical substances through the use of
nanotechnology. These ideas were presented in his lecture
entitled Theres Plenty of Room at the Bottomat the
American Institute of Physics in 1959. Also, Drexler, in his
paper called Engines of Creationproposed the possibility of
creating nanomachines by controlling atoms and molecules
and manipulating them in a precise controlled manner.
2With regard to the basic research stage, Tamada, Kodama,
and Genba(2003) conducted several surveys covering
Japanese patents in four fields : biotechnology,
nanotechnology, IT, and environmental technology. The
results indicated that biotechnology has the greatest
science linkage to patents, while nanotechnology, IT, and
environmental technology follow in consequent order.
3Moore(1991)indicated that the difficulties in the
commercialization stage, in which Moore called Chasm, can
occur when high-technology based products are brought to
market. Moore(1991 : 134
135)argued that focusing
exclusively on the products quality is a major cause of the
difficulty in the commercialization stage.
Bucher, Philip, Beat Birkenmeier, Harald Brodbeck, Jean-philippe
Eschger(2003)Management Principles for Evaluating and
Introducing Disruptive Technologies : the Case of
Nanotechnology in Switzerland,
R&D Management,
33, pp.149
Day, George and Paul Schoemaker(2000)
Wharton On Managing
Emerging Technologies,
John Wiley & Sons Inc.
Drexler, Eric K.(1986)
Engines of Creation
The Coming Era of
Anc hor.
Feynman, Richard P.(1959)Theres Plenty of Room at the
Journal of Microelectromechanical Systems,
Inoue Ryuichiro, Tadashi Nihei, Ken Ishikawa, Jun Funabiki(2003
Desubare-gensho to Sangyo-Saisei( Valley-of-Death
Phenomenon and Industrial Revitalization),
Journal of Mitsubishi
Research Institute,
Lerner, Josh(2000)When Bureaucrats Meet Entrepreneurs :
The Design of Effective Public Venture Capital Programs,Lewis
M. Branscomb, Kenneth Morse, and Michael Florida, ed.,
Managing Technical Risk,
National Institute for Standard and
Technology, US Department of Commerce, pp.80
Moore, Geoffrey A.(1991)
Crosing the Chasm,
Publishers Inc.
Science, Technology and Industry Scoreboard,
OECD Publication Service.
Tamada, Schumpeter, Fumio Kodama, and Kiminori Gemba(2003)
Jyuten 4 Bunya ni okeru Saiensu-rinkage no Keisoku(Study on
Science Linkage of Japanese Patents : An analysis on patents
in the field of genetic technology by constructing a citation
database),RIETI Discussion Paper Series.
The Challenges and Issues with Nanotechnology at the Product Development Stage
Malaysia has exhibited a profound interest, thus far lacking in the developmental concentration in the field of nanotechnology since the embryonic formation of the National Nanotechnology Initiative (NNI) in 2006. There have been evident barriers, which disconnect the R&D and commercialization of this technology from spanning through a progressing and transcending flow of innovative efficiency. This thesis aims to: (i) To identify the critical barriers that constrain the R&D and commercialization of nanotechnology in Malaysia, and (ii) To provide recommendations for policy actions and future studies for nanotechnology R&D and commercialisation in Malaysia. This thesis illustratively explains the author’s design of various factors, distinctively developed through a series of time series - citation analyses of core referred journals from 1989 – 2014 (26 year period). Citation analyses were conducted manually since the main element embedded within the core subject theme of each paper was not explicitly detected through title headings by use of any software. Graphical mappings were designed to prove the existence of missing gaps in literature and how it was relevant to the construction of a conceptual framework and its associated building blocks. Missing gaps were identified in the area of: I: The hybrid of comprehensive vs non-comprehensive education of nanotechnology II: The distinct priorities of academia and industry and how it affects the R&D and commercialization of nanotechnology III: The formation of R&D policy for nanotechnology This thesis explains the conceptual framework design through the formation of building blocks functioning as individual units of structure composed to formulate a larger subject entity that interoperate with interdependent units found within the structural assemblage. This thesis also provides an explicit presentation of exploratory questions designed to guide the qualitative research study - design model. Sampling method via purposive sampling and triangulation have been explained in terms of reason, sampling size and methodology. The findings establish that university researchers and students are undeniably the knowledge bearing assets required during the invention or discovery stage and prototyping or testing stage from R&D to the commercialization of nanotechnology. This thesis proves that there is an absolute need for a skilled and educated workforce trained within an array of levels bifurcating from nanotechnology to congregate the projected demand in the future. Apart from human capital and technological capability, aspects such as infrastructure and capital investment also come into play in the pursuit towards realising a solid bridge between R&D and commercialization of nanotechnology. Considering that a lot of investments have been made in the area of science and technology, although not specifically in the area of nanotechnology development and not many significant results attained, the main implication of this study is that it unveils the key anomalies existing within the nanotechnology environment to give the government and policy makers reason to invest in developing solutions to prevent the occurance of bottlenecks. The main findings and recommendations indicate the urgency to prepare human capital in nanotechnology through education and training for the fulfilment of nanotechnology relevant research activities in the next ten years. Besides, it is crucial to make known the total cost of key infrastructure required to undertake a nanotechnology research activity in preparation for financial apportionments by potential applicants, the parallel importance of patents and publications in universities, and its role in sustaining nanotechnology research. Furthermore, this thesis suggests the needs in adopting a multidisciplinary approach in nanotechnology educational programme and the potential roles that can be played by the Malaysian government to assist universities in creating research opportunities in nanotechnology through University-Industry partnerships.
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