Foreign Technology Acquisition Policy and Firm Performance in Japan, 1957-1970: The Japanese Industrial Policy Revisited (Published in "International Journal of Industrial Organization", Sep2005, Vol. 23 Issue 7/8, p563-586. )
We examine the cause and effect of technology acquisition policy on firm performance, using firm-level data between 1957 and 1970. Our results indicate that in the technology acquisition licensing, the government screened a firm's application, based on (i) the industry that the firm belonged to and (ii) firm's sales ranking in the industry. As a result, large but inefficient firms tended to acquire more technologies before the deregulation. Despite such screening process, the technology acquisition policy did not result in a serious failure. The firms that acquired technology grew much faster than those did not during the regulation period.