Firms in Japan, US and France account for 85% of the Top 100 innovators in the global corporate world according to Thomson Reuters. The selection is based on an analysis of overall patent volume, patent-grant success rates, global reach and invention influence as evidenced by citations.

 

The 2015 Top 100 Global Innovators (report) hail from three continents and comprise eleven countries. Just two countries account for 75% of the list: Japan and the US, making them the true innovation hubs of the world. The remaining nine countries include Belgium, Canada, France, Germany, the Netherlands, South Korea, Sweden, Switzerland and Taiwan. The majority of the nations in our world are absent from hosting even one of the world’s leading innovators.

The United Kingdom where the Industrial Revolution had its genesis, has no firm in the top 100. In March 1838, Benjamin Disraeli (1804-1881), a future British prime minister, said in a speech to the House of Commons:

The Continent will [not] suffer England to be the workshop of the world.

Japan has 40 firms that are leading innovators and innovation in Japan has experienced a curious rise and fall in recent decades.

It's striking that Japan's big companies faltered with the rest of the economy, in the aftermath of the bursting of the huge property bubble in the early 1990s. Productivity is generally low and a survey of Japanese firms in 2009, carried out by a research firm that was founded in 1892, estimated that over 20,000 companies were more than a century old (about 1% of the total) and there were eight firms that were founded more than 1,000 years before.

According to the Joint Research Centre (JRC) of the European Commission, over 50% of all US firms in the Top 1,000 global R&D spenders in 2009, were founded after 1975, in Europe the figure was 18% and in Japan just 2%.

Japan’s biggest companies have been losing relative market share in recent decades: their proportion of the Fortune Global 500’s total revenues decreased to 13%, from 35%, between 1995 and 2009. One of Japan’s longtime strengths was in electronics, for example, but its share of the world’s export value of electronic goods has fallen from 30% in 1990 to less than 15% in recent years, according to the Japanese Ministry of Economy, Trade, and Industry. Many Japanese companies have no alternative to globalization if they hope to continue growing.

Japan’s ICT (information, communications, technology) market was over US$325bn in 2013, the 3rd largest single-country market in the world according to the Japan External Trade organisation (Jetro) and
2nd in Asia, with an 8.8% share of the global ICT market.

China’s share of Asia’s exports of high-tech goods such as medical instruments, and aircraft and telecommunications equipment jumped to 43.7% in 2014 from 9.4% in 2000, the Asian Development Bank said in a report last month. Japan’s share tumbled to 7.7% in 2014 from 25.5% in 2000.

The shift reflects China’s success in boosting innovation and technology as key drivers of its economy as it seeks to move up the manufacturing value chain. Low-tech goods accounted for 28% of China’s exports in 2014, compared with 41% in 2000, according to the ADB’s Asian Economic Integration Report 2015.

Japanese companies have a global presence and reputation, but most remain surprisingly dependent on Japan’s domestic market for revenue, while struggling to capture a reasonable share of dynamically growing emerging markets. A McKinsey analysis shows that Japanese high-tech companies, as a group, in recent years have generated more than 50% of their sales in the home market, growing by a mere 1% annually, compared with growth of 5 to 10% in the developing world and 2 to 3% in other developed markets.

In 2009 Japan had the lowest score of any of the International Monetary Fund’s advanced economies on the Test of English as a Foreign Language, administered to foreign students who want to study in the United States. It had the second-lowest score among Asian nations, outperforming only Laos.

The Nikkei Asian Review reported last July:

Japanese corporations were the global leader last year in nine out of 50 product and service categories, showing strength in businesses such as carbon fiber that cater to other companies.
US companies were No. 1 in 16 categories, followed by 10 for European concerns. South Korean companies had the largest market share in eight categories while Chinese businesses led in six. American and Chinese companies were strong in consumer products thanks to their large home markets.

Bloomberg reports here on how the Japanese government is pushing for research spending of at least 4% of gross domestic product. However, China shows that in the bullet train market, that Japan is competing against an increasingly powerful regional rival.

There was one Chinese company in the 2014 top 100 innovators: Huawei, but there was none in 2015.

Thomson Reuters says in its report:

A big factor contributing to China’s shortcoming is the fact that most of its innovation is domestic and therefore is not realized outside of its borders. In fact, only about six% of China’s innovation activity is protected, and commercialized, outside of China. In order for China to see more organizations join this prestigious group, it will need to think more internationally and look to bring its inventions to market around the world.

The United Kingdom continues to be noticeably absent, largely because of the country’s relatively low Gross Domestic Expenditure on R&D (GERD). The UK’s GERD is 1.63%, for example, whereas Japan’s is 3.47%.

UK and Irish business R&D heavily reliant on foreign-owned firms

Thomson Reuters adds:

Europe increased its overall share in the Top 100 by 2% over 2014, and now holds 20% of the overall pie. Its country distribution has shifted slightly as well. France continues to lead the region, this year with 10% of the 100, versus just seven% last year, adding Alstom, Thales and Valeo to its roster. Germany stayed consistent with four companies on the list, while Belgium rejoined the group once again with the reappearance of Solvay. Switzerland contributed three (versus five in 2014), while the Netherlands and Sweden remain with one honoree each.

IBM was dropped from the American companies while new entrants include Amazon, InterDigital and Johnson Controls all making the list for the first time. Struggling Blackberry (previously known as Research in Motion) is the one company from Canada.  

Gloobal Onnovators, top 100 firms, 2016, 2015