Under fierce global competition in a knowledge-based economy, Japanese companies based in the UK have intensified research and development (R&D) collaboration and have been expanding their networks with excellent local universities and research institutes. Through administering questionnaires and interviews, this study attempts to clarify how Japanese companies absorb capacities by carrying out advanced R&D with local universities and what benefits and spillover affect the UK academics. The

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... lts indicate that the Japanese companies located geographically close to excellent research environments are more satisfied with the outcomes of their collaborative R&D with UK universities. Further, those companies have developed their organisational capacity by embedding themselves into the local innovation network. Moreover, UK academics have gained funding opportunities as well as research capabilities with an entrepreneurial mind-set through the intensifying collaboration with Japanese companies. Pfirmann, O. (1995). Path analysis and regional development: factors affecting R&D in West German small and medium sized firms. Regional Studies, 29, 605-618. http://dx.