AbstractThe common wisdom about R&D consortia in Japan may be misguided. They are not formed as an attempt by the government to pick and create winners, but often rather as a response to the adoption of ideas from abroad. Enhancing competitive incentives, more than trying to force cooperation, is the key to accelerating innovation in both development and commercialization. Procompetitive coordination rather than precompetitive cooperation is the dominant strategy. Japanese consortia nurture competitors to better assure that domestic competition will propel the firms to international competitiveness. The USA can learn important lessons from the structure of consortia in Japan.