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Research and Technology (R&T) are approaching from different perspective in Japan. The roles played by government and industry in Japan, as to link the R&T findings with the Small & Medium Size Enterprises (SME) applications, are institutionalized after years of cooperation, yet flexible enough to be directed as needed. There is definite focus on R&T by both government and industry, and their efforts in concert to exploit technology thoroughly as soon as possible. What do firms such as Sony, Honda, Fujitsu, Hitachi, and Mitsubishi have in common? Not only are they all Japanese companies, but they are also highly leveraged, both from operational research and innovative technology perspective. This paper is intended to investigate the current government strategy for promoting research and new trends in technology, with more emphasize on SME, in Japan that propelled this nation to lead the world economy.