Latecomer Strategies: Evidence from the Semiconductor Industry in Japan and Korea

Abstract

The effects of strategic order of entry on firms' performance have long been an issue in many areas of study. Past research efforts, however, have been concentrated mostly on first mover or early entrant advantages. To contribute to developing a theory of latecomer strategies, the authors investigate how latecomers compete successfully or even leapfrog early movers. They review previous studies on early mover advantages and disadvantages, and group the sources of such advantages or disadvantages into three areas: the firm, its market, and its competitors. The theoretical focus is how a firm converts the opportunities stemming from entry order into performance. The authors seek to confirm and extend relevant theories by examining how late entrants have caught up with incumbent industry leaders in the global semiconductor industry. On the basis of in-depth case analysis of three Japanese and three Korean semiconductor companies, they identify and categorize successful latecomer strategies into two types: strategies for overcoming latecomer disadvantages and strategies for utilizing latecomer advantages. Focusing, thin margin or loss bearing, and volume building form the essence of strategies for overcoming disadvantages, whereas odd timing, time compression, human-embodied technology transfer, benchmarking, technological leapfrogging, and resource leveraging form the essence of strategies for utilizing advantages. Because many companies in Asia have had to face the reality of being latecomers, the Asian perspectives are particularly useful for studying and explicating latecomer strategies.

Towards industry upgrading: A study of Catching Up strategy of Asian countries with focusing on Chinese sectors

“…It also pre-empted large-scale R&D spending on major innovations. Cho et al (1998) examined MTI latecomer's strategies based on the evidence from the semiconductor industry in Japan and Korea. The authors discovered that catching up processes of the semiconductor industry consist of 3 steps, completed one after the other, which are taken by Japanese semiconductor firms for building their competency.…”

“…Most of these studies have focused on the analysis of the inducement of successful catching up but less are about the process. In these rare studies about the catching up process, the objects of majority research are technology industries and technology-driven industries, such as South Korea and Taiwan's semiconductor research (Cho et al, 1998), China Telecom equipment suppliers (Fan, 2006), and integrated circuits in Taiwan and China (Rasiah et al, 2010). These studies basically follow a basic assumption of catching up theory: the technical orbit is predictable.…”

Missing the starting gun: de alio entry order in new markets, inertia and real option capabilities

“…New goods may reduce sales of existing products (Tushman and Anderson, 1986;Aron and Lazear, 1990;Burgelman, 1994;Klepper, 2001) so that wait-and-see strategies are best fitted. According to Cho et al (1998), late entry may be the only realistic option for many de alio firms given their competitive posture. De alio firms experience great opportunity costs in investing resources into risky markets, and so they wait until the uncertainty lowers or when new industries and market characteristics become similar to those of existing markets (Smith and Cooper, 1988).…”

Global Commodity Chains and the Production of Surplus-value on a Global Scale: Bringing Back the New International Division of Labour Theory

“…A major transformation of the local industry occurred during the 1970s and by the end of the decade Japanese firms were beginning to compete successfully with U.S. manufacturers in the production of one type of complex ICs: Dynamic Random Access Memory (DRAM) chips. This qualitative change in the economic geography of the global microelectronics industry, however, was not simply the result of the bold actions by the Japanese "developmental" state accelerating the process of industrial upgrading, as often argued (see, e.g., Cho, Kim andRhee 1998, Mathews andCho 2000). Rather, several other inter-connected forces favored this development in the structure of the microelectronics industry, all of them expressing the transformations in the process of capital accumulation on a global scale reviewed in the previous section.…”