Knowledge creation and diffusion in the semiconductor industry

                        Appleyard, Melissa McComb; PhD

                        UNIVERSITY OF CALIFORNIA, BERKELEY, 1997

                        ADMINISTRATION, MANAGEMENT (0454)

                         Innovation propagated through improvements to physical capital, human capital, and production
                         processes, is vital to the long-run competitiveness of the firm and the country. Few studies in the
                         economics literature have attempted to understand mechanisms of innovation in an industry context,
                         and this dissertation fills this void by dissecting the process of innovation in a technology-intensive
                         industry. This research examines the tensions and challenges surrounding the creation and diffusion of
                         knowledge in the semiconductor industry. What emerges is an intricate system of technological change
                         that links innovators both within companies and between companies. Firms in the semiconductor
                         industry face a tremendous amount of technological uncertainty, which requires them to hone their ability
                         to transfer knowledge both within their boundaries and with the outside world. This dissertation presents
                         a framework for modeling the willingness of an innovating firm to share its knowledge. Using this
                         framework as a departure point, this research analyzes how firms coordinate their internal resources
                         during new process introduction and cooperate with other firms to determine the evolution of process
                         and equipment technologies. Long-term success in this industry requires that firms rapidly and efficiently
                         introduce new production processes dictated by a technology roadmap and implemented through a
                         well-orchestrated system that coordinates resources across development and manufacturing operations.
                         Complementing their internal systems, semiconductor firms also create interfirm systems of knowledge
                         sharing. Horizontal ties to other semiconductor producers allow them to reinforce their understanding of
                         process technology. Survey data presented in this dissertation provide empirical evidence that frequent
                         exchange of technical knowledge occurs between semiconductor firms in both the United States and
                         Japan. In addition, vertical ties linking semiconductor producers with their equipment suppliers help
                         advance the processing capabilities of capital equipment. As modeled in this dissertation,
                         co-development projects between semiconductor producers and their equipment suppliers contribute
                         to knowledge accumulation at suppliers, which bolsters the technological capabilities of the industry. An
                         understanding of these internal and external knowledge sharing mechanisms afforded by this
                         dissertation permits innovators to heighten their rate of technology development and guides public
                         policy makers in the construction of institutional environments that facilitate economic growth.

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