Dynamic competition in technological investments: An empirical examination of the LCD panel industry |
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Authors: | Jeongsik Lee Byung-Cheol Kim |
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Affiliation: | a Georgia Institute of Technology, College of Management, 800 W Peachtree St. NW, Atlanta, GA 30308-0520, United Statesb Georgia Institute of Technology, School of Economics, 221 Bobby Dodd Way NW, Atlanta, GA 30332, United Statesc Samsung Economic Research Institute, 1321-15 Seocho 2-dong, Seocho-gu, Seoul 137-072, South Korea |
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Abstract: | When are technological laggards more likely to try to catch up with leaders? We offer empirical evidence on firm-level data of plant investments in the TFT-LCD panel industry, where technological competition has been intense and dynamic. We find that the followers' level of technology has a non-monotonic effect on technology-improving investments, with intermediate followers the most apt to invest in catch-ups. This result is a puzzle given the existing theory on technology race. We also find that followers' catch-up investments increase with the capacity of the leader that employs the state-of-the-art technology. These results are robust to variations in specification and alternative accounts of effects. We discuss our findings and contributions in light of the technology race literature. |
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Keywords: | D21 L13 L63 O31 O32 O33 |
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