Dynamic competition in technological investments: An empirical examination of the LCD panel industry

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...

Full description

Saved in:
Bibliographic Details
Published in:International journal of industrial organization 2011-11, Vol.29 (6), p.718-728
Main Authors: Lee, Jeongsik, Kim, Byung-Cheol, Lim, Young-Mo
Format: Article
Language:English
Subjects:
Catch-up investment
Competition
Dynamics
Firm heterogeneity
Industrial economics
Industrial production
Innovation
Investment analysis
Investment decision
LCD industry
LCDs
Leadership competition
Liquid crystal displays
New technology
Studies
Technological change
Technology race
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary: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. ► We offer evidence on dynamic technology competition in the TFT-LCD panel industry. ► Followers with medium technology indexes are most apt to make catchup investments. ► This supports action–reaction rather than increasing dominance as race pattern. ► Catchup investments also increase with industry's cutting-edge technology capacity. ► This finding confirms that followers strive to catch up not to fall too far behind.
ISSN:0167-7187
1873-7986
DOI:10.1016/j.ijindorg.2011.03.006