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Session 8(11/2): Modularity, Standard/Networks and Interorganizational Relationship
T. E. (1998). Network positions and propensities to collaborate: An investigation of strategic alliance formation in a high-technology industry. Administrative Science Quarterly, 43(3), 668-698.
Hyo Jung Lee
Graduate School of International Studies
International Management Program
[Introduction]
The purpose of this paper is to map thetechnological positions of the firms in an industry and adapt this model in a study of the formation for alliances between firms. Especially this paper analyzed how network position of firms affects the strategic alliance based on a sample of 150 semiconductor companies during a six-year period. The Author found out that firms in crowded positions and those with high prestigeform alliances at the highest rates.
[Summary]
The authors developed the idea of two dimensions of technological positioning: crowding andprestige by proving his hypotheses. In order to test the author’s hypotheses, he compiled a database that documentsthe alliance histories of a large sample of semiconductor firms.
The author argued that the semiconductor is a suitablefortesting his hypotheses because the semiconductor industry has heterogeneous population of firms that vary in size, scope,age, and innovation strategy. In addition, there were many alliances in the semiconductor industry which can offer sample variationfor testing the hypotheses. Especially, the author analyzed semiconductor industry during the period of 1986-1992.
Based on the test, the author argued that the greater the level of crowding of a firm's technologicalposition, the higher the rate at which it will form technologydevelopment and/or exchange alliances (Hypothesis 1). The author also proved that the greater the level of a firm's technological prestige,the higher the rate at which it will form technology developmentand/or exchange alliances (Hypothesis 2).In addition, increases in the level of technological crowding willincrease the formation of technology development and/or exchangealliances at a decreasing rate (Hypothesis 3) andincreases in the level of technological prestige willincrease the formation of technology development and/or exchangealliances at a decreasing rate (Hypothesis 4). The author also proposed that the higher the level of a firm's technological prestige,the lower the effect of crowding on the rate at which it willform technology development and/or exchange alliances (Hypothesis 5).
[Main Contributions]
The key contribution of this paper is to study strategic alliance based on the technological aspects. There were numbers of other studies which analyzed the forms and types of strategic alliance but there were little studies about the strategic alliance on the basis of firms’ technological aspects. In this paper, the author especially analyzed high-technology firm’s positions in the competitive environment and the main two dimensions, crowding and prestige, are categorized by technology spaces. Another contribution of this paper is the idea of “two-dimensional: crowding and prestige” characterization of corporate positions and it is possible to apply two dimensions to other high-technology industries beyond semiconductor. Corporate management in the real world could execute strategies and establish corporate guideline for strategic allianceby considering these two dimensions in this paper. Also, based on this paper, further studies on strategic alliances can be progressed by analyzing what dimensions can be characterized in order to considering technological positions of firms.
[Critiques]
The author developed two dimensions: crowding and prestige when analyzing the technological position of high-technology based firms. However, theindependent variables: Patent-based measures of technological positioning seem to be not always adaptable to other high-tech companies. In my opinion, patent cannot always be measures that represent the technological prestige or crowding. When evaluating the technological positioning of a firm, it would be useful to quote technology experts interview or users’ evaluation on certain technologies’ level or position in the market.
Furthermore, this paper was written in 1998 and after early 2000s, many high-tech firms have been made industrial innovation and also created new high-tech industries. Therefore, the result of this paper cannot be always adaptable to new high-tech industries. The technological uncertainty and market uncertainty is getting more important factors of the risk management of high-tech firms nowadays and inter-firm alliance is critical in high-tech industries (Mariarty & Kosnik). Strategic alliance is even important in the tornado phase (when the growth rate of firm sales gets higher in a short period) of high-tech firms (Geoffrey Moore). Especially, the importance of strategic alliance of high-tech firms are getting stronger and the network effect is emphasized when a firm meet “standard wars”. That is why “Hypothesis 5: The higher the level of a firm's technological prestige,the lower the effect of crowding on the rate at which it willform technology development and/or exchange alliances” cannot be always accepted to recent competitive dynamics. Nowadays, the higher the level of a firm's technological prestige,the higher the effect of crowding on the rate can be possible result.
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