Dynamic Competition in Technological Investments: An Empirical Examination of the LCD Panel Industry
Georgia Institute of Technology - College of Management
Georgia Institute of Technology
affiliation not provided to SSRN
International Journal of Industrial Organization, Vol. 29, No. 6, 2011
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.
Number of Pages in PDF File: 35
Keywords: LCD industry, Technology race, Leadership competition, Innovation, Catch-up investment, Firm heterogeneity
JEL Classification: D21, L13, L63, O31, O32, O33Accepted Paper Series
Date posted: July 24, 2009 ; Last revised: July 24, 2012
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