Dynamic Competition in Technological Investments: An Empirical Examination of the LCD Panel Industry

35 Pages Posted: 24 Jul 2009 Last revised: 24 Jul 2012

See all articles by Jeongsik Lee

Jeongsik Lee

Drexel University - LeBow College of Business

Byung-Cheol Kim

University of Alabama

Young-Mo Lim

affiliation not provided to SSRN

Date Written: August 2010

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.

Keywords: LCD industry, Technology race, Leadership competition, Innovation, Catch-up investment, Firm heterogeneity

JEL Classification: D21, L13, L63, O31, O32, O33

Suggested Citation

Lee, Jeongsik and Kim, Byung-Cheol and Lim, Young-Mo, Dynamic Competition in Technological Investments: An Empirical Examination of the LCD Panel Industry (August 2010). International Journal of Industrial Organization, Vol. 29, No. 6, 2011, Available at SSRN: https://ssrn.com/abstract=1436586 or http://dx.doi.org/10.2139/ssrn.1436586

Jeongsik Lee (Contact Author)

Drexel University - LeBow College of Business ( email )

3141 Chestnut Street
Philadelphia, PA 19104
United States

Byung-Cheol Kim

University of Alabama ( email )

Culverhouse College of Business
Tuscaloosa, AL 35487-0223
United States
7708462727 (Phone)
7708462727 (Fax)

HOME PAGE: http://https://sites.google.com/site/byungcheolkim76/

Young-Mo Lim

affiliation not provided to SSRN ( email )

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