The Relationship between Innovation and Market Share: Evidence from the Global LCD Industry

Lee, J. and B.C. Kim. 2013. The Relationship between Innovation and Market Share: Evidence from the Global LCD Industry. Industry and Innovation 20 (1): 1-21.

22 Pages Posted: 18 Dec 2009 Last revised: 8 Mar 2013

See all articles by Jeongsik Lee

Jeongsik Lee

Drexel University - LeBow College of Business

Byung-Cheol Kim

University of Alabama

Date Written: February 11, 2013

Abstract

We investigate the impact of technological capability on firm market share using technology investment data in the global thin-film-transistor liquid-crystal-display panel industry from 1999 to 2007. The Arellano–Bond estimation of the dynamic panel model indicates that prior technological capability is positively correlated with current market share. The magnitude of this effect appears economically substantial: an improvement of technological capability by one standard deviation implied a permanent increase of 2.6 percent-point in quarterly market share, a return tantamount to $470 million in 2007 sales. The Granger test reveals that technological capability helps to predict future market share, but that the inverse is not true.

Keywords: technological capability, Innovation, firm size, technology investment, LCD industry

JEL Classification: D2, L13, L25

Suggested Citation

Lee, Jeongsik and Kim, Byung-Cheol, The Relationship between Innovation and Market Share: Evidence from the Global LCD Industry (February 11, 2013). Lee, J. and B.C. Kim. 2013. The Relationship between Innovation and Market Share: Evidence from the Global LCD Industry. Industry and Innovation 20 (1): 1-21., Available at SSRN: https://ssrn.com/abstract=1524042 or http://dx.doi.org/10.2139/ssrn.1524042

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/

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