Cooperative Knowledge Creation: The Case of Buyer-Supplier Co-Development in the Semiconductor Industry

Abstract

This research contributes to the literature on innovation and alliance formation by modeling the role of learning during cooperative innovation. Learning, modeled as knowledge accumulation as a consequence of an alliance, influences the parameters that will govern the alliance. Specifically, this paper focuses on the interplay between semiconductor companies and the suppliers of their production equipment during equipment modification projects. A multi-period model presents the tradeoffs encountered during co-development, including whether a buyer should insist on customized modifications or modifications that are more generally applicable across the industry. Three case studies provide a context for the assumptions and findings of the model.

Keywords: Co-development, Vertical Alliance, Knowledge Accumulation, Semiconductors