The Distribution of R&D Effort in Systemic Industries: Implications for Competitive Advantage

40 Pages Posted: 15 Oct 2004  

Sendil K. Ethiraj

University of Michigan - Stephen M. Ross School of Business

Phanish Puranam

INSEAD

Abstract

Systemic industries comprise groups of firms making component products that are valued as complements by consumers (PC, automobiles, aircraft, networking). In this study, we investigate the distribution of research effort across the technological system by individual firms as a basis for building competitive advantage. Our empirical setting is a sample of component makers in the personal computer system. We show that even in a sample dominated by focused component manufacturers, diversified research effort in the broader technological system improves R&D productivity in the component technology. Broad scope R&D in the rest of the system also increases the marginal benefits of research efforts in the component technology, though at a diminishing rate. We explore the determinants of this complementarity between the scope of system level research and the focus on component level research, and derive implications for competitive advantage.

Keywords: R&D strategy, Systemic industries, Competitive advantage

JEL Classification: D21, L10, L20

Suggested Citation

Ethiraj, Sendil K. and Puranam, Phanish, The Distribution of R&D Effort in Systemic Industries: Implications for Competitive Advantage. Advances in Strategic Management, Vol. 21, pp. 225-253, 2004. Available at SSRN: https://ssrn.com/abstract=604124

Sendil K. Ethiraj (Contact Author)

University of Michigan - Stephen M. Ross School of Business ( email )

701 Tappan Street
R4442
Ann Arbor, MI 48109
United States
734-764-1230 (Phone)

Phanish Puranam

INSEAD ( email )

1 Ayer Rajah Avenue
Singapore, 138676
Singapore

HOME PAGE: http://www.insead.edu/facultyresearch/faculty/profiles/ppuranam/

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