Doomed by the quest to contiauously decrease transistor size as predicted by Moore's law, the semiconductor industry is generally viewed as driven by constant technology innovation. The increasing burden of Research and Development (R&D) and manufacturing costs resulting from this race requires companies to find efficient business models. As in other industries, off-shoring as well as development alliances are widely used. The expansion into other countries is also driven by the need to be close to new markets leading as an inevitable consequence to a globalization of the R&D function. While these methods are generally accepted, there is little research on how such globally diversified organizations manage their innovation capabilities to maintain competitiveness. This research addresses a strategic gap in management practice and strategic research. It analyzes the requirements for a global innovation strategy in a case study of a semiconductor company with various global R&D, design and manufacturing sites. The research hypothesis derived is the following: Global innovation performance is most successfully accomplished when the innovation chain is globally integrated. The authors conducted interviews with senior managers from different functional units of one company to identify the innovation constraint for this company. As a result the core competencies and deficits to improve the innovation performance were identified and a general concept of an innovation strategy addressing the innovation chain is presented.
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