What firms make vs. what they know: How firms' production and knowledge boundaries affect competitive advantage in the face of technological change

摘要

Product innovations require managing technological changes and close coordination of the activities of development of components and its integration in the final product. In order to attain competitive advantage with product innovations, firms face important trade-offs viz., vertical integration and outsourcing. However, there are risks of control and adaptability attached to the trade offs. The alternative available is "knowledge integration" even as the production function is outsourced. The research paper examines how investments in vertical integration and knowledge integration shape firms' effectiveness in managing technological change and commercialize new product generations. Extending the theoretical framework proposed by Nickerson and Zenger's (Ref. 1), the paper tests the predictions in the context of the global dynamic random access memory (DRAM) industry from 1974 to 2005, during which it transitioned through twelve distinct product generations. The results are discussed. (103 refs.)