This study investigated whether firms’ knowledge assets and path dependence in their innovations affect firm value. For the analysis, I used 37 firms in the semiconductor industry in Korea. These firms were listed on the Korea Stock Exchange and the Korea Securities Dealers Association Automated Quotation as of 2010 and through 2015. The dependent variable was measured by return on assets as firm value, and the ordinary least squares estimation was used. The results showed that a firm’s knowledge assets have a positive effect on firm value. In addition, when a firm creates new knowledge, if the firm follows path dependence by using its own knowledge, it has a positive effect on firm value. By contrast, when a firm conducts innovations using knowledge created by other firms, it has no effect on the value of the firm. Additionally, I found that technological innovation based on knowledge assets and path dependence has a positive effect on firm value in the short term but has no effect in the medium term. Thus, firms need to continue their innovation to maintain their competitive advantage and to use their existing knowledge in innovation in order to have high performance.
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