Technological accumulation, sequential entry, and exit of start-up companies in the global semiconductor industry

Why do firms become different as they grow over time? This thesis seeks to answer this question by linking technological accumulation of a firm and its growth to the sequential development of capabilities. Technology is defined as knowledge about how to solve problems. The evolution of an industry is explained in terms of technological trajectories, which give rise to technological relatedness among the subfields within the industry. The growth of a firm is seen as a reflection of its technological capabilities accumulated through diverse learning processes. Due to its evolutionary nature, technological accumulation of a firm is path-dependent; a firm\u27s choice of technologies at one point in time influences the capabilities it forms subsequently. In this light, technological accumulation is a mixed blessing: a firm\u27s technological history acts to lever and at the same time to constrain its future growth process. Technologies can be grouped into two categories: core and application-specific. The former enables a firm to accumulate basic capabilities by which it can expand into other related areas. In contrast, the latter provides a firm with limited applications specific to the purpose of a given technology. Core technologies thus generate growth options, while application-specific technologies do not. Firms may acquire technologies from outside sources; strategic alliances are raised as an external source of technologies. The study tests the arguments empirically by tracking the historical records of 180 start-up companies founded between 1977 and 1989 in the global semiconductor industry. A discrete time logit model is used to test the hypotheses on sequential entry. A proportional hazards regression model is employed to test the hypotheses on exit. The results indicate that core technologies significantly increase the likelihood of diversification, while application-specific technologies induce higher failure rates. Technology-based alliances are also found to increase and decrease the likelihood of diversification and failure, respectively. The findings point to the importance of an evolutionary view of the firm for understanding interfirm heterogeneity