From Vertical to Horizontal Inter-Firm Cooperation: Dynamic Innovation in Japan's Semiconductor Industry

Yoshitaka Okada

Asia Pacific Business Review, 2008, vol. 14, issue 3, 379-400

Abstract: In the 1990s, Japanese semiconductor manufacturers lost international competitiveness, failing to maintain their technological leadership. Their innovative dynamics in the old techno-governance structure based on vertical intra- and inter-firm cooperation faced limitations; they became entrapped in a DRAM-based technological trajectory. Faced by disrupting contingencies, how did they change relations with firm- and technology-related actors in ways sufficient to develop a new techno-governance structure? Through their micro-level strategies they shifted from vertical intra- and inter-firm relations to horizontal ones, while through their macro-level strategies they developed coordinating mechanisms with technology-related actors in order to consolidate innovative capability for developing the system LSI. These strategies resulted in a complex mix of modularized-product-based competition and cooperation in addition to reviving collective projects, some running even without government subsidy. Such developments, though characterized as new, remain an extension of the Japanese institutional inheritance; namely, an emphasis on a strategic mix of cooperation and competition, but with a revised understanding of cooperation. Thus, this paper analyzes how institutions restrict innovative dynamics through techno-governance structure, while they also transform path-dependently as actors struggle to develop a new structure to cope with threatening contingencies.

Date: 2008
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DOI: 10.1080/13602380802116799

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