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The Relationship between Innovation and Market Share: Evidence from the Global LCD Industry

Jeongsik Lee and Byung-Cheol Kim ()

Industry and Innovation, 2013, vol. 20, issue 1, 1-21

Abstract: We investigate the impact of technological capability on firm market share using technology investment data in the global thin-film-transistor liquid-crystal-display panel industry from 1999 to 2007. The Arellano--Bond estimation of the dynamic panel model indicates that prior technological capability is positively correlated with current market share. The magnitude of this effect appears economically substantial: an improvement of technological capability by one standard deviation implied a permanent increase of 2.6 percent-point in quarterly market share, a return tantamount to $470 million in 2007 sales. The Granger test reveals that technological capability helps to predict future market share, but that the inverse is not true.

Date: 2013
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DOI: 10.1080/13662716.2013.761375

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