Abstract
The semiconductor industry is experiencing a rapid change since new markets and new technologies have emerged to give insights to product innovation. The semiconductor industry is now specializing into the integrated device manufacturer (IDM), fabless, and foundry sectors. We investigated the determinant factors that affect the financial performance of firms in the fabless sector, which is the most technology-intensive and product-oriented sector among the three sectors. The correlation among technological capability, product platform, and financial performance is analyzed by structural equation modeling. The data includes 17,256 patents from 2005 to 2014 and financial data from 2012 to 2016 from 57 firms that run businesses in the fabless sector. Specifically, technological capability includes technological assets, technology breadth, and technology depth. New product development occurs by applying product platform efficiency. Financial performance includes growth and profitability. The results show that advancing product platform efficiency brings positive effects to financial performance. Also, increasing technological depth and technological assets not only improve product platform efficiency, but also bring positive effects to financial performance. In addition, technological depth affected growth positively, and technological breadth affected profitability positively. The results show the direction that new product development strategy needs to take.
Highlights
Since the late 20th century, firms’ boundaries started to fade away worldwide, and businesses entered a hypercompetitive state [1]
In this paper, we empirically investigate how technology capability through new product development positively affects the financial performance of the firm
For Hypothesis 1, we claim that product platforms impact growth and help firms enter into new markets since it enables easier and faster application of semiconductor design in the fabless semiconductor industry
Summary
Since the late 20th century, firms’ boundaries started to fade away worldwide, and businesses entered a hypercompetitive state [1]. Petersen et al (2005) examined how supplier involvement and management influence financial performance in the value chain [3] They proposed a NPD framework using such variables as product advantage, organization, technology synergy, market synergy and proficiency of market related activities. Extant research on technology capability, was viewed as an internal resource of the firm, but few studies examined how this resource influences firms’ financial performance through new product development. In this paper, we empirically investigate how technology capability through new product development positively affects the financial performance of the firm. Our research question is: are product platform efficiency and technology capability the driving or determining factors that positively lead to financial performance in the context of the fabless semiconductor industry? The variable definition and literature are given in the Appendix A (Table A1)
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