Abstract
This paper presents an empirical study that shows the relationship between innovation activities and the sustainable performance of firms in terms of market share and profit. While previous studies of innovation effects have focused on one type of innovation in the industry, such as incremental or radical innovations, the study of both incremental and architectural innovations in the same industry would enrich our understanding of innovation. This study discusses and emphasizes the importance of continuous incremental innovation and how switching-over to architectural innovation affects the sustainable performance of firms in the NAND flash memory industry. A systematic content analysis, comparing the changes in market and profit leadership in terms of continuous incremental innovation and an introduction of architectural innovation, was performed, and it was concluded that both continuous incremental innovation and switching-over to architectural innovation positively affects the sustainable market and profit leadership of firms. Additionally, architectural innovation reframes the technological lifecycle in the industry and gives a firm a chance to retain and continue its technological leadership by establishing new dominant designs. This study suggests that continuous incremental innovation is very important for high-tech firms, and firms should consider the option of switching-over to architectural innovation instead of the incremental development of current dominant design when the complexity of technology and market is increased in order to have a sustainable advantage.
Highlights
A firm’s sustainable performance is an important issue for its survival in the market
The 2D rectangles in Figure 4 represent the development of different nodes in planar scaling, and the 3D cubes represent the development of different numbers of vertical layers
As verified by Samsung, architectural innovation is effective to reframe an old design to the new one and help a firm to reset the technological lifecycle and continue their sustainable growth in the industry, as discussed in Sections 4.1 and 4.2 The results suggest that the technology pioneer that adopts successful architectural innovation with different designs faster than the competitors can continuously enjoy the benefits from it by maintaining itself as a technological pioneer in the Vertical NAND (VNAND) industry
Summary
A firm’s sustainable performance is an important issue for its survival in the market. This study focuses on the high-tech industry, in which technological innovation is important to sustain market leadership along with sustainable performance. The flash memory industry is a good example to observe the causality between technological innovation and the firms’ sustainable performance. The largest non-volatile memory type in the semiconductor market, was introduced by Toshiba in 1984 [3]. After this introduction, Intel and Toshiba were able to commercialize the NOR (NOT OR) type flash in 1988 and the NAND (NOT AND) type flash in 1989, respectively [3,4].
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