The genesis of fabless business model: Institutional entrepreneurs in an adaptive ecosystem

Abstract

How does an institutionally-contested business model originate, survive, and grow? What roles do institutional entrepreneurs play in the different stages of evolution of the business model? In the past four decades, the fabless model (which allows a semiconductor firm to operate without a fabrication unit) has changed the global semiconductor industry with significant impact in the Asian regions. In this paper, we trace the origin and evolution of the fabless model through a mixed-method approach, utilizing historic milestones, events, and financial data of publicly-traded semiconductor firms. We have applied theories of institutional entrepreneurship and adaptive ecosystem to identify four stages in this history: differentiation, mobilization, legitimization, and symbiosis to conceptualize the fabless model’s co-creation and co-evolution. Our findings indicate that actions of institutional entrepreneurs within specific temporal locations and structures played a crucial role in the fabless business model’s origin and co-evolution.