Abstract
This study examines the effects of innovation (patent-related proxies), internationalisation (proxies measuring overseas business), and the interaction terms of the two variables on dynamic business performance (technical efficiency). A dynamic production model has been developed and assessed using a directional distance function (DDF) model under the Luenberger benefit function to measure technical efficiency of 467 firm-year observations of Taiwanese listed semiconductor companies during the sample period 2009-2015. The DDF efficiency analysis shows that technical efficiency fluctuated but remained relatively stable, with an overall mean value of 0.828. Regression results indicate that innovation and internationalisation contribute positively to dynamic business performance; although, the interaction between the two variables is not related to dynamic business performance. While innovation and internationalisation are important factors driving the dynamic business performance of the semiconductor companies in Taiwan, the vital economic assets of the industry have to be continuously protected.
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