Latecomer Strategies: Evidence From the Semiconductor Industry in Japan and Korea

• Authors: Dong-Sung Cho;Dong-Jae Kim;Dong Kee Rhee
• Venue: Organization Science
• Year: 1998

The effects of strategic order of entry on firms' performance have long been an issue in many areas of study. Past res earch efforts, however, have been concentrated mostly on first mover or early entrant advantages. To contribute to developing a theory of latecomer strategies, the authors investigate how latecomers compete successfully or even leapfrog early movers. They review previous studies on early mover advantages and disadvantages, and group the sources of such advantages or disadvantages into three areas: the firm, its market, and its competitors. The theoretical focus is how a firm converts the opportunities ste mming from entry order into performance. The authors seek to confirm and extend relevant theories by examining how late entrants have caught up with incumbent industry leaders in the global semiconductor industry. On the basis of in-depth case analysis of three Japanese and three Korean semiconductor companies, they identify and categorize successful latecomer strategies into two types: strategies for overcoming latecomer disadvantages and strategies for utilizing latecomer advantages. Focusing, thin margin or loss bearing, and volume building form the essence of strategies for overcoming disadvantages, whereas odd timing, time compression, human embodied technology transfer, benchmarking, technological leap frogging, and resource leveraging form the essence of strategies for utilizing advantages. Because many companies in Asia have had to face the reality of being latecomers, the Asian perspectives are particularly useful for studying and explicating latecomer strategies.