Neo-schumpeterian approach for determinants of success or failure in diversification : Samaung's diversification cases in semiconductor industry

Abstract

This thesis considers the determinants of success or failure of diversification from three viewpoints: industrial economics, strategic management, and neo-Schumpeterian, and suggests comprehensive determinants based on a new approach integrating these viewpoints. This thesis also ascertains that our determinants can well reflect the performance of diversification (success or failure) by studying Samsung``s diversification cases: DRAM, TFT-LCDs, and micro-processors. This thesis shows that our approach can more exactly forecast the success or failure of diversification than previous approaches. Previous approaches judge the performance of diversification based on the relatedness of standard of industrial classification (SIC) excluding technological aspects, or focus on technological relatedness. However, our approach considers both characteristics of firms and industry as well as the technological relatedness that Neo-Schumpeterian thinks important. Therefore, it explains well why Samsung was successful in diversification of TFT-LCD, which has a low relatedness of SIC, and why the company was not successful in diversification of micro-processors, which has a high relatedness of SIC. We investigated Samsung``s diversification cases under our integrated determinants, five indicators of sector-specific characteristics and three indicators of a firm``s technological capabilities, and we discovered the following. Comparing the characteristics of three sectors, we found that DRAM is similar to TFT-LCD, but that the micro-processor is quite different from the other two sectors as a whole. This implies that the difference among sectors is a major reason that Samsung was not successful in the micro-processor sector. Second, investigating Samsung``s technological capabilities, we found that Samsung tried to build the capabilities required for each sector but was unsuccessful. In particular, Samsung experienced difficulty in building the capabilities required for the m...