The Chicken Game and the Amplified Semiconductor Cycle: The Evolution of the DRAM Industry from 2006 to 2014

Industry fluctuations in the supply of DRAM chips relative to demand have been characterized by what is called the silicon cycle. In the period between 2006 and 2008, the DRAM industry experienced an unusually sharp transition from a shortage of DRAM products to an extreme oversupply, culminating with the crash of DRAM prices in 2008. The industrys overcapacity was preceded by a mad race to expand capacity; this race has been dubbed as the chicken game in the media. Even in the time of plunging DRAM prices, players preferred no to reduce their output. The amplified industry cycle accelerated the exit of financially vulnerable firms. I argue that the combination of the amplification of cycle and rising entry barriers fosters the transition of an industry to an oligopoly, in which cyclicality is curbed and the positions of market leaders are solidified

Scale-free Networks in the Presence of Constraints: An Empirical Investigation of the Airline Route Network

Classifying the types of networks has been a focus of analysis in the recent, small-world research. A unifying theory has been introduced to provide an integrative perspective on the statistical properties of a variety of real-world networks. This theory postulates that the existence of constraints deters the emergence of a scale-free network. For example, the theory argues that the constraints of airport capacity limit the growth of air traffic, blocking the emergence of a scale-free network. We challenge this argument by reexamining the context of the airline industry. We empirically show that the U. S. airline route network is a scale-free network despite the presence of capacity constraints. We propose a new avenue for future research

Exploration and exploitation in the presence of network externalities

This paper examines the conditions under which exploration of a new, incompatible technologyis conducive to firm growth in the presence of network externalities. In particular, this studyis motivated bythe divergent evolutions of the PC and the workstation markets in response to a new technology: reduced instruction set computing (RISC). In the PC market, Intel has developed new microprocessors bymaintaining compatibilitywith the established architecture, whereas it was radicallyr eplaced byRISC in the workstation market. History indicates that unlike the PC market, the workstation market consisted of a large number of power users, who are less sensitive to compatibilitythan ordinaryusers. Our numerical analysis indicates that the exploration of a new, incompatible technologyis more likelyto increase the chance of firm growth when there are a substantial number of power users or when a new technologyis introduced before an established technologytakes off. (; ; ;

Complexity and Building Block Search: A Historical Account of Drug Discovery

The history of the pharmaceutical industry shows that innovators have searched for new drugs by building upon known, active substances, or what are called chemical building blocks. The essence of this search is to test variations of the known chemical building blocks for some desired properties and to select the most effective variant from a collection of related variants. This collection is called a library, which guides and delimits future search. My study suggests that by managing libraries with proper design rules, innovators can sustain their R&D activities with modest risk. This sustainability is proposed as an important component of dynamic capabilities

Innovation and Strategic Divergence: An Empirical Study of the U.S. Pharmaceutical Industry from 1920 to 1960

Today, firms employing two distinct survival strategies---(1) innovation and (2) imitation ---coexist in the U.S. pharmaceutical industry. History indicates that this intraindustry heterogeneity did not exist prior to 1940. This study empirically investigates the origin of this strategic divergence by focusing on changes in firms' R&D inputs and outputs. It finds that some U.S. pharmaceutical firms responded to the opportunity presented by the discovery of antibiotics in the 1940s by investing more in R&D, while many others did not. Over time, the innovators dominated in developing new drugs, and the gap between innovators and imitators steadily increased. These findings also shed light on Üthe genesis of strategic groups,Ý a phenomenon that is not yet well understood.innovation, strategic groups, schumpeterian competition

Reconsideration of the Winner-Take-All Hypothesis: Complex Networks and Local Bias

The literature on network effects has popularized a hypothesis that competition between incompatible technologies results in the "winner-take-all" outcome. For the survival of the firm in this sort of competition, the installed base has been emphasized. We argue that the validity of this hypothesis depends on how customers interact with one another (e.g., if they exchange advice or files). In some interaction networks, customers influenced by their acquaintances may adopt a lagging technology even when a lead technology has built a large installed base. The presence of such a local bias facilitates the persistence of incompatibilities. When local bias cannot be sustained in other interaction networks, one technology corners the market. Our study suggests that overemphasizing the installed base, while ignoring network structure, could mislead practitioners.network externalities, network, increasing returns, technology, complexity