Koreas rapid growth in TFTLCD and the spillover of technological capability crossindustry.docx

1、Koreas rapid growth in TFTLCD and the spillover of technological capability crossindustryKoreas rapid growth in TFT-LCD and the spillover of technological capability cross-industry (DRAM and TFT-LCD) Tae-Young Park, Jae-Yong Choung Center for Technology and Innovation Policy (CTIP), ICU, Daejeon, KO

2、REA Pa0616icu.ac.kr, jychoungicu.ac.kr Abstract Although Koreas growth in the TFT-LCD industry has been surprisingly rapid, there are only a few studies on the reasons behind the countrys success in this area. Most of these studies lack views on technological innovation or have the limitation of exp

3、anding the concept of knowledge spillover among industries related technically into all areas but production. Fist of all, we prove the relatedness of technology between TFT-LCD and DRAM. We investigate the mechanism of DRAMs technological capability transfer into TFT-LCD from three points of view:

4、technology, human resources/organization and network. We find that DRAMs technological capability transferred into TFT-LCD mainly in the shape of capital powe􀁓, semiconductor technology required for TFT-LCD R&D, production and quality management systems, key labor movements, and organizatio

5、nal systems. However, there is almost no spillover in technology transfer and global and supplier network. 1. Introduction Koreas growth in the TFT-LCD industry has been surprisingly rapid in that Korean firms, starting in 1995, recorded the largest world market share in only 3 years. However, there

6、 are only a few studies on the reasons for Koreas success in this area. Most researches lack views on technological innovation or have the limitation of expanding the concept of knowledge spillover among industries related technically into all areas but production. We start from the idea (Choung and

7、 Hwang, 2003; Park et al., 2003) that TFT-LCD and DRAM are technically very much related. The high relatedness of technology between the two industries means that knowledge accumulated in an existing industry, DRAM, can spill over into a new industry, TFT-LCD, very quickly (Choung and Hwang, 2000, 2

8、003, Forthcoming; Park et al., 2003) and accelerate the growth of the new industry. We regard knowledge accumulated in an existing industry as technological capability that is necessary for less developed countries (LDCs) to catch up with advanced technology (Lee et al., 1988; Bell and Pavitt, 1993;

9、 Hobday, 1994). Our objective is to find the mechanism for how DRAMs capability transferred into TFT-LCD and what kind of capability moved from DRAM to TFT-LCD. In order to achieve our objectives, first we review the literatures on knowledge spillover and accumulation of technological capability and

10、 re-classify and redefine technological capabilities. Second, we suggest our theoretical framework and explain our methodology. Third, we prove the relatedness of technology between TFT-LCD and DRAM through a comparative analysis of their respective production processes and technology innovation sys

11、tems. Fourth, we show the results of a case study we conducted with Samsung and LG. And finally, we present our papers implications and limitations.2. Literature Review Literatures on Koreas TFT-LCD success are summarized as follows. 􀂂 At the firm level: Korean firms success can be attribut

12、ed to high production technology and the independence of technology (Chang, 2005), unique propensities favoring large scale investment and a first mover strategy (Hung, forthcoming), high vertical integration in equipment and parts/material firms, and strategic alliances with the United States, Japa

13、n, China and ASEAN (Linden, Hart, Lenway, 1998). 􀂂 At the industry level: The characteristic industrial structure in TFT-LCD is a crystal cycle which offers opportunity of successful entry to new firms when the cycle is facing a downturn (Mathews, 2005). 􀂂 At the national level: St

14、rong support of the Korean government such as direct financing (Linden, Hart, and Lenway, 1998). 􀂂 At the technology level: Technology relatedness such as production process technology between TFT-LCD and DRAM (Choung and Hwang, 2003; Park, et al., 2003). However, the previous studies have

15、a few limitations. First, studies at the firm level are likely to be interpreted post factum and cannot explain the mechanism of success. Second, the crystal cycle cannot show why the successful firms are specifically Korean firms. Third, in TFT-LCD, the Korean government did not play a major role,

16、unlike DRAM and CDMA. 2.1 Knowledge Spillover Knowledge spillover is the non-appropriable amount of knowledge that is produced by a firms innovation efforts (Griliches, 1992). Knowledge spillover has positive externality in that it prevents innovation actors from completely appropriating their knowl

17、edge, thereby allowing even non-innovation actors to benefit from it. This denies the complete competition assumption of classical economics, accepts market failure and offers the excuse of government interruption to the market. Therefore, if a certain industry has knowledge spillover that leads to

18、a lot of positive externalities, the government tries to strategically support and foster that industry. These industries are called “technology drivers,” of which the most representative example is DRAM (Malerba, 1985; Baldwin and Krugman, 1988; Dick,1991; Gruber, 1992; Flamm, 1993a; Irwin and Klen

19、ow, 1994a; Udayagiri and Schuler,1999). The more industries technically relate to each other, the more knowledge spillover happens (Udayagiri and Schuler, 1999; Malerba and Montobbio, 2003). The concepts based on DRAMs role as a “technology driver” and the technological distance of knowledge spillov

20、er support the possibility of a knowledge transfer from DRAM to TFT-LCD. We regard knowledge as technological capabilityeverything generating and managing a technical change (Bell and Pavitt, 1993). 2.2 Accumulation of Technological Capabilities Technological capability refers to the ability to make

21、 effective use of technological knowledge in efforts to imitate and assimilate existing technologies, create new ones, and develop new products and processes in response to the changing economic environment (Kim, 1997a). Many literatures mention the importance of those in the LDCs accumulating techn

22、ological capabilities internally in order to catch up with advanced technology (Lee et al., 1988; Bell and Pavitt, 1993; Hobday, 1994). There have been many efforts to measure this technological capability in previous studies both at the macro and micro level. At the macro level, there have been fiv

23、e different attempts to measure technological capabilities: the WEF Technology Index (WEF, 2001, 2002, 2003; Furman et al., 2002); the UNDP Technology Achievement Index (UNDP, 2001; Desai et al., 2002); the ArCO Indicators of Technological Capability (Archibugi and Coco, 2004); the RAND Industrial D

24、evelopment Scoreboard (UNIDO, 2002; Lall and Albaladejo, 2001); and the Science and Technology Capacity Index (Wagner et al., 2004)2. At the micro level, the most common ones can be placed into one of three different categories: R&D expenditures, patent statistics, and statistics on new product intr

25、oductions. Firm technological capabilities (FTC) can be divided into scale FTC and quality FTC (Schoenecker and Swanson, 2002). Technological capability (TC) also can be distinguished from technological efforts, inputs for TC, and from economic performances, the effects of TC (Jonker et al., 2006).

26、The above two approaches do not consider the level of economic development of a country. However, there are several studies that consider the fact that patterns of technology development differ significantly between LDCs and DCs (Mohan Babu and Ganesh, 1997; Kim, 1999; Yu et al., 2004; Cho and Lee,

27、2003)3. We suggest a new classification of technological capabilities through reviewing previous studies. The new classification is comprised of three categories: technology, human resources and organization network, as shown in Table 1.3. Theoretical Framework and Methodology Our framework is for p

28、roving the possibility that DRAM knowledge can spillover into TFT-LCD, based on the similarity of their production processes and technology innovation systems. It is also for finding the mechanism for knowledge spillover in terms of technology, human resources/organization and network (Figure 1). We

29、 collected firm data from interviews with managers of Samsung Electronics and LG Philips LCD, as well as from business reports offered by DART4and annual reports supplied by homepages. For consulting on technology and patents, we interviewed researchers of several research institutes5. We also used

30、Aureka DB of 9.0 version for patent analysis.4. Technology Relatedness between DRAM and TFT-LCD 4.1. Similarity of Production Process Technology In TFT-LCD production processes, the TFT array and color filter processes include a repeated patterning process: decomposition, cleaning, PR coating, expos

31、ure, developing, etching, and inspection. This patterning process is very similar to the fabrication process of DRAM (Figure 2). 4.2 Similarity of Technology Innovation System The relatedness of technology between the two industries makes the characteristics of innovators, the major sources of innov

32、ation, the key capabilities of innovation, and the changes of environment and technology, similar. This is consistent with the concept that industries in the same sector often have a similar pattern of technology innovation (Pavitt, 1984). As shown in Table 2, almost all the characteristics of the t

33、echnology innovation systemsof the two industries are similar except that TFT-LCD is considered customized goods, while DRAM is considered commodity goods. 5. Case Study The period for case study is restricted to the time Samsung and LG began R&D (mid 1980s) to when the two companies acquired success in the world market (late 1990s). 5.