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The innovator's non-dilemma: the case of next-generation lithography

Author

Listed:
  • Melissa M. Appleyard

    (School of Business Administration, Portland State University, Portland, OR, USA)

  • Clara Y. Wang

    (Ithaca, NY, USA)

  • J. Alexander Liddle

    (Molecular Foundry, Lawrence Berkeley National Laboratory, Berkeley, CA, USA)

  • John Carruthers

    (Portland State University, Portland, OR, USA)

Abstract

Previous studies have analyzed how incumbents may falter when they focus too narrowly on satisfying the needs of current customers at the expense of pursuing innovations that will ensure future market leadership. This paper examines this 'dilemma' faced by incumbents and considers cases where incumbents do spearhead innovation on the technology frontier thus enabling future product generations. In particular, we examine the case of the semiconductor industry confronting a technological discontinuity in the production of chips. In anticipation of a discontinuity in the lithography production module, leading firms in the semiconductor industry have initiated next-generation lithography (NGL) projects. These projects have exhibited an unprecedented level of horizontal and vertical cooperation. Our research analyzes how such cooperative research and development (R&D) programs allow incumbent innovators to mitigate four areas of uncertainty-leadership, preemption, performance, and industry adoption. We adapt a Hotelling location model to demonstrate the tension between mitigating these uncertainties through interfirm cooperation and the possibility of increased downstream competition. Such tensions have influenced cooperation within and across the R&D consortia pursuing NGL led by IBM, Intel, and Bell Labs. Copyright © 2008 John Wiley & Sons, Ltd.

Suggested Citation

  • Melissa M. Appleyard & Clara Y. Wang & J. Alexander Liddle & John Carruthers, 2008. "The innovator's non-dilemma: the case of next-generation lithography," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 29(5), pages 407-423.
    • Handle: RePEc:wly:mgtdec:v:29:y:2008:i:5:p:407-423
    DOI: 10.1002/mde.1404
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    References listed on IDEAS

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    5. Lange, Knut & Müller-Seitz, Gordon & Sydow, Jörg & Windeler, Arnold, 2013. "Financing innovations in uncertain networks—Filling in roadmap gaps in the semiconductor industry," Research Policy, Elsevier, vol. 42(3), pages 647-661.

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