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Vertical Integration and Dis-integration of Computer Firms: A History Friendly Model of the Co-evolution of the Computer and Semiconductor Industries

Author

Listed:
  • Franco Malerba

    (Cespri, Bocconi University, Milano, Italy.)

  • Richard Nelson

    (Columbia University, New York, USA.)

  • Luigi Orsenigo

    (University of Brescia and CESPRI, Bocconi University, Milan, Italy.)

  • Sidney Winter

    (Wharton School, University of Pennsylvania, Philadelphia, USA.)

Abstract

In this paper we present a history-friendly model of the changing vertical scope of computer firms during the evolution of the computer and semiconductor industries. The model is “history friendly”, in that it attempts at replicating some basic, stylized qualitative features of the evolution of vertical integration on the basis of the causal mechanisms and processes which we believe can explain the history. The specific question addressed in the model is set in the context of dynamic and uncertain technological and market environments, characterized by periods of technological revolutions punctuating periods of relative technological stability and smooth technical progress. The model illustrates how the patterns of vertical integration and specialization in the computer industry change as a function of the evolving levels and distribution of firms’ capabilities over time and how they depend on the co-evolution of the upstream and downstream sectors. Specific conditions in each of these markets – the size of the external market, the magnitude of the technological discontinuities, the lock-in effects in demand – exert critical effects and feedbacks on market structure and on the vertical scope of firms as time goes by.

Suggested Citation

  • Franco Malerba & Richard Nelson & Luigi Orsenigo & Sidney Winter, 2006. "Vertical Integration and Dis-integration of Computer Firms: A History Friendly Model of the Co-evolution of the Computer and Semiconductor Industries," KITeS Working Papers 191, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Dec 2006.
  • Handle: RePEc:cri:cespri:wp191
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    File URL: ftp://ftp.unibocconi.it/pub/RePEc/cri/papers/WP191MalerbaNelsonOrsenigoWinter.pdf
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    References listed on IDEAS

    as
    1. Utterback, James M & Abernathy, William J, 1975. "A dynamic model of process and product innovation," Omega, Elsevier, vol. 3(6), pages 639-656, December.
    2. Klepper, Steven, 1996. "Entry, Exit, Growth, and Innovation over the Product Life Cycle," American Economic Review, American Economic Association, vol. 86(3), pages 562-583, June.
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    Cited by:

    1. Christian Garavaglia & Franco Malerba & Luigi Orsenigo & Michele Pezzoni, 2012. "Technological regimes and demand structure in the evolution of the pharmaceutical industry," Journal of Evolutionary Economics, Springer, vol. 22(4), pages 677-709, September.
    2. Roberto Fontana & Lorenzo Zirulia, 2015. "“…then came Cisco, and the rest is history”: a ‘history friendly’ model of the Local Area Networking industry," Journal of Evolutionary Economics, Springer, vol. 25(5), pages 875-899, November.
    3. Dosi, Giovanni & Nelson, Richard R., 2010. "Technical Change and Industrial Dynamics as Evolutionary Processes," Handbook of the Economics of Innovation, Elsevier.
    4. Malerba, Franco & Nelson, Richard & Orsenigo, Luigi & Winter, Sidney, 2008. "Public policies and changing boundaries of firms in a "history-friendly" model of the co-evolution of the computer and semiconductor industries," Journal of Economic Behavior & Organization, Elsevier, vol. 67(2), pages 355-380, August.
    5. Aghion, Philippe & David, Paul A. & Foray, Dominique, 2009. "Science, technology and innovation for economic growth: Linking policy research and practice in 'STIG Systems'," Research Policy, Elsevier, vol. 38(4), pages 681-693, May.
    6. Fabio Pieri, 2015. "Vertical organization of production and firm growth behavior," Working Papers 1508, Department of Applied Economics II, Universidad de Valencia.
    7. Antonio Revilla & Zulima Fernández, 2013. "Environmental Dynamism, Firm Size and the Economic Productivity of R&D," Industry and Innovation, Taylor & Francis Journals, vol. 20(6), pages 503-522, August.
    8. Fabio Pieri, 2016. "Vertical organization of production and firm growth," DEM Working Papers 2016/01, Department of Economics and Management.
    9. Garavaglia Christian & Malerba Franco & Orsenigo Luigi & Pezzoni Michele, 2014. "Innovation and Market Structure in Pharmaceuticals: An Econometric Analysis on Simulated Data," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 234(2-3), pages 274-298, April.
    10. repec:spr:italej:v:3:y:2017:i:3:d:10.1007_s40797-017-0049-z is not listed on IDEAS
    11. Marie-Claude BELIS-BERGOUIGNAN (GREThA UMR CNRS 5113), 2009. "An evolutionist analysis of sectoral dynamics (In French)," Cahiers du GREThA 2009-18, Groupe de Recherche en Economie Théorique et Appliquée.
    12. Ammon J. Salter & Maureen McKelvey, 2016. "Evolutionary analysis of innovation and entrepreneurship: Sidney G. Winter—recipient of the 2015 Global Award for Entrepreneurship Research," Small Business Economics, Springer, vol. 47(1), pages 1-14, June.
    13. Arora, Ashish & Gambardella, Alfonso, 2010. "The Market for Technology," Handbook of the Economics of Innovation, Elsevier.
    14. repec:bla:stratm:v:38:y:2017:i:3:p:609-625 is not listed on IDEAS
    15. Alessandro Manello & Giuseppe G. Calabrese & Piercarlo Frigero, 2016. "Technical efficiency and productivity growth along the automotive value chain: evidence from Italy," Industrial and Corporate Change, Oxford University Press, vol. 25(2), pages 245-259.
    16. Stephan Manning & Silvia Massini & Carine Peeters & Arie Lewin, 2012. "Global Co-Evolution of Firm Boundaries: Process Commoditization, Capabilities Development, and Path Dependencies," Working Papers CEB 12-009, ULB -- Universite Libre de Bruxelles.
    17. Thomas Brenner & Johann Peter Murmann, 2016. "Using simulation experiments to test historical explanations: the development of the German dye industry 1857-1913," Journal of Evolutionary Economics, Springer, vol. 26(4), pages 907-932, October.
    18. Carlsson , Bo, 2016. "Industrial Dynamics: A Review of the Literature 1990-2009," Papers in Innovation Studies 2016/3, Lund University, CIRCLE - Center for Innovation, Research and Competences in the Learning Economy.

    More about this item

    Keywords

    Industrial Dynamics; Vertical Integration; Specialization; Technology.;

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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