TY - JOUR
T1 - R&D, value chain location and firm performance in the global electronics industry
AU - Shin, Namchul
AU - Kraemer, Kenneth L.
AU - Dedrick, Jason
N1 - Funding Information:
This research has been supported by grants from the US National Science Foundation and the Alfred P. Sloan Foundation. Any opinions, findings and conclusions or recommendations expressed in this material are those of the author(s) and do not necessarily reflect the views of the National Science Foundation or the Sloan Foundation. The authors would like to thank the referees for their valuable comments and suggestions for improvement on a previous version of this paper.
PY - 2009/6
Y1 - 2009/6
N2 - In today's global electronics industry, innovation is carried out by various value chain participants, including brand-name manufacturers (sometimes called lead firms), contract manufacturers and component suppliers, but there is little understanding of who benefits most from innovation in such networks. This research examines empirically the relationship of R&D spending and location in the value chain (lead vs. non-lead firms) to firm performance in the global electronics industry by using the Electronic Business 300 data set for 2000-2005. Our results show that firms spending more on R&D have higher gross profits, but do not have higher return on equity (ROE) and return on assets (ROA). There is a strong positive relationship between lead firms and performance as measured by gross profit, ROE and ROA, but the relationship between lead firms and gross profit becomes insignificant when the interaction term of R&D and lead firm is included in the analysis. Finally, lead firm status has a positive interaction effect on the relationship between R&D and gross profit. These findings suggest that the relationship of R&D to performance is mixed, but that lead firms can capture higher value (gross profit) from R&D than contract manufacturers and component suppliers.
AB - In today's global electronics industry, innovation is carried out by various value chain participants, including brand-name manufacturers (sometimes called lead firms), contract manufacturers and component suppliers, but there is little understanding of who benefits most from innovation in such networks. This research examines empirically the relationship of R&D spending and location in the value chain (lead vs. non-lead firms) to firm performance in the global electronics industry by using the Electronic Business 300 data set for 2000-2005. Our results show that firms spending more on R&D have higher gross profits, but do not have higher return on equity (ROE) and return on assets (ROA). There is a strong positive relationship between lead firms and performance as measured by gross profit, ROE and ROA, but the relationship between lead firms and gross profit becomes insignificant when the interaction term of R&D and lead firm is included in the analysis. Finally, lead firm status has a positive interaction effect on the relationship between R&D and gross profit. These findings suggest that the relationship of R&D to performance is mixed, but that lead firms can capture higher value (gross profit) from R&D than contract manufacturers and component suppliers.
KW - Electronics industry
KW - Global production network
KW - Innovation
KW - Lead firm
KW - R&D
KW - Value chain
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U2 - 10.1080/13662710902923867
DO - 10.1080/13662710902923867
M3 - Article
AN - SCOPUS:77954821616
SN - 1366-2716
VL - 16
SP - 315
EP - 330
JO - Industry and Innovation
JF - Industry and Innovation
IS - 3
ER -