Latecomer Strategies: Evidence from the Semiconductor Industry in Japan and Korea

TLDR

Strategic entry order has long been studied, but research has focused mainly on first‑mover advantages; this paper focuses on how firms convert entry‑order opportunities into performance, especially from the Asian late‑comer perspective. The study aims to develop and test a theory of late‑comer strategies by examining how late entrants in the global semiconductor industry compete with or leapfrog incumbents. The authors review prior work on early‑mover advantages, categorizing them into firm, market, and competitor factors, and then conduct in‑depth case studies of six semiconductor firms to classify late‑comer strategies into disadvantage‑overcoming and advantage‑utilizing types. They find that disadvantage‑overcoming strategies center on focus, thin margins or loss bearing, and volume building, while advantage‑utilizing strategies involve odd timing, time compression, human‑embodied technology transfer, benchmarking, technological leapfrogging, and resource leveraging.

Abstract

The effects of strategic order of entry on firms' performance have long been an issue in many areas of study. Past research efforts, however, have been concentrated mostly on first mover or early entrant advantages. To contribute to developing a theory of latecomer strategies, the authors investigate how latecomers compete successfully or even leapfrog early movers. They review previous studies on early mover advantages and disadvantages, and group the sources of such advantages or disadvantages into three areas: the firm, its market, and its competitors. The theoretical focus is how a firm converts the opportunities stemming from entry order into performance. The authors seek to confirm and extend relevant theories by examining how late entrants have caught up with incumbent industry leaders in the global semiconductor industry. On the basis of in-depth case analysis of three Japanese and three Korean semiconductor companies, they identify and categorize successful latecomer strategies into two types: strategies for overcoming latecomer disadvantages and strategies for utilizing latecomer advantages. Focusing, thin margin or loss bearing, and volume building form the essence of strategies for overcoming disadvantages, whereas odd timing, time compression, human-embodied technology transfer, benchmarking, technological leapfrogging, and resource leveraging form the essence of strategies for utilizing advantages. Because many companies in Asia have had to face the reality of being latecomers, the Asian perspectives are particularly useful for studying and explicating latecomer strategies.