IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v13y2021i2p489-d475838.html
   My bibliography  Save this article

The Impact of Technological Capability on Financial Performance in the Semiconductor Industry

Author

Listed:
  • Jun Hong Park

    (Graduate School of Management of Technology, Korea University, 145 Anam-ro, Seongbuk-gu, Seoul 02841, Korea)

  • Hyunseog Chung

    (Graduate School of Management of Technology, Korea University, 145 Anam-ro, Seongbuk-gu, Seoul 02841, Korea)

  • Ki Hong Kim

    (Department of Industrial and Management Engineering, Korea University, 145 Anam-ro, Seongbuk-gu, Seoul 02841, Korea)

  • Jin Ju Kim

    (Korea Institute of Energy Technology Evaluation and Planning, 14 Teheran-ro 114-gil, Gangnam-gu, Seoul 06175, Korea)

  • Chulung Lee

    (School of Industrial and Management Engineering, Korea University, 145 Anam-ro, Seongbuk-gu, Seoul 02841, Korea)

Abstract

The modern semiconductor industry is going through rapid changes as new markets and technologies appear. In this paper, such technology-intensive firms’ relationship between technological capability and financial performance is analyzed with regression analysis. Revenue and market capitalization are used as dependent variables. For the independent variables, the technological intensity, technological diversity, technological asset, and technological efficiency are used. The analysis results revealed different effects of technological capability on financial performance. Also, regression analysis is conducted by dividing firms into high and low groups based on technological asset and technological efficiency, and the analysis result revealed different effects of technological intensity and technological diversity on financial performance. For technological asset, the financial performance in the high group is affected more by technological intensity, and the financial performance in the low group is affected more by technological diversity. For technological efficiency, only the financial performance in the high group is affected by technological intensity. Although both groups’ financial performance is somewhat affected by technological diversity, there was no statistically significant differences between the groups. By separating the effect of technological capability on financial performance, this research can provide more detailed analysis results compared to previous literature and the methods of managing technological capability for semiconductor firms.

Suggested Citation

  • Jun Hong Park & Hyunseog Chung & Ki Hong Kim & Jin Ju Kim & Chulung Lee, 2021. "The Impact of Technological Capability on Financial Performance in the Semiconductor Industry," Sustainability, MDPI, vol. 13(2), pages 1-20, January.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:2:p:489-:d:475838
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/13/2/489/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/13/2/489/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Atul Nerkar & Peter W. Roberts, 2004. "Technological and product‐market experience and the success of new product introductions in the pharmaceutical industry," Strategic Management Journal, Wiley Blackwell, vol. 25(8‐9), pages 779-799, August.
    2. Lin, Bou-Wen & Lee, Yikuan & Hung, Shih-Chang, 2006. "R&D intensity and commercialization orientation effects on financial performance," Journal of Business Research, Elsevier, vol. 59(6), pages 679-685, June.
    3. Ki Hong Kim & Young Jae Han & Sugil Lee & Sung Won Cho & Chulung Lee, 2019. "Text Mining for Patent Analysis to Forecast Emerging Technologies in Wireless Power Transfer," Sustainability, MDPI, vol. 11(22), pages 1-24, November.
    4. David J. TEECE, 2008. "Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy," World Scientific Book Chapters, in: The Transfer And Licensing Of Know-How And Intellectual Property Understanding the Multinational Enterprise in the Modern World, chapter 5, pages 67-87, World Scientific Publishing Co. Pte. Ltd..
    5. Grimaldi, Michele & Cricelli, Livio & Di Giovanni, Martina & Rogo, Francesco, 2015. "The patent portfolio value analysis: A new framework to leverage patent information for strategic technology planning," Technological Forecasting and Social Change, Elsevier, vol. 94(C), pages 286-302.
    6. Jun Hong Park & Sang Ho Kook & Hyeonu Im & Soomin Eum & Chulung Lee, 2018. "Fabless Semiconductor Firms’ Financial Performance Determinant Factors: Product Platform Efficiency and Technological Capability," Sustainability, MDPI, vol. 10(10), pages 1-22, September.
    7. Aw, Bee Yan & Batra, Geeta, 1998. "Technological Capability and Firm Efficiency in Taiwan (China)," The World Bank Economic Review, World Bank, vol. 12(1), pages 59-79, January.
    8. Alecke Björn & Reinkowski Janina & Mitze Timo & Untiedt Gerhard, 2012. "Does Firm Size make a Difference? Analysing the Effectiveness of R&D Subsidies in East Germany," German Economic Review, De Gruyter, vol. 13(2), pages 174-195, May.
    9. Namchul Shin & Kenneth L. Kraemer & Jason Dedrick, 2017. "R&D and firm performance in the semiconductor industry," Industry and Innovation, Taylor & Francis Journals, vol. 24(3), pages 280-297, April.
    10. Saridakis, George & Lai, Yanqing & Mohammed, Anne-Marie & Hansen, Jared M., 2018. "Industry characteristics, stages of E-commerce communications, and entrepreneurs and SMEs revenue growth," Technological Forecasting and Social Change, Elsevier, vol. 128(C), pages 56-66.
    11. Kim, Jeeeun & Lee, Sungjoo, 2015. "Patent databases for innovation studies: A comparative analysis of USPTO, EPO, JPO and KIPO," Technological Forecasting and Social Change, Elsevier, vol. 92(C), pages 332-345.
    12. repec:bla:rdevec:v:5:y:2001:i:2:p:266-88 is not listed on IDEAS
    13. Giacomo Vaccario & Mario V. Tomasello & Claudio J. Tessone & Frank Schweitzer, 2018. "Quantifying knowledge exchange in R&D networks: a data-driven model," Journal of Evolutionary Economics, Springer, vol. 28(3), pages 461-493, August.
    14. Murphy, Gregory B. & Trailer, Jeff W. & Hill, Robert C., 1996. "Measuring performance in entrepreneurship research," Journal of Business Research, Elsevier, vol. 36(1), pages 15-23, May.
    15. Chen, Yi-Min & Yang, De-Hsin & Lin, Feng-Jyh, 2013. "Does technological diversification matter to firm performance? The moderating role of organizational slack," Journal of Business Research, Elsevier, vol. 66(10), pages 1970-1975.
    16. Shoko Haneda & Hiroyuki Odagiri, 1998. "Appropriation Of Returns From Technological Assets And The Values Of Patents And R&D In Japanese High-Tech Firms," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 7(4), pages 303-321.
    17. Hiroko Nakamura & Shinji Suzuki & Yuya Kajikawa & Masataka Osawa, 2015. "The effect of patent family information in patent citation network analysis: a comparative case study in the drivetrain domain," Scientometrics, Springer;Akadémiai Kiadó, vol. 104(2), pages 437-452, August.
    18. Grzegorczyk Tomasz & Głowiński Robert, 2020. "Patent management strategies: A review," Journal of Economics and Management, Sciendo, vol. 40(2), pages 36-51, June.
    19. Nicky J. Welton & Howard H. Z. Thom, 2015. "Value of Information," Medical Decision Making, , vol. 35(5), pages 564-566, July.
    20. Cohen, Wesley M & Klepper, Steven, 1996. "Firm Size and the Nature of Innovation within Industries: The Case of Process and Product R&D," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 232-243, May.
    21. Yu-Shan Chen & Ke-Chiun Chang, 2012. "Using the entropy-based patent measure to explore the influences of related and unrelated technological diversification upon technological competences and firm performance," Scientometrics, Springer;Akadémiai Kiadó, vol. 90(3), pages 825-841, March.
    22. Jinyoung Kim & Sangjoon John Lee & Gerald Marschke, 2009. "Relation of Firm Size to R&D Productivity," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 8(1), pages 7-19, April.
    23. William C. Bogner & Pamela S. Barr, 2000. "Making Sense in Hypercompetitive Environments: A Cognitive Explanation for the Persistence of High Velocity Competition," Organization Science, INFORMS, vol. 11(2), pages 212-226, April.
    24. Mowery, David C. & Oxley, Joanne E. & Silverman, Brian S., 1998. "Technological overlap and interfirm cooperation: implications for the resource-based view of the firm," Research Policy, Elsevier, vol. 27(5), pages 507-523, September.
    25. Palda, Kristian S., 1986. "Technological intensity: Concept and measurement," Research Policy, Elsevier, vol. 15(4), pages 187-198, August.
    26. David J. Teece & Gary Pisano & Amy Shuen, 1997. "Dynamic capabilities and strategic management," Strategic Management Journal, Wiley Blackwell, vol. 18(7), pages 509-533, August.
    27. Derek Bosworth & Mark Rogers, 2001. "Market Value, R&D and Intellectual Property: An Empirical Analysis of Large Australian Firms," The Economic Record, The Economic Society of Australia, vol. 77(239), pages 323-337, December.
    28. Kevin Zheng Zhou & Fang Wu, 2010. "Technological capability, strategic flexibility, and product innovation," Strategic Management Journal, Wiley Blackwell, vol. 31(5), pages 547-561, May.
    29. Jeffrey G. Covin & Dennis P. Slevin, 1989. "Strategic management of small firms in hostile and benign environments," Strategic Management Journal, Wiley Blackwell, vol. 10(1), pages 75-87, January.
    30. repec:bla:ecorec:v:77:y:2001:i:239:p:323-37 is not listed on IDEAS
    31. An‐Chi Tung, 2001. "Taiwan’s Semiconductor Industry: What the State Did and Did Not," Review of Development Economics, Wiley Blackwell, vol. 5(2), pages 266-288, June.
    32. Chang, Ke-Chiun & Chen, Dar-Zen & Huang, Mu-Hsuan, 2012. "The relationships between the patent performance and corporation performance," Journal of Informetrics, Elsevier, vol. 6(1), pages 131-139.
    33. Jian Cheng Guan & Xia Gao, 2009. "Exploring the h‐index at patent level," Journal of the American Society for Information Science and Technology, Association for Information Science & Technology, vol. 60(1), pages 35-40, January.
    34. Yi-Chia Chiu & Hsien-Che Lai & Yi-Ching Liaw & Tai-Yu Lee, 2010. "Technological scope: diversified or specialized," Scientometrics, Springer;Akadémiai Kiadó, vol. 82(1), pages 37-58, January.
    35. Hyunseog Chung & Soomin Eum & Chulung Lee, 2019. "Firm Growth and R&D in the Korean Pharmaceutical Industry," Sustainability, MDPI, vol. 11(10), pages 1-19, May.
    36. Takehiko Yasuda, 2005. "Firm Growth, Size, Age and Behavior in Japanese Manufacturing," Small Business Economics, Springer, vol. 24(1), pages 1-15, December.
    37. Ke-Chiun Chang & Wei Zhou & Sifei Zhang & Chien-Chung Yuan, 2015. "Threshold effects of the patent H-index in the relationship between patent citations and market value," Journal of the Association for Information Science & Technology, Association for Information Science & Technology, vol. 66(12), pages 2697-2703, December.
    38. Chen-Lung Chin & Picheng Lee & Hsin-Yi Chi & Asokan Anandarajan, 2006. "Patent Citation, R&D Spillover, and Tobin's Q: Evidence from Taiwan Semiconductor Industry," Review of Quantitative Finance and Accounting, Springer, vol. 26(1), pages 67-84, February.
    39. Lee, Hakyeon & Park, Yongtae & Choi, Hoogon, 2009. "Comparative evaluation of performance of national R&D programs with heterogeneous objectives: A DEA approach," European Journal of Operational Research, Elsevier, vol. 196(3), pages 847-855, August.
    40. Ke Zhong & Fang Wang & Lihui Zhou, 2017. "Deferred revenue changes as a leading indicator for future financial performance," Asian Review of Accounting, Emerald Group Publishing Limited, vol. 25(4), pages 549-568, December.
    41. Krishna Palepu, 1985. "Diversification strategy, profit performance and the entropy measure," Strategic Management Journal, Wiley Blackwell, vol. 6(3), pages 239-255, July.
    42. Jean O. Lanjouw & Mark Schankerman, 2004. "Patent Quality and Research Productivity: Measuring Innovation with Multiple Indicators," Economic Journal, Royal Economic Society, vol. 114(495), pages 441-465, April.
    43. Kim, Jungho & Lee, Chang-Yang & Cho, Yunok, 2016. "Technological diversification, core-technology competence, and firm growth," Research Policy, Elsevier, vol. 45(1), pages 113-124.
    44. Thomas, V.J. & Sharma, Seema & Jain, Sudhir K., 2011. "Using patents and publications to assess R&D efficiency in the states of the USA," World Patent Information, Elsevier, vol. 33(1), pages 4-10, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lingli Qing & Dongphil Chun & Abd Alwahed Dagestani & Peng Li, 2022. "Does Proactive Green Technology Innovation Improve Financial Performance? Evidence from Listed Companies with Semiconductor Concepts Stock in China," Sustainability, MDPI, vol. 14(8), pages 1-20, April.
    2. Shih-Ping Shen & Jung-Fa Tsai, 2022. "Evaluating the Sustainable Development of the Semiconductor Industry Using BWM and Fuzzy TOPSIS," Sustainability, MDPI, vol. 14(17), pages 1-17, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jun Hong Park & Sang Ho Kook & Hyeonu Im & Soomin Eum & Chulung Lee, 2018. "Fabless Semiconductor Firms’ Financial Performance Determinant Factors: Product Platform Efficiency and Technological Capability," Sustainability, MDPI, vol. 10(10), pages 1-22, September.
    2. Sang Ho Kook & Ki Hong Kim & Chulung Lee, 2017. "Dynamic Technological Diversification and Its Impact on Firms’ Performance: An Empirical Analysis of Korean IT Firms," Sustainability, MDPI, vol. 9(7), pages 1-16, July.
    3. Puay Khoon Toh & Gautam Ahuja, 2022. "Integration and appropriability: A study of process and product components within a firm's innovation portfolio," Strategic Management Journal, Wiley Blackwell, vol. 43(6), pages 1075-1109, June.
    4. Choi, Jin-Uk & Lee, Chang-Yang, 2022. "The differential effects of basic research on firm R&D productivity: The conditioning role of technological diversification," Technovation, Elsevier, vol. 118(C).
    5. Seh-Hyun Yoo & Chang-Yang Lee, 2023. "Technological diversification, technology portfolio properties, and R&D productivity," The Journal of Technology Transfer, Springer, vol. 48(6), pages 2074-2105, December.
    6. Rakesh B. Sambharya & Jooh Lee, 2014. "Renewing Dynamic Capabilities Globally: An Empirical Study of the World’s Largest MNCs," Management International Review, Springer, vol. 54(2), pages 137-169, April.
    7. Moaniba, Igam M. & Lee, Pei-Chun & Su, Hsin-Ning, 2020. "How does external knowledge sourcing enhance product development? Evidence from drug commercialization," Technology in Society, Elsevier, vol. 63(C).
    8. Francesco Paolo Appio & Luigi de Luca & Robert Morgan & Antonella Martini, 2019. "Patent portfolio diversity and firm profitability: A question of specialization or diversification?," Post-Print halshs-02292360, HAL.
    9. Huang, Kenneth Guang-Lih & Huang, Can & Shen, Huijun & Mao, Hao, 2021. "Assessing the value of China's patented inventions," Technological Forecasting and Social Change, Elsevier, vol. 170(C).
    10. Maria Chiara Di Guardo & Kathryn Rudie Harrigan & Elona Marku, 2019. "M&A and diversification strategies: what effect on quality of inventive activity?," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 23(3), pages 669-692, September.
    11. Gianluigi Giustiziero & Aseem Kaul & Brian Wu, 2019. "The Dynamics of Learning and Competition in Schumpeterian Environments," Organization Science, INFORMS, vol. 30(4), pages 668-693, July.
    12. Iain M. Cockburn & Megan J. MacGarvie, 2011. "Entry and Patenting in the Software Industry," Management Science, INFORMS, vol. 57(5), pages 915-933, May.
    13. Rodríguez-Pose, Andrés & Zhang, Min, 2020. "The cost of weak institutions for innovation in China," Technological Forecasting and Social Change, Elsevier, vol. 153(C).
    14. Cantner, Uwe & Graf, Holger, 2006. "The network of innovators in Jena: An application of social network analysis," Research Policy, Elsevier, vol. 35(4), pages 463-480, May.
    15. Frank T. Rothaermel & Maria Tereza Alexandre, 2009. "Ambidexterity in Technology Sourcing: The Moderating Role of Absorptive Capacity," Organization Science, INFORMS, vol. 20(4), pages 759-780, August.
    16. Rajneesh Narula & Andrea Martínez-Noya, 2014. "International R&D Alliances by Firms: Origins and Development," John H Dunning Centre for International Business Discussion Papers jhd-dp2014-06, Henley Business School, University of Reading.
    17. Mohd Shadab Danish & Pritam Ranjan & Ruchi Sharma, 2021. "Identification of “Valuable” Technologies via Patent Statistics in India: An Analysis Based on Renewal Information," BASE University Working Papers 13/2021, BASE University, Bengaluru, India.
    18. Choi, Mincheol & Lee, Chang-Yang, 2021. "Technological diversification and R&D productivity: The moderating effects of knowledge spillovers and core-technology competence," Technovation, Elsevier, vol. 104(C).
    19. Anders Pehrsson, 2019. "When are innovativeness and responsiveness effective in a foreign market?," Journal of International Entrepreneurship, Springer, vol. 17(1), pages 19-40, March.
    20. Yu-Shan Chen & Chun-Yu Shih, 2011. "Re-examine the relationship between patents and Tobin’s q," Scientometrics, Springer;Akadémiai Kiadó, vol. 89(3), pages 781-794, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:13:y:2021:i:2:p:489-:d:475838. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.