Academic journal article Advances in Competitiveness Research

National Culture and National Competitiveness: A Study of the Microcomputer Component Industry

Academic journal article Advances in Competitiveness Research

National Culture and National Competitiveness: A Study of the Microcomputer Component Industry

Article excerpt

INTRODUCTION

The competitiveness of US, Japanese, Taiwanese and Korean(1) multinational enterprises (MNEs) in different aspects of microcomputer(2) component markets can be analyzed from the perspectives of economics or organizational studies. Economists such as Ricardo (1817) as well as Heckscher-Ohlin's (1933) theory of comparative advantage suggested that MNEs specialized in microcomputer components in which they could produce most efficiently. Vernon's (1966) product cycle model, in the other hand, proposed a sequential process where new microcomputer components would be first manufactured in the USA, then in other advanced economies such as Japan, and eventually in less developed countries such as the Philippines. Organizational theorists Lieberman and Montgomery's (1988) first-mover advantage furnished a rationale for the competitiveness of microcomputer component MNEs in terms of preemption of product space. Furthermore, Wernerfelt (1984), as well as Prahalad and Hamel (1990), proposed that competitiveness among microcomputer component MNEs arose from individual organizational capabilities. Finally, Porter's (1990) diamond theory explained that MNEs' international success was a result of the competitive advantages embedded in their homebases.

Figure 1 provides an overview of static competitiveness(3) in relation to microcomputer components of high monetary value. A typology of components incorporated in microcomputers as differentiated by concept-intensity, capital-intensity and labor-intensity is shown in Table 1. Concept-intensive components encompass the designs of microprocessors and software. Capital-intensive components refer to the assembly of dynamic random access memories (D-rams) and printer engines while labor-intensive components include monitors, keyboards, and printed circuit boards. The highest demand for skilled labor is in the concept-intensive components. For example, it took IBM, Motorola, and Apple designers in the Somerset Joint Design Center, Texas, nearly two years to complete the Power PC Architecture, which was implemented in the Power PC601, 603, 604, and 620 microprocessors. The critical feature of capital-intensive components, on the other hand, is that they contained the highest level of minimum efficient scale and initial capital investment. For instance, the minimum efficient scale for hard disk drives as estimated from IBM's Thailand facility in 1997 was approximately 1,000,000 per month, whereas the capital requirement for building a 256-megabit semiconductor plant was estimated to be about US$3 billion in 1998. (Financial Times, 11/28/1996:4 and 6/23/1998:35). Finally, labor-intensive components have the longest product life cycle.

FIGURE 1
Microcomputer Component World Market Share Estimates(*) of Producers
headquartered in the USA, Japan, Taiwan, and Korea in the mid-1990s

a. Concept-intensive Components of Microprocessors and Software

% of total sales value

         Microprocessors   Software

USA            96%           74%
JAPAN          4%            18%
OTHERS                        8%

Notes:

(1.) Static competitiveness for microcomputer components in 1995 was
adopted; it corresponded to the dynamic competitiveness for
concept-intensive components since the 1970s and for capital-intensive
components and labour-intensive components from the mid-1980s onwards.

(2.) Microprocessors refer to the widely accepted CISC
microprocessors. For example, the 32-bit CISC microprocessor market was
worth US$11.974 million in 1995, while the 32/62-bit RISC
microprocessor was worth only US$1.355 million. It has further been
estimated that by 2000, the CISC market will reach US$30.357 million
as compared to the US$4.530 RISC market.

(3.) Software includes all systems and applications software,
languages, networking systems, application development tools, and
other software not embedded in hardware.

Source: Estimation based on Business Week Nov 6 1995 p40, Datamation
June 15 1996 p55 and ICEC 1996a 4. … 
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