THE COMPETITIVE SEMICONDUCTOR MANUFACTURING HUMAN
Second Interim Report
Clair Brown, Editor
10. How does Knowledge Flow? Inter-Firm Patterns in the Semiconductor
Melissa M. Appleyard **
10.2 Why Would Rivals Share?
10.3 Cross-Industry Comparison of Knowledge-Sharing:
Semiconductors vs. Steel
10.4 Knowledge-Sharing in Different Institutional
Contexts: Japan vs. the U.S.
10.5 Survey Results
10.6 Summary and Conclusions
When considering the evolution of technology, economists often assume
the existence of knowledge spillovers, especially across company
boundaries. The vast majority of the spillovers literature is silent
on the following points: How does knowledge flow across company
boundaries? How do industry characteristics and national institutions
shape knowledge diffusions? To what degree do companies direct knowledge
flows? This research provides a foundation for answering these questions
by examining knowledge-sharing patterns in the semiconductor industry.
An analysis of survey data shows that public sources of technical
information play a larger role in knowledge diffusion in Japan relative
to the U.S. and in the semiconductor industry relative to the steel
industry. Only through an understanding of knowledge flows can company
managers and policy makers establish optimal patterns of knowledge
This paper documents the existence of inter-firm information flows
in a knowledge-intensive industry. Although many economists assume
that knowledge "spills" across company boundaries, this
research details the actual mechanisms by which technical knowledge
is disseminated in the semiconductor industry. This research employs
the concept of knowledge-sharing, defined as the transfer of useful
know-how or information across company lines and executed through
communication channels that vary both in terms of their privacy
and their legal status. Although previous empirical studies have
documented informal inter-firm knowledge exchanges, this paper explores
the reasons why patterns differ across industries and across countries.
The findings from survey data offer a rare account of the primary
knowledge-sharing vehicles in the semiconductor industry, both in
the U.S. and Japan, and provide a grounding for optimal strategies
of knowledge management.
Section 10.2 provides a framework for thinking about the payoffs
to knowledge-sharing. This section begins by distinguishing between
the access to knowledge and its use. Access to knowledge is either
public or private in nature, and its subsequent use may or may not
be legally restricted. Based on a typology of findings from empirical
studies of private, unrestricted inter-firm knowledge-sharing, the
conditions under which firms, even rival firms, would exchange knowledge
Turning to a cross-industry analysis, Section 10.3 compares the
characteristics of the semiconductor industry to those of the steel
industry. I hypothesize that industries with a rapid pace of technological
change, such as the semiconductor industry, would have a lower incidence
of private knowledge-sharing.
By focusing on distinctions between the institutional environments
in the U.S. and Japan, Section 10.4 discusses how such distinctions
might shape knowledge-sharing within a given industry. Taking into
account the influence of the employment systems and the intellectual
property right regimes in the two countries, I predict that private
knowledge-sharing would be more likely among U.S. semiconductor
workers than among their Japanese counterparts. This prediction
stems from a higher incidence of employee turnover in the U.S. and
America's first-to-invent patent system.
Drawing on surveys of people in the semiconductor industry, Section
10.5 presents empirical evidence supporting the two hypotheses posited
above and provides clues to the profiles of people who engage in
knowledge-sharing. In contrast to previous empirical studies of
the steel industry, public channels of communication play a central
role in the transfer of knowledge in the semiconductor industry.
As for the international comparison, U.S. semiconductor workers
are approached more frequently for technical information and are
more likely to fulfill at least one request per year. However, Japanese
workers are more likely to fulfill the majority of requests that
they receive. The field work in Section 10.5 details the primary
mechanisms of knowledge-sharing in the semiconductor industry.
The final section summarizes the findings and describes how a company
can incorporate knowledge-sharing patterns into its knowledge management
strategy. The final section also discusses policy implications derived
from the evidence presented in this paper.
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* Presented at the Tenth Annual Franco
American Seminar on the Economics and Econometrics of Innovation
Strasbourg, France, June 1996.
** Department of Economics, UC Berkeley (email: firstname.lastname@example.org).
I gratefully acknowledge the Alfred P. Sloan Foundation for funding.
I am indebted to Sarah Bales, Clair Brown, Bronwyn Hall, Rose
Marie Ham, David Mowery, Steve Raphael, Paul Romer, Stephan Schrader,
my dissertation group, the participants in UC Berkeley's Institutions
Seminar, the participants in the ADRES Strasbourg Conference on
Innovation and many people associated with the semiconductor industry,
including Tony Alvarez, Jose Arreola, Neil Berglund, Dan Flamm,
Jim Nulty, John Schuler, and the late Vinay Sohoni for useful
comments and insights.