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TRENDS AND PATTERNS IN INTER-FIRM R&D NETWORKS IN THE GLOBAL COMPUTER INDUSTRY: A HISTORICAL ANALYSIS OF MAJOR DEVELOPMENTS DURING THE PERIOD 1970-1999

Myriam Cloodt* John Hagedoorn** Nadine Roijakkers*

December 14, 2005 Paper submitted to Business History Review

*Department of Organization Science and Marketing and ECIS Faculty of Technology Management, Eindhoven University of Technology P.O. Box 513, 5600 MB Eindhoven, The Netherlands Tel: (31) 40-2472170, Fax: (31) 40-2468054 [email protected] [email protected] **Department of Organization and Strategy and MERIT Faculty of Economics and Business Administration, Maastricht University P.O. Box 616, 6200 MD Maastricht, The Netherlands Tel: (31) 43-3883823, Fax: (31) 43-3884893 [email protected]

We appreciate helpful comments on earlier versions of this paper by Geoffrey Jones and Walter Friedman. We also thank Marc van Ekert, Boy Kessel, Josien Suntjens, and Rob Webbink for their research assistance.

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TRENDS AND PATTERNS IN INTER-FIRM R&D NETWORKS IN THE GLOBAL COMPUTER INDUSTRY: A HISTORICAL ANALYSIS OF MAJOR DEVELOPMENTS DURING THE PERIOD 1970-1999 Abstract

We present a historical analysis of major trends in inter-firm R&D partnering in the international computer industry during the period 1970-1999. We first discuss different modes of R&D cooperation in the context of the overall growth patterns in R&D partnerships. We also examine major changes in the structure of R&D partnering networks, by studying both network-level characteristics and partnering behavior at the level of individual firms. This part of the analysis shows the change from extremely sparse and disconnected networks into very dense and well-connected networks. In addition, we analyze the important role played by individual companies when these sparse networks developed into very dense networks. This development coincides with the transition from the old, vertically organized computer industry into a new, horizontally organized computer industry as it emerged towards the end of the previous century.

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INTRODUCTION The main purpose of this paper is to present a historical analysis of major trends and patterns in inter-firm R&D partnering, the sharing of R&D resources and R&D inputs through collaboration between companies in the international computer industry. Our analysis starts in the early 1970s and follows the development of inter-firm R&D partnerships in this sector until the end of the 1990s. Previous studies1 have established that inter-firm R&D partnerships were almost non-existent in the years before 1970, after which a small growth in the number of inter-firm R&D partnerships took place during the 1970s. The same body of literature also reveals that the formation of R&D partnerships did not really take off until the beginning of the 1980s. As R&D partnerships flourished during the final decades of the previous century, companies engaging in these partnerships developed particular inter-firm network structures, where combinations of companies created clusters of R&D partnerships. From the perspective of business history, the growth of these R&D partnerships and the emerging patterns in inter-firm networks over longer periods of time, raises a number of interesting questions that deal with both general developments and particular changes within the relationships that companies have established over time. Our analysis qualifies some previous business historical work that also indicates that since the 1970s large companies have become nodal players in inter-firm networks but which stresses that these networks consist mainly of manufacturing partnerships with material suppliers and specialized equipment manufacturers. It acknowledges the R&D collaboration of large companies but these partnerships were

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Francois Chesnais, “Technical cooperation agreements between firms,” STI Review 4 (1988): 51-120; John Hagedoorn, “Inter-firm R&D partnerships: an overview of major trends and patterns since 1960,” Research Policy 31 (2002): 477-492; Michael Hergert and Deigan Morris, “Trends in international collaborative agreements,” in F.J. Contractor and P. Lorange, Cooperative strategies in international business (Lexington, USA, 1988); Karen Hladik, International joint ventures (Lexington, USA, 1985); Paolo Mariti and Robert Smiley, “Cooperative agreements and the organization of industry,” Journal of Industrial Economics 31 (1983): 3437-3451; OECD, Technical cooperation agreements between firms: some initial data and analysis (Paris, 1986); OECD, Technology and the economy (Paris, 1992).

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thought to focus primarily on cooperation with the public technological infrastructure and not on R&D partnerships with other companies2. Our contribution, however, shows how important R&D partnerships between a variety of companies have actually become over time, leading to the emergence of increasingly dense inter-firm R&D networks in the international computer industry. To the best of our knowledge, this paper is the first attempt to present a long-term historical overview of international trends and patterns in inter-firm R&D partnership formation in the international computer industry. Our study focuses on that particular industry, not only because the computer industry is such an interesting sector from the perspective of business history as such3, but also because it is one of the major industries of inter-firm R&D partnering.4 The current paper complements previous work in the Business History Review 2001 special issue on ‘Computers and communication networks’ that looked at the failed role of managerial information systems as a guiding principle for the information technology ‘revolution’ and the critical role of integrated circuits and software for the computer industry. Our work largely covers the same period, the second half of the previous century, but it concentrates on the analysis of some major structural transformations in the computer industry, the role of leading companies and their R&D partnerships, and the changing patterns in inter-firm R&D networks in that industry that were the result of increased R&D partnering activities. Apart from a more general description of growth patterns in R&D partnerships in the international computer industry, our paper also pays attention to important developments in the preferences that companies appear to have had for particular modes of organization used

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Alfred Chandler and Takashi Hikino, “The large industrial enterprise and the dynamics of modern economic growth,” in A.D. Chandler, F. Amatori and T. Hikino, Big business and the wealth of nations (Cambridge, USA, 1997), 24-57. 3 See Richard John, “Rendezvous with information? Computers and communication networks in the United States,” Business History Review, 75 (2001): 1-13. 4 Hagedoorn, “Inter-firm R&D partnerships: an overview of major trends and patterns since 1960.”

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to form these inter-firm R&D relationships. In the analysis of the specific networks of R&D partnerships, as they developed over a thirty years period, we will look at the changes in the nature of the overall, industry-wide, networks and the emergence of particular sub-networks, as well as consider the role played by individual companies that took a leading role in these inter-firm networks. This paper not only reflects on the vast body of literature on the topic of partnerships, various sector studies, and background studies on the industry and the companies involved, it also applies statistical analysis to map inter-firm R&D networks over time. The main data source for the statistical analysis is the MERIT-CATI database that contains information on thousands of inter-firm partnerships (See Appendix I). In the next section, we will first present a general overview of the historical growth pattern in R&D partnerships, followed by a discussion of specific trends in the use of different modes of R&D cooperation by companies over time. In the following section, we examine major changes in the structure of R&D partnering networks, by studying both network-level characteristics and partnering behavior at the level of individual firms. This section shows the change from extremely sparse and disconnected networks with a few small multi-partner clusters into very dense, well-connected networks with a multitude of companies. In that section we also analyze the role played by individual companies as we see a clear change in the importance of some individual network participants. These developments in terms of changes from a sparse network to a dense network and the growing importance of particular leading computer companies coincide with the transition from the old, vertically organized computer industry into a new, horizontally organized computer industry. We will present some of the main conclusions that can be drawn from this contribution in terms of historical changes in industry structures that appear to have had a

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profound effect on the trends and patterns in R&D partnering in the international computer industry during the final decades of the previous century. Our analysis of this transition qualifies some elements of the work of Chandler on the role of large, multidivisional, vertically and horizontally integrated companies. Chandler stresses the role of these large integrated companies for creating fast growing industries such as the computer industry.5 In addition, he argues that, as in many other industries, established integrated companies were the first movers in the computer industry that maintained their competitive edge while challengers were mainly other established integrated companies from related industries diversifying into the computer industry or niche players with limited impact. Hence, the industry was dominated by large integrated companies with vast R&D resources that enabled them to benefit from the economies of scale and scope in R&D and with little need for R&D partnerships with other companies.6 Our analysis indicates that during the 1980s and 1990s the computer industry changed from a vertically integrated industry towards a more horizontally organized industry where inter-firm collaboration had become more important than control through integrated production. In that context, R&D partnerships had become a major vehicle for increasing the flexibility of computer companies in terms of having access to a variety of external R&D resources and new technologies.

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Alfred D. Chandler, Scale and scope – The dynamics of industrial capitalism, (Cambridge, Mass., 1990); Alfred D. Chandler, Inventing the electronic century: the epic story of the consumer electronics and computer industries, (New York, USA, 2001). 6 Alfred D. Chandler, “The United States: engines of economic growth in the capital-intensive and knowledgeintensive industries,” in A.D. Chandler, F. Amatori, and T. Hikino, Big business and the wealth of nations (Cambridge, Mass., 1997), 63- 101; Chandler, Inventing the electronic century: the epic story of the consumer electronics and computer industries; Chandler and Hikino, “The large industrial enterprise and the dynamics of modern economic growth.”

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GENERAL TRENDS IN R&D PARTNERSHIPS Historical growth patterns The growth in the number of R&D partnerships in the computer industry has to be seen in the context of the overall growth in the number of R&D partnerships across industries, in particular in high-tech sectors.7 The explanation for this growth pattern of newly made R&D partnerships is generally related to important technological developments in the 1970s, 1980s, and early 1990s that have led to major changes in the organization of R&D by companies. In that context, companies were facing increased complexity of R&D projects due to the inter-sectoral nature of many new technologies and their cross-disciplinary scientific focus which forced companies to monitor the evolution of scientific knowledge and complementary technologies across a broad spectrum.8 As even many very large and diversified companies still lack some competence in a number of relevant scientific and technological fields, R&D partnerships can create the necessary complementary technological and scientific inputs that enable these companies to capitalize on shared economies of scale and scope. Few, if any, companies have all-embracing competences in each relevant field of technology and therefore a concrete evaluation of possible synergies might at some stage of a particular technological trajectory, on which a company operates,

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Hagedoorn, “Inter-firm R&D partnerships: an overview of major trends and patterns since 1960.”; Sueng Ho Park, Roger Chen and Scott Gallagher, “Firm resources as moderators of the relationship between market growth and strategic alliances in semiconductor start-ups,” Academy of Management Journal 45 (2002): 527; Walter Powell, Douglas White, Kenneth Koput and Jason Owen-Smith, “Network dynamics and field evolution: the growth of interorganizational collaboration in the life sciences,” American Journal of Sociology 110 (2005): 1132-1205. 8 Seungwha Chung, Harbir Singh and Kyungmook Lee,” Complementarity, status similarity and social capital as drivers of alliance formation,” Strategic Management Journal 21 (2000): 1; John Hagedoorn, “Understanding the rationale of strategic technology partnering: interorganizational modes of cooperation and sectoral differences,” Strategic Management Journal 14 (1993): 371-385; Hagedoorn, “Inter-firm R&D partnerships: an overview of major trends and patterns since 1960.”; Hladik, “International joint ventures”; Mariti and Smiley “Cooperative agreements and the organization of industry”; Bo Bernhard Nielsen, “An empirical investigation of the drivers of international strategic alliance formation,” European Management Journal 21 (2003): 300; Francisco_Javier Obleros and Roderick MacDonald, “Strategic alliances: managing complementarity to capitalize on emerging technologies,” Technovation 7 (1988): 155-176; Park, Chen and Gallagher, “Firm resources as moderators of the relationship between market growth and strategic alliances in semiconductor start-ups.”; Hiroshi Yasuda, “Formation of strategic alliances in high-technology industries: comparative study of the resource-based theory and the transaction-cost theory,” Technovation 25 (2005): 763.

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warrant a joint undertaking with another company. Given the high uncertainty surrounding leading edge technology and the considerable costs of many R&D projects, multidivisional and multi-technology companies can not afford to follow an ‘independent’ and ‘go-it-alone’ innovation strategy across the board of all their innovation projects.9 In addition, high-tech industries face competitive pressures to shorten their innovation cycles and to reduce the period between invention and market introduction of new products, joint innovation projects with combined R&D resources are instrumental in shortening these innovation cycles.10 All of these developments encourage companies in high-tech industries to complement their internal innovative activities with external innovative resources through R&D partnerships. Another set of factors that explain why companies partly reorganize their R&D efforts by means of R&D partnerships with other companies refers to the opportunities for market entry through a joint monitoring of changes in markets and the business environment in combination with developing new products and new industrial processes. At an international level, combining some activities of two geographically separated companies can facilitate the internationalization of companies that lack the economic control, competence or experience to make such a strategic international move independently. In a similar vein, inter-firm partnerships can be instrumental in creating new markets and new products, provide market entry and expand the product range of partners.11 9

Sandford Berg, Jerome Duncan and Philip Friedman, Joint venture strategies and corporate innovation (Cambridge, Mass., 1982); Hagedoorn, “Understanding the rationale of strategic technology partnering: interorganizational modes of cooperation and sectoral differences.”; Hladik, “International joint ventures”; Obleros and MacDonald, “Strategic alliances: managing complementarity to capitalize on emerging technologies.”; Park, Chen and Gallagher, “Firm resources as moderators of the relationship between market growth and strategic alliances in semiconductor start-ups.”; Yasuda, “Formation of strategic alliances in high-technology industries: comparative study of the resource-based theory and the transaction-cost theory.” 10 Hagedoorn, “Inter-firm R&D partnerships: an overview of major trends and patterns since 1960.”; OECD, “Technology and the economy”; World Investment Report, Cross-border mergers and acquisitions and development, (New York and Geneva, 2000); Yasuda, “Formation of strategic alliances in high-technology industries: comparative study of the resource-based theory and the transaction-cost theory.” 11 Hagedoorn, “Understanding the rationale of strategic technology partnering: inter-organizational modes of cooperation and sectoral differences.”; Hagedoorn, “Inter-firm R&D partnerships: an overview of major trends and patterns since 1960.”; Hladik, “International joint ventures”; Nielsen, “An empirical investigation of the drivers of international strategic alliance formation.”; Obleros and MacDonald, “Strategic alliances: managing complementarity to capitalize on emerging technologies.”

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Especially in the information technology-based sectors we witness an accelerated technological convergence within many product markets during the mid 1980s and early 1990s. This implies that the boundaries between information technology sub-sectors, in which the computer industry plays a leading role, have disappeared creating opportunities for many combined products for which information technology is a crucial technological feature.12 In that context one has to think of many information technology based products such as PCs, game computers, telecom equipment and telecom products, advanced consumer electronics, etc. Due to these new developments, companies were confronted with an increased need to master different technologies and they increasingly engaged in more and more R&D partnerships that would enable them to combine different technological capabilities.13 However, during the early 1970s, the number of newly established R&D partnerships in the international computer industry was still rather low, with an average of three new partnerships made each year (see figure 1). The share of inter-firm R&D partnerships in the computer industry was on average around 5.7% of the total number of partnerships made during that period. A distinguishing feature, when the computer industry is compared with other industries, is the fact that although we witness an overall increase in the total number of R&D partnerships during the second half of the 1970s, this growth pattern cannot be recognized in the computer industry. A possible explanation for this low degree of R&D cooperation in the computer industry, compared to many other industries, is found in the preference for vertical integration and internal control of new technologies by the main

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Geert Duysters and John Hagedoorn, “Technological convergence in the IT industry: the role of strategic technology alliances and technological competencies,” International Journal of the Economics of Business 5 (1998): 335-368. 13 Duysters and Hagedoorn, “Technological convergence in the IT industry: the role of strategic technology alliances and technological competencies.”; Farid Harianto and Johannes Pennings, “Technological convergence and scope of organizational innovation,” Research Policy 23 (1994): 293; OECD, “Technology and the economy”; Rob van Tulder and Gerd Junne, European multinationals in core technologies (Chichester, 1988).

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players within the industry during that particular period of time.14 As indicated by Chandler15 this period of the1970s marks the dominance of the computer industry by multidivisional, vertically and horizontally integrated large companies, most of which had diversified from related industries into the computer sector. For example leading companies such as IBM, Burroughs, Control Data Corporation (CDC), Honeywell and Sperry Rand manufactured not only computers but they also produced the microelectronics, provided operating systems, application software and services that came with these computers.16

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During the first half of the 1980s, we see a slight increase in the number of newly established R&D partnerships, which continued during the second half of the 1980s. Throughout the early 1980s the number of R&D partnerships within the computer industry increased from 4 in 1980 to 16 new agreements made in 1984. In the late 1980s the number of newly established R&D partnerships started at 10 in 1985 and increased to 22 R&D partnerships made in 1989. This gradual increase of newly established R&D partnerships in the computer industry reflects the emerging importance of the microcomputer (PC) as it developed through the 1980s. The growth of the PC sector was largely responsible for a more decentralized new structure of the computer industry as firms that produced PCs were mostly assemblers, that bought most of their components and software on the market.17 Consequently, compatible sub-technologies, such as Operating Systems (OS) technology, 14

Timothy Bresnahan and Franco Malerba, “Industrial dynamics and the evolution of firms’ and nations’ competitive capabilities in the world computer industry,” in D. Mowery and R. Nelson, The sources of industrial leadership (Cambridge, 1999); David Methé, Ryoko Toyama and Junichiro Miyabe, “Product development strategy and organizational learning: a tale of two PC makers,” The Journal of Product Innovation Management 14 (1997): 323-336; Fred Weston, “Mergers and Acquisitions as adjustment processes,” Journal of Industry, Competition and Trade 1 (2001): 395-410. 15 Chandler, “Scale and scope – The dynamics of industrial capitalism.” 16 Weston, “Mergers and Acquisitions as adjustment processes.” 17 Franco Malerba, Richard Nelson, Luigi Orsenigo and Sidney Winter, “’History-friendly’ models of industry evolution: the computer industry,” Industrial and Corporate Change 8 (1999): 3-40.

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Microprocessor (MPU) technology, and application software, started to spread out among independent firms. The compatibility of these new technologies enabled companies to collaborate on the integration and further development of these new technologies, which resulted in increased R&D cooperation among companies.18 During the early 1990s, we see a further increase in the number of newly made computer R&D partnerships, with the exception of two small drops in numbers in 1991 and 1994. The average annual number of newly established R&D partnerships for this period lies at 32, which represents around 7% of all R&D partnerships made in the first half of the 1990s. The increase in the number of computer R&D partnerships reached its peak in 1995, when 56 new partnerships were established. A plausible explanation for this increase in newly formed computer R&D partnerships in the period 1990-1995 is found in the gradual erosion of the mainframe and minicomputer industry segment and the growth of the network segment. Within the network segment, existing types of small computers were linked to build more complex computer networks, which led to a new focus away from hardware development to new software and services.19 Since no single firm had the capabilities to innovate in all parts and subsystems, companies started to specialize in certain market layers (microprocessors, printers, operating software etc.) that were connected through open standards and interfaces.20 One of the results of this specialization was the increased need for companies to engage in R&D cooperation with other companies.21

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Methé, Toyama and Miyabe, “Product development strategy and organizational learning: a tale of two PC makers.”; Dorman Raphael, “The changing structure of the global information industry,” SRI International, Report no. 807 (1989); David Charles, Peter Monk and Ed Sciberras, Technology and competition in the international telecommunications industry (London, 1989); Raymond Leban, Jacques Lesourne, Keishi Oshima and Taizo Yakushiji, Europe and Japan facing high technologies (Paris, 1989). 19 Bresnahan and Malerba, “Industrial dynamics and the evolution of firms’ and nations’ competitive capabilities in the world computer industry.” 20 Malerba, Nelson, Orsenigo and Winter, “’History-friendly’ models of industry evolution: the computer industry.” 21 Bresnahan and Malerba, “Industrial dynamics and the evolution of firms’ and nations’ competitive capabilities in the world computer industry.”; Raphael, “The changing structure of the global information industry.”; Leban, Lesourne, Oshima and Yakushiji, “Europe and Japan facing high technologies.”

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After 1995, figure 1 shows a substantial drop in newly made R&D partnerships in computers to only 17 partnerships in 1999. An explanation for this decrease can be found in the rapid decline in PC prices driven by decreasing component costs, the shift of manufacturing to low-cost locations, increased competition, and the rise of the internet.22 This decline of prices in combination with a slow industry growth forced companies to use more zero-sum strategies (i.e. fierce price wars) at the expense of innovation.23 In addition, the slow growth rates of the computer industry imply that market-structure related, consolidation, motives to undertake M&As were probably more important during the period 1995-1999 than technologically-driven motives related to R&D partnerships that would stimulate companies to engage in joint innovation.24 Modes of cooperation Companies cooperate in R&D through a specific number of organizational modes: equitybased agreements, such as research joint ventures, and a number of contractual modes, such as joint R&D pacts and joint development agreements. Before examining the specific trend in the use of these different modes of collaboration in the computer industry over time, we will first briefly discuss each of these organizational arrangements. Of all types of inter-firm cooperation, joint ventures are probably the oldest and most widely studied form of partnering.25 In a research joint venture, two or more separate parent companies agree to conduct long-term, shared R&D within a distinct organizational entity or 'company' that is characterized by common equity ownership. Such equity-based joint ventures typically serve the purpose of substantially lowering the costs of transaction between

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Jason Dedrick and Kenneth Kraemer, “The impacts of IT on a firm and industry structure: the personal computer industry,” California Management Review 47 (2005): 122-142; Mariana Mazzucato, “The PC industry: new economy or early life-cycle?,” Review of Economic Dynamics 5 (2002): 318-345. 23 Mazzucato, “The PC industry: new economy or early life-cycle?.” 24 John Hagedoorn and Geert Duysters, “External appropriation of innovative capabilities: the choice between strategic partnering and mergers and acquisitions,” Journal of Management Studies 39 (2002): 167-188. 25 Berg, Duncan and Friedman, “Joint venture strategies and corporate innovation.”; Hladik, “International joint ventures”.

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the independent research partners. More specifically, partners to a joint venture are not very likely to behave in an opportunistic manner as this kind of behavior leads the whole venture to suffer and equity to diminish for the partners involved.26 Contractual modes of inter-firm R&D partnering, in particular joint R&D pacts and joint development agreements, constitute an important alternative to equity-based forms of cooperation. An advantage of contractual partnerships over equity alliances is that the former group of partnerships provides research partners with a high degree of flexibility and enables them to switch from research in one technological sub-field to another.27 Joint R&D pacts and joint development agreements involve the pooling of funds by two or more partners for the purpose of sharing technological know-how and setting up joint research and development programs. During the early 1970s, when there were so few R&D partnerships in the computer industry, all of these R&D partnerships were joint ventures (see figure 2, with three year moving averages). During the second half of the 1970s the share of equity-based R&D partnerships still reached a level of about 80%. However, in the early 1980s we witness a ‘sudden’ and steep decrease in the share of R&D joint ventures and a parallel increase in the contractual mode, which reached a share of almost 70% in 1985. Next, we see a gradually increasing trend towards a share of 95% during the second half of the 1990s. This pattern reflects previous research, which argues that non-equity, contractual forms of R&D partnerships gain in importance over the years as their absolute number and share in the total number of R&D partnerships has by far exceeded that of equity partnerships.28 26

Peter Buckley and Mark Casson, “A theory of cooperation in international business,” in F.J. Contractor and P. Lorange, Cooperative strategies in international business (Lexington, USA, 1988), 31-54. 27 Stephen Barley, John Freeman and Ralph Hybels, “Strategic alliances in commercial biotechnology,” in N. Nohria and R.G. Eccles, Networks and organizations: structure, form, and action (Boston, Mass., 1992), 311347; Obleros and MacDonald, “Strategic alliances: managing complementarity to capitalize on emerging technologies.” 28 See also John Hagedoorn, “Trends and patterns in strategic technology partnering since the early seventies,” Review of Industrial Organization 11 (1996): 601-616; Hagedoorn, “Inter-firm R&D partnerships: an overview of major trends and patterns since 1960.”; John Hagedoorn and Rajneesh Narula, “Choosing organizational

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These changes in the preference towards more flexible forms of inter-firm R&D collaboration in the international computer industry can be interpreted in the context of a shift from the ‘old computer industry’ to the ‘new computer industry’.29 The old computer industry can in general be characterized by a concentrated market structure and a dominance of vertically integrated producers, such as IBM as it existed during most of the 1970s and the 1980s. These vertically integrated producers had a high preference for internal control or shared control over hardware and software sub-technologies, which explains the importance they attached to equity partnerships, such as joint ventures, rather than to contractual arrangements that give little formal control. The new computer industry has to be seen in the context of a process of vertical disintegration, a widespread heterogeneity of potential technologies, and a shift towards rent generation in software and services.30 All these developments taking place in the 1980s and 1990s indicate that inter-firm R&D partnering had to become more flexible, thereby increasing the use of contractual collaboration. By enlarging the number of flexible contractual partnerships at the expense of equity partnerships, firms in the computer industry extended their ability to explore and experiment with several new technologies with various partners without having to establish new ventures with a company like set-up.

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modes of strategic technology partnering: international and sectoral differences,” Journal of International Business Studies 27 (1996): 265-284; Rajneesh Narula and John Hagedoorn, “Innovating through strategic alliances: moving towards international partnerships and contractual agreements,” Technovation 19 (1999): 283294. 29 Bresnahan and Malerba, “Industrial dynamics and the evolution of firms’ and nations’ competitive capabilities in the world computer industry”, 118. 30 Timothy Bresnahan, “The changing structure of innovation in the computer industry, America’s Industrial Resurgence: an overview,” in D. Mowery, US industry in 2000: Studies in competitive performance (Washington DC, USA, 1998); Timothy Bresnahan and Shane Greenstein, “Technological competition and the structure of the computer industry,” The Journal of Industrial Economics XLVII (1999): 1-40; Bresnahan and Malerba, “Industrial dynamics and the evolution of firms’ and nations’ competitive capabilities in the world computer industry.”; Malerba, Nelson, Orsenigo and Winter, “’History-friendly’ models of industry evolution: the computer industry.”

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THE STRUCTURE OF INTER-FIRM R&D NETWORKS Network evolution in the computer industry In the previous sections, we identified and described a number of important basic developments in computer R&D partnering since the early 1970s. We now turn to an overview of major changes in the structure of R&D partnering networks over time, examining both network-level characteristics and partnering behavior at the level of individual firms. Figures 3-8 give us a graphical representation of newly established R&D partnerships in the computer industry during the periods 1970-1974, 1975-1979, 1980-1984, 1985-1989, 1990-1994, 1995-1999, using a non-metric multidimensional scaling (MDS) technique. MDS is a data reduction procedure somewhat comparable to principal component analysis and other factor-analytical methods. One of the main advantages of MDS is that it can usually, but not necessarily, fit an appropriate model in a two-dimensional picture. Particularly, MDS offers a scaling of similarity data into points lying in an X-dimensional space. The purpose of this method is to provide coordinates for these points in such a way that distances between pairs of points fit as closely as possible to the observed similarities. In order to facilitate interpretation, the solution is given in two dimensions, provided that the fit of the model is acceptable. A stress value indicates the goodness-of-fit of the configuration as this measures the proportion of the variance of the disparities that is accounted for by the MDS model, implying that lower values indicate a better goodness of fit.31 For all MDS solutions presented in this paper Kruskal's stress values32 range from good, e.g. 0.027 for the period 1995-1999, to very good, e.g. 0.001 for the period 1970-1974. Using our own network visualization software tool Najojo (see Appendix II), we enhance the interpretability of these MDS pictures, first, by adding company labels to the 31

Joseph Hair, Rolph Anderson, Ronald Tatham and William Black, Multivariate data analysis (New Jersey, 1998). 32 Joseph Kruskal and Myron Wish, Multidimensional scaling (Beverly Hills, CA., 1978).

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dots, and, second, by drawing lines of different styles and thickness between pairs of firms with varying degrees of partnering intensity. Dotted lines represent one R&D partnership between companies, whereas solid lines indicate 2 or 3 partnerships. See Appendix III for company labels. For the computer industry, the 1970s were very much influenced by Intel’s invention of a new technology at the component level, the microprocessor, followed by the introduction of new types of computers such as the minicomputer, the supercomputer, and the microcomputer or PC.33 However, despite the introduction of the microprocessor, firms within the mainframe and minicomputer segment continued to control most of the crucial hardware and software sub-technologies themselves.34 Consequently, vertical integration remained the dominant strategy for the most important players and the advantages of partnerships remained relatively unknown within the industry.35 It is therefore not surprising that the period 1970-1974 (see figure 3) shows a relatively sparse network consisting of 20 firms in which the traditional mainframe manufacturers were dominant. More in particular, we observe three isolated research clusters and two one-on-one R&D partnerships between computer companies. At the right hand side of figure 3 we notice the largest research cluster of that particular period consisting of nine companies in total. Six of these nine companies belong to Europe’s leading electronics champions of that period (International Computers Limited from Britain, AEG, Siemens, and Nixdorf from Germany, Bull from France, and Philips from the Netherlands). In an attempt to diminish IBM’s control over European domestic markets and to overcome their weaknesses in computer technology, several governments within Europe chose a ‘national champion’ strategy. This implies that domestic computer makers were consolidated into one large 33

Geert Duysters, The dynamics of technical innovation (Cheltenham, 1996); Bresnahan and Greenstein, “Technological competition and the structure of the computer industry.” 34 Methé, Toyama and Miyabe, “Product development strategy and organizational learning: a tale of two PC makers.” 35 Duysters, “The dynamics of technical innovation.”

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company with the resources that might enable them to compete with IBM.36 In addition, these electronics companies all became members of the so-called Round Table and, encouraged by the European Commission, they studied the feasibility of European collaborative efforts in R&D.37 The remaining companies in this cluster were US companies that represented three distinct types of companies present in the mainframe computer industry at that time: office equipment producers (NCR, Sperry, Burroughs), electronics firms (Honeywell) and new firms (such as CDC), that avoided direct competition with established firms and preferred to open up new segments in the computer industry.38 Strikingly, in that period, IBM did not participate in any R&D partnership in computers. Other clusters of importance in this period are shown at the bottom left hand side and the top left hand side of figure 3. These clusters are mainly centered around the largest horizontal keiretsus of Japan (Mitsui, Mitsubishi, Sumitomo, Fuyo, and DKB). Two of the four leading vertical keiretsus in electronics are also present, namely Hitachi and Toshiba. In 1971, the Ministry of International Trade and Industry (MITI) made it mandatory for the six Japanese computer manufacturers to organize themselves in three major groups (HitachiFujitsu (DKB), Sumitomo (NEC)-Toshiba and Mitsubishi-Oki Electric). The intention of MITI was not to create a merger of these companies rather it was an effort to stimulate cooperation through joint R&D.39 However, the attempt of MITI to change the Japanese computer industry was not very successful.40 Competition between the Japanese companies remained high, which is probably one of the main reasons why there were no ties between Hitachi, Toshiba and Mitsubishi in figure 3. Another reason is that each of the groups was persuaded to produce another design. The Hitachi-Fujitsu group (DKB is the parent company 36

Kenneth Kraemer and Jason Dedrick, Asia’s computer challenge: threat or opportunity for the United States and the World? (New York, USA, 1998). 37 Paul Jowett and Margaret Rothwell, The economics of information technology (London, UK, 1986). 38 Bresnahan and Greenstein, “Technological competition and the structure of the computer industry.” 39 Sigeru Takahashi, “A brief history of the Japanese computer industry before 1985,” IEEE annals of the history of computing 18 (1996): 76-79. 40 Jowett and Rothwell, “The economics of information technology.”

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of Fujitsu) produced large IBM-compatible mainframes, the Mitsubishi-Oki Electric group produced smaller IBM-compatible computers and the NEC-Toshiba group (with Sumitomo as the parent company of NEC) was free to develop its own design.41 So, although R&D cooperation and development cost sharing were stimulated within each group, we see little R&D cooperation between the groups. Japanese-European partnerships were even completely absent during that time period. Consequently, the period 1970-1974 presents an extremely sparse, disconnected network of companies operating within relatively small research clusters or one-on-one R&D partnerships.


For the period 1975-1979 (see figure 4) we witness a similar pattern of an extremely sparse and disconnected network consisting of relatively small R&D partnering clusters. The largest cluster from the period 1970-1974 had now shrunk to only four companies (Honeywell, CDC, Bull, and ICL) as important European players such as Philips, Nixdorf, AEG, and Siemens had left that cluster. Siemens participated in a newly developed cluster together with DKB (Fujitsu), Burrough and Amdahl, companies that had been isolated from each other in the years 1970-1974. The main reason for the existence of this cluster was the financial support that the Japanese firm Fujitsu provided to Amdahl to develop high performance mainframes and the original equipment manufacturing (OEM) agreement between Siemens and DKB. The number of one-on-one R&D partnerships had tripled in comparison with the previous period. Within these one-on-one partnerships we recognize some important players in the computer industry, such as Matsushita, Hitachi, Olivetti, GEC, and DEC. Some of 41

Jowett and Rothwell, “The economics of information technology.”; Takahashi, “A brief history of the Japanese computer industry before 1985.”

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these one-on-one partnerships can be linked to extended OEM agreements, such as for example the alliance between Olivetti and Hitachi. Japanese firms used the strategy of OEM agreements to enter the international computer market while avoiding direct competition with IBM. Another significant R&D partnership was established between United Technologies and DEC, one of the first cooperative efforts that can be associated with the minicomputer segment.42 The minicomputer was pioneered primarily by Digital Equipment Corporation (DEC), which had the largest market share in the minicomputer and the super minicomputer segment at that time.43 In Europe, few new minicomputer firms entered the industry, mainly because American producers had a first mover advantage and rapidly entered the European market, while the lack of venture capital in Europe frustrated the start up of new companies.44 With respect to the cluster of Japanese companies we witness an increase in the number of ties between the existing partners, in addition the number of participating companies had also increased slightly. We also see a small cluster consisting of companies such as Datapoint, Tandy, and Commodore International. Tandy was one of the companies that, together with Commodore International and Apple, started the microcomputer revolution, with their TRS-80 (1977) and TRS-80 color computer (1980) line of home computers.45 Finally, during that period, IBM was still absent in the overall network of R&D partnerships in computers.


42

Duysters, “The dynamics of technical innovation.” George Gray and Ronald Smith, “Sperry Rand’s third-generation computers: 1964-1980,” IEEE Annals of the History of Computing (2001): 3-16. 44 Bresnahan and Malerba, “Industrial dynamics and the evolution of firms’ and nations’ competitive capabilities in the world computer industry.”; Jacqueline Senker, Biotechnology and competitive advantage: Europe’s firms and the US challenge (Cheltenham, 1998). 45 Wikipedia, “The free encyclopedia”, http://en.wikipedia.org (October 2005). 43

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The microcomputer (PC) segment developed further in the period 1980-1984, from a number of small firms that assembled machines, supplied add-on parts, wrote software and provided service and know-how to a significant sub-sector within the computer industry. 46 When large vertically integrated firms entered that segment of the industry, they were forced to rely on a large number of outside suppliers.47 Accordingly, this period shows the breakthrough of several small companies that accounted for the economic progress in the computer industry and its new decentralized structure.48 As mentioned earlier, in the 1970s companies such as IBM, Sperry, DEC, NEC, and Fujitsu performed all functions such as distribution, applications, system software, computer platform, and semiconductor development by themselves. However, unlike the mainframe and minicomputer segment, where vertical integration was still the norm, sub-technologies in the microcomputer (PC) industry were spread out among interdependent firms that had to be technologically compatible.49 This interdependence led to an increased R&D cooperation between firms. As a result, within the period 1980-1984 (see figure 5) we find a network that was relatively dense compared to the 1970s. Partners in the network were now, either directly or indirectly, connected to each other. In addition, as was the case in the 1970s, we no longer witnessed disparate research clusters with on the one hand US-European cooperation and on the other hand Japanese partnerships. The increase in R&D partnerships was especially due to a rapid growth in the number of US-Japanese partnerships, in which IBM started to play a prominent role. Through these partnerships Japanese companies tried to acquire the technological knowledge base of competent partners in the US.50 In spite of the still relatively 46

Richard Langlois, ”Creating external capabilities: innovation and vertical disintegration in the microcomputer industry,” Business and economic history 19 (1990): 93-102. 47 Bresnahan and Greenstein, “Technological competition and the structure of the computer industry.” 48 Langlois, ”Creating external capabilities: innovation and vertical disintegration in the microcomputer industry.” 49 Methé, Toyama and Miyabe, “Product development strategy and organizational learning: a tale of two PC makers.” 50 See also Robert Reich and Eric Mankin, “Joint ventures with Japan give away our future,” Harvard Business Review 64 (1986): 78-86.

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low number of Japanese-European partnerships, the overall network very clearly illustrates the internationalization tendency during the early 1980s.51 Finally, we see some one-on-one partnerships and a separate research cluster consisting of PerfectData, Permabyte Magnetics, and Polaroid which announced a joint venture in 1983 to develop and market a premium line of floppy disks.52


The growth of the microcomputer segment went forward during the period 1985-1989 and became largely dependent on external economies. External economies became very significant in the microcomputer industry because no single firm was able to develop its capabilities as fast as the decentralized market could.53 In addition to external economies, the PC industry can be characterized by its modular nature. Modularity allows components, peripherals, and software to be designed independently, and integrated into the final PC.54 Because the PC is a modular product it is possible for companies to specialize in one industry segment and concentrate on only a few activities.55 For example, Compaq focused mainly on PCs, HP on peripherals such as printers, and Sun Microsystems on workstations. Intel and Microsoft dominated the microprocessor and operating systems markets. So, the modular nature of the market in combination with rapid innovation resulted in increased technological

51

Farok J. Contractor and Peter Lorange, Cooperative strategies and alliances (Oxford, 2002); John Dunning, Multinational enterprises and the global economy (Workingham, 1993); Michael Yoshino and Srinivasa Rangan Strategic alliances (Boston, 1995). 52 David H. Ahl, “1984 Winter consumer electronics show,” Creative computing 10 (1984): 132. 53 Langlois, ”Creating external capabilities: innovation and vertical disintegration in the microcomputer industry.” 54 James Curry and Martin Kenney, “Beating the clock: corporate responses to rapid change in the PC industry,” California Management Review 42 (1999): 8-36. 55 Kenneth L. Kraemer and Jason Dedrick, “Globalization of the personal computer industry: trends and implications,” Center for Research on Information Technology and Organizations (California, 2002).

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uncertainty, as companies were involved in only certain technological activities, which forced them to cooperate extensively in order to bring their products to the market.56 Consequently, we recognize a relatively dense network in the period 1985-1989 (see figure 6) dominated by major US companies such as IBM, HP, DEC, Intel, and Sun Microsystems. This is consistent with the technological and market dominance of US companies in the computer industry at that time.57 Within the network, these companies were important mediators in the information flows between different partners. Especially Sun Microsystems appears to have taken full advantage of this modularity and opened its system to others. On top of that, it relied on outside suppliers for key components and licensed its technology in an effort to widen its impact on the industry.58 European firms had only limited success in the PC industry, for the same reasons as they had little success in the minicomputer industry. They entered late into the PC market where American manufacturers already had a first mover advantage as these companies had quickly entered the European market.59 Examples of late entrants are Nixdorf and Siemens, which had several internal weaknesses such as the overly broad portfolio of their businesses, their narrow internal technological competencies, and their limited innovative capabilities.60 Olivetti was somewhat of an exception as the company clearly followed a strategy of international R&D partnerships to support and strengthen its entry into the microcomputers segment during the 1980s. Figure 6 shows that Olivetti indeed played a role with respect to the mediation of information flows between different partners of the network.

56

Langlois, ”Creating external capabilities: innovation and vertical disintegration in the microcomputer industry.” 57 Duysters, “The dynamics of technical innovation.”; Malerba, Nelson, Orsenigo and Winter, “’Historyfriendly’ models of industry evolution: the computer industry.” 58 Richard Langlois, Cognition and Capabilities: Opportunities seized and missed in the history of the computer industry (New York, 1994). 59 Bresnahan and Malerba, “Industrial dynamics and the evolution of firms’ and nations’ competitive capabilities in the world computer industry.”; Chandler, “Scale and scope – The dynamics of industrial capitalism.” 60 Bresnahan and Malerba, “Industrial dynamics and the evolution of firms’ and nations’ competitive capabilities in the world computer industry.”

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Japanese companies remained vertically integrated and relied on domestic suppliers for their components. Although this was a strength in the mainframe era, it became a big disadvantage in the PC era61 as it generated few incentives to enter into a larger number of R&D partnerships. Another reason for the limited presence of Japanese firms both in the PC industry and the network of R&D partnerships is, like in Europe, found in the lack of entrepreneurial startup companies, such as Apple and Compaq, which created much of the global PC industry that started in the USA.


In the 1990s the structure of the computer industry became even more disintegrated and globally organized than in the 1980s. The continued disintegration of the industry was mainly due to the fact that companies started to focus on their core competencies and outsourced many other activities to contract manufacturers.62 We already saw some examples of OEM in the 1980s but this was confined to a few market segments. In the 1990s contract manufacturing spread to all segments in the industry and included large global companies that provided all elements of manufacturing and manufacturing services.63 IBM and other manufacturers drove the global organization of the industry, by setting up production facilities around the world. Production facilities for hardware (especially disk drives) were set up in Singapore, Taiwan became a supplier for components and peripherals, and Korea was an important supplier of high-volume components such as memory chips.64 In addition, labor-

61

Kenneth L. Kraemer and Jason Dedrick, “Behind the curve: Japan’s PC industry,” Center for Research on Information Technology and Organizations (California, 1996). 62 Ted G. Lewis, “HP means high-powered: future business, side A,” IEEE Computer 28 (1995): 6-8. 63 Boy Lüthje, “The IT industry: labor flexibility, production networks, and the global downturn,” Asian Labour Update spring (2003). 64 Kraemer and Dedrick, “Globalization of the personal computer industry: trends and implications.”

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intensive activities were relocated to low-wage locations such as Thailand, Malaysia, and China.65 In correspondence with the disintegrated, globally organized industry in the 1990s, the top of figure 7 shows a large and dense R&D network consisting of almost 160 research partners that were nearly all connected to each other by numerous direct and indirect ties. An outstanding feature of the network, in line with the global structure of the industry, is that there were numerous R&D partnerships that involved companies from the Triad: US, Japan, and Europe. This reflects the international advantage of these countries with respect to the presence of strong technological knowledge and capabilities. However, with the exception of some Korean firms, such as Daewoo, Hyundai, and Samsung, newly industrialized countries (i.e. Taiwan, Singapore, and Malaysia) and less developed countries (i.e. Thailand) had little or no involvement in joint R&D partnerships. Hence, although the structure of the computer industry had become more globalized during the early 1990s, many core activities such as R&D and software development were still concentrated in the US and to a lesser extent in Japan and Europe.66 Another interesting aspect of the network in the period 1990-1994 is that it is characterized by a relatively large number of tightly connected couples of partnering firms that are engaged in two or more R&D partnerships. Finally, at the bottom right of figure 7 we observe an isolated R&D cluster consisting of mainly US companies. Several of these companies, i.e. Planar Systems, Photonics Systems, Tektronix Inc., OIS, and Standish Industries were part of the American Display Consortium that was formed in 1992 to develop color flat-panel display technology for computers. Although this network is quite dense, participating companies appear disconnected from knowledge generated through R&D partnerships outside their cluster. 65 66

Kraemer and Dedrick, “Globalization of the personal computer industry: trends and implications.” Kraemer and Dedrick, “Globalization of the personal computer industry: trends and implications.”

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In the second half of the 1990s we witness a shift in focus from hardware, which became more and more a commodity product, to software and services. This shift was spurred by three developments. The first development was the widespread adoption of the internet and the use of e-commerce by PC manufacturers and customers.67 The use of the internet stimulated the growth of direct sales companies such as Dell and reinforced their competitiveness.68 Market pull became the key word instead of market push and services became important vehicles to satisfy the customer. Another factor that stimulated the growth of the software and service industry was the rapid decline in PC prices because of decreasing component costs and the shift of manufacturing to low-cost locations.69 Finally, there was an acceleration in the rate of product cycles, which made the hardware segment less attractive.70 The network in the period 1995-1999 (see figure 8) shows a dense, well-connected network where cooperation is mainly concentrated at the right hand side of figure 8. Nearly all firms in this dense research network were either directly or indirectly connected to each other. We observe only a small number of one-on-one partnerships at the right hand side of the figure. The importance of the software and services industry becomes visible in figure 8 where packaged software providers and service companies such as Oracle, SAP, and Novell have become part of the dense network. In addition we see an increased use of many repeated

67

Kenneth L. Kraemer and Jason Dedrick, “The role of information technology in transformation of the personal computer industry,” Center for Research on Information Technology and Organizations (California, 2003). 68 Martin Kenney and James Curry, “We all want to be like Mike: the internet and the personal computer value chain,” in the BRIE-IGCC E-conomy Project, Tracking a Transformation: E-Commerce and the Terms of Competition in Industries (Washington D.C., USA, 2000); Kenneth L. Kraemer, Jason Dedrick and Sandra Yamashiro, “Refining and extending the business model with Information Technology: Dell Computer Corporation,” Center for Research on Information Technology and Organizations (California, 2000). 69 Dedrick and Kraemer, “The impacts of IT on a firm and industry structure: the personal computer industry.”; Mazzucato, “The PC industry: new economy or early life-cycle?.” 70 Dedrick and Kraemer, “The impacts of IT on a firm and industry structure: the personal computer industry.”

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ties by the two largest software manufacturers at that time: IBM and Microsoft. Examples of these repeated ties include IBM and Apple, IBM and Siemens, IBM and AT&T, Microsoft and Intel, and Microsoft and HP.


Important network players in the computer industry In the above, we provided an insight into the historical changes in the network structure of a large number of R&D partnerships in the international computer industry. Besides this aggregate level, it is useful to study the importance of leading individual network participants for the overall structure of the network. For a first impression of the role played by the top ten firms with the most R&D partnerships in computers during the periods 1970-1974, 19751979, 1980-1984, 1985-1989, 1990-1994, and 1995-1999, we refer to table 1.

----------Insert table 1 about here----------

Our perception of the role of leading network participants with most R&D partnerships in the computer industry is heavily influenced by the understanding of its transition through industry-specific dynamics in terms of the change from the old computer industry towards the new computer industry.71 This distinction is quite similar to the one made by Grove72 who differentiates the computer industry into an older, vertical computer industry and a new, horizontal computer industry. The old or vertically integrated computer industry (mainframe and minicomputer era) was dominated by firms that integrated all competencies and based their competitive 71

Bresnahan and Malerba, “Industrial dynamics and the evolution of firms’ and nations’ competitive capabilities in the world computer industry.” 72 Andrew S. Grove, Only the paranoid survive (New York, 1996).

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advantage on complete computer product offerings. Due to the power of these large vertically integrated incumbents, the industry was characterized by a highly concentrated market structure.73 When, in the early 1980s, the PC industry emerged from the pre-existing markets for mainframe computers and minicomputers, few changes took place in the old computer market structure. The most important reason for this continuation of the concentrated market structure is the fact that important innovations mainly enhanced the existing competencies and the lead of companies such as IBM.74 It is uncertain as to when exactly the real shift in the computer industry occurred. However, around the second half of the 1980s innovation in the computer industry became more of the competence-destroying type, rendering the competencies of incumbents more and more obsolete.75 This marked the beginning of the industrial transformation towards the new computer industry accompanied by radical innovations that allowed new entrants to gain more influence over the innovation process.76 Besides the fact that these new entrants gained more control over the innovation process, we also witness a higher degree of competitive innovation driven by the large spread of innovative activities over an extensive number of coexisting firms.77 These firms were distributed among a set of horizontal layers such as the chip layer, the computer layer, the operating system layer, the application software layer, and the sales and distribution layer.78 Within the chip layer, suppliers of the Intel-architecture competed with companies such as Motorola. In the computer layer we find for example, Compaq, Dell, IBM, and Hewlett-Packard. Established operating systems consisted of DOS (1980s) and Windows (1990s) from Microsoft, OS/2 from IBM, and Mac OS from Apple.

73

Mazzucato, “The PC industry: new economy or early life-cycle?.” Mazzucato, “The PC industry: new economy or early life-cycle?.” 75 Michael Tushman and Philip Anderson, “Technological discontinuities and organizational environments,” Administrative Science Quarterly 31 (1986): 439-465. 76 Mazzucato, “The PC industry: new economy or early life-cycle?.” 77 Bresnahan, “The changing structure of innovation in the computer industry, America’s Industrial Resurgence: an overview.” 78 Grove, “Only the paranoid survive.” 74

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Finally, there were numerous application software programs (i.e. Word, Wordperfect, etc.) present in the market. Based on the vertical-to-horizontal transition in the computer industry, we can expect that the central role of vertically integrated companies in the research network, is likely to be most obvious during the first three periods (1970-1974, 1975-1979, 1980-1984). However, with the disappearance of the vertical industry structure, as a result of Schumpeterian creative destruction, established vertically integrated mainframe producers are expected to lose their control over the innovation process in favor of new entrants. In other words, existing incumbents should become less important players with respect to the use of inter-firm R&D partnering in the latter periods (1985-1989, 1990-1994, 1995-1999) while new entrants become more important. In the following, we will analyze to what extent established incumbents and/or new entrants play an important role in R&D partnership networks in the computer industry. During the early years, from 1970-1974, the listing of top ten R&D partnering companies consists mostly of large, vertically integrated companies present in the mainframe computer industry of that period (see table 1). Besides the horizontal Japanese keiretsus (DKB, Mitsubishi, and the Mitsui Group), we can classify the most active players in three distinct types of companies, that were already introduced in the above: office equipment producers (Sperry), electronics firms (Bull, Siemens, ICL, AEG, and Philips) and a new firm (CDC). The five electronics firms in combination with the new firm all belonged to the same research network consisting of US and European R&D partnerships (see figure 3). In the period 1975-1979, the leading electronics companies from Europe disappeared from the listing of top ten R&D partnering companies. In comparison with the previous period there was now only one European firm present in the listing, namely Olivetti. After the collapse of the mechanical and electromechanical office machinery market of the 1970s, this

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firm re-entered the computer industry in 1978.79 With its re-entrance into the industry, Olivetti also occupied a place on the list of firms with the most R&D partnerships and it improved its position on this list in later years. The Japanese companies increased their number of R&D partnerships and climbed towards the top of the listing. We also see the entrance of a fourth leading Japanese keiretsu, namely the Fuyo Group. Finally, large vertically integrated firms from the US, such as Burroughs, Tandy, and Honeywell entered the listing and became central players in this network of R&D partnerships in the computer industry. The pattern that we observe for the period 1980-1984 is not that different from the previous period, 1975-1979. Vertically integrated firms, mainly from the US or Japan, remained the most important players within the network. The strong presence of Japanese firms, as already noted on the previous section, was largely due to the rapid growth of R&D partnerships with US companies through which Japanese companies tried to link-up to the technological knowledge base of their competent US partners. The transition from the old computer industry towards the new computer industry became especially noticeable during the period 1985-1989, when new entrants, such as Sun Microsystems, Sequent Computer Systems, Intel, and Apple Computer were steadily becoming more important. Within the list of top ten firms with most R&D partnerships in computers, we also immediately recognize the division into horizontal layers. Within the operating system, Sun Microsystems and Sequent Computer Systems were among the leading makers of UNIX-based servers, while Apple competed with its Mac OS. In addition, the chip layer was represented by Intel. In contrast to our findings for the previous period that showed the strong positions held by large integrated firms in the rank order of leading network participants, this group no 79

Bresnahan and Malerba, “Industrial dynamics and the evolution of firms’ and nations’ competitive capabilities in the world computer industry.”

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longer played a role of importance during the period 1985-1989. The increasing significance of new entrants becomes also clear when looking at the R&D network in figure 6 where a number of these companies, such as Sun Microsystems, Sequent Computer Systems, and Intel had become important intermediaries of knowledge flows through R&D partnerships. In congruence with the very dense network structure visualized in figure 7, the most important players had entered into very large numbers of R&D partnerships during the period 1990-1994. Apple, for example had formed 27 new R&D partnerships during this period, in comparison with five R&D partnerships in the previous period (see table 1). Also IBM became highly active in the R&D network with 23 new R&D partnerships in comparison with four new partnerships in the previous period. If we take a closer look at figure 7, we also observe that all firms in the listing of most important players are located close together at the left hand side of the network. Finally, many cluster members were connected to each other through more than one tie, such as for example Sony and Tosbiha, Philips and Thomson, Sony and Apple, Toshiba and IBM, Apple and Bull, Philips and Sony, and Toshiba and Sun Microsystems. This clearly illustrates the evolvement of the network era in which the new entrants became nodal players, embedded in a dense research network with many participants and numerous repeated ties. Although the period 1995-1999 shows a substantial drop in newly made R&D partnerships in the computer industry, the partnerships undertaken by the most important players stayed on average at a number that is comparable to the number from the previous period (see table 1). This could indicate that, at least for the nodal players in the network, consolidation pressures (i.e. slow growth rates, decreasing prices, and intensive competition) were no obstacle for investing a lot of time and energy in R&D cooperation, even though the network at the left hand side of figure 8 became less dense. Companies such as IBM, Apple, Siemens, Hewlett Packard, Intel, Compaq, Microsoft, and Motorola remained important

30

mediators of numerous knowledge flows between network participants throughout the second half of the 1990s. In that period, a prominent facet of the listing of top ten firms with most R&D partnerships is that it consists completely of US companies, with the exception of Siemens. This clearly illustrates the strength of US companies during the network era.80 In addition, even more clearly than for the previous period, we recognize the horizontal structure of the computer network industry in the overall network of R&D partnerships established during the second half of the 1990s. We find IBM, Hewlett-Packard, and Compaq in the computer layer, Apple and Microsoft within the operating systems layer, and Intel, Motorola, and Texas Instruments in the chips layer.

CONCLUSIONS Our analysis is centered around the transition of the old, vertical computer industry into the new, horizontal computer industry, in the context of networks of R&D partnerships. Going from old to new, we witness a slow but steady increase in the number of R&D partnerships that is mainly due to an increase in the number of contractual forms of R&D partnering at the expense of equity-based partnerships. This transition is highly indicative of a clear change in the specific structures of inter-firm R&D networks. While the vertical computer industry was characterized by relatively sparse and disconnected networks, the horizontal industry shows a relatively dense network structure whereby partners are either directly or indirectly connected to each other. The most dominant players within the vertical network structure were the large established mainframe and minicomputer producers. However, along with the transition around the second half of the 1980s, we see an increasing importance of new entrants, which developed into dominant players with multiple partnerships.

80

Bresnahan and Malerba, “Industrial dynamics and the evolution of firms’ and nations’ competitive capabilities in the world computer industry.”

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As the computer industry changed from a vertically integrated industry towards a more horizontally organized industry, R&D partnerships became a major mechanism for increasing the flexibility of companies in terms of getting access to a wide variety of external R&D resources and new technologies. The preference for flexible access to new R&D resources and the flexibility in the choice of partners is also reflected in the preference for particular modes of R&D collaboration. Traditionally, vertically integrated producers preferred internal control or shared control through equity partnerships, such as joint ventures, rather than engage in partnerships through other arrangements that gave little formal control. By enlarging the number of flexible contractual partnerships at the expense of more complex equity partnerships, firms in the computer industry extended their ability to explore and experiment with several new technologies and external R&D resources through a multitude of partnerships without having to engage in time consuming negotiations on fullblown new ventures through equity-sharing arrangements and joint ownership with other companies. In other words, these flexible networks of R&D partnerships by means of R&D pacts and joint development agreements with a variety of firms provide companies ample access to external R&D and new technologies, sharing these resources with a changing set of partners. One thing that remained the same throughout the whole period of our analysis is the continuous role of US companies as nodal network players in the computer industry. In the early periods, the US firm IBM was the most important company in the mainframe segment. The reason why it did not appear in the R&D networks, is that IBM had complete control over its innovation process and relied mainly on internal economies. During that early period, IBM could take full advantage of economies of scale in R&D and production and benefit

32

from economies of scope in R&D and in related products such as software.81 The challenge to IBM’s leadership in the minicomputer and microcomputer segments came mainly from US firms, such as DEC, Honeywell (before it left the industry), and Tandy that were also active in these R&D partnership networks. Finally, during the later network era, when US companies turned out to have a clear comparative advantage due to the presence of strong complementarities and local knowledge externalities,82 US companies continued to dominate the networks of R&D partnerships.

81

Chandler, “The United States: engines of economic growth in the capital-intensive and knowledge-intensive industries.”; Chandler, “Inventing the electronic century: the epic story of the consumer electronics and computer industries.” 82 Bresnahan and Malerba, “Industrial dynamics and the evolution of firms’ and nations’ competitive capabilities in the world computer industry.”

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Transformation: E-Commerce and the Terms of Competition in Industries, Brookings Institution, Washington D.C. Kraemer, K. L. and J. Dedrick, J, 1996, Behind the curve: Japan’s PC industry, Center for Research on Information Technology and Organizations (CRITO), University of California, Irvine. Kraemer, K. L. and J. Dedrick, 1998, Asia’s computer challenge: threat or opportunity for the United States and the World?, Oxford University Press, New York. Kraemer, K.L., Dedrick, J. and S. Yamashiro, 2000, Refining and extending the business model with Information Technology: Dell Computer Corporation, Center for Research on Information Technology and Organizations (CRITO), University of California, Irvine. Kraemer, K.L. and J. Dedrick, 2002, Globalization of the personal computer industry: trends and implications, Center for Research on Information Technology and Organizations (CRITO), University of California, Irvine. Kraemer, K. L. and J. Dedrick, 2003, The role of information technology in transformation of the personal computer industry, Center for Research on Information Technology and Organizations (CRITO), University of California, Irvine. Kruskal, J.B. and M. Wish, 1978, Multidimensional scaling, Sage, Beverly Hills (CA). Langlois, R. N., 1990, Creating external capabilities: innovation and vertical disintegration in the microcomputer industry, Business and economic history, vol. 19, pp. 93-102. Langlois, R. N., 1994, Cognition and Capabilities: Opportunities seized and missed in the history of the computer industry, Stern school of business, New York University, New York.

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Leban, R., Lesourne, J., Oshima, K. and T. Yakushiji, 1989, Europe and Japan facing high technologies, Economica, Paris. Lewis, T.G., 1995, HP means high-powered: future business, side A, IEEE Annals of the History of Computing, pp. 6-8. Lüthje, B., 2003, The IT industry: labor flexibility, production networks, and the global downturn, Asian Labour Update spring 2003. Malerba, F., Nelson, R., Orsengico, L. and S. Winter, 1999, ‘History-friendly’ models of industry evolution: the computer industry, Industrial and Corporate Change, 8, pp. 340. Mariti, P. and R.H. Smiley, 1983, Cooperative agreements and the organization of industry, Journal of Industrial Economics, 31, pp. 3437-3451. Mazzucato, M., 2002, The PC industry: new economy or early life-cycle?, Review of Economic Dynamics, 5, pp. 318-345. Methé, D. T., Toyama, R., and J. Miyabe, 1997, Product development strategy and organizational learning : a tale of two PC makers, The Journal of Product Innovation Management, 14, pp. 323-336. Narula, R. and J. Hagedoorn, 1999, Innovating through strategic alliances: moving towards international partnerships and contractual agreements, Technovation, 19, pp. 283-294. Obleros, F.J. and R.J. MacDonald, 1988, Strategic alliances: managing complementarity to capitalize on emerging technologies, Technovation, 7, pp. 155-176. OECD, 1986, Technical cooperation agreements between firms: some initial data and analysis, OECD, Paris. OECD, 1992, Technology and the economy, OECD, Paris.

38

Raphael, D.E., 1989, The changing structure of the global information industry, SRI International, Report no. 807. Reich and Mankin 1986, Joint ventures with Japan give away our future, Harvard Business review, 64, pp. 78-86. Senker, J., 1998, Biotechnology and competitive advantage: Europe’s firms and the US challenge, Edward Elgar, Cheltenham. Takahashi, 1996, A brief history of the Japanese computer industry before 1985, IEEE annals of the history of computing, vol. 18, no.1, pp 76-79. Tulder van R. and G. Junne, 1988, European multinationals in core technologies, Wiley, Chichester. Tushman, M. and P. Anderson, 1986, Technological discontinuities and organizational environments, Administrative Science Quarterly, 31, pp. 439-465. Weston, J.F., 2001, Mergers and Acquisitions as adjustment processes, Journal of Industry, Competition and Trade, 1, pp. 395-410. Wikipedia, September 2005, the free encyclopedia, http://en.wikipedia.org. World Investment Report, 2000, Cross-border mergers and acquisitions and development, United Nations, New York and Geneva. Yoshino, M. and U. Rangan, 1995, Strategic alliances, Harvard Business School Press, Boston.

39

APPENDIX I: DATA AND SAMPLE For our analysis, we make use of data on inter-firm R&D partnerships. These data are taken from the MERIT-Cooperative Agreements and Technology Indicators (CATI) information system83. This databank contains information on nearly 10,000 cooperative agreements in various sectors, ranging from high technology sectors, such as information technology and biotechnology, to less technology intensive sectors, such as chemicals and heavy electrical equipment. Cooperative agreements are defined as mutual interests between independent industrial partners that are not linked through majority ownership. In the CATI database, only those agreements are being recorded that involve either a technology transfer or some form of jointly undertaken R&D. Information is also collected on joint ventures in which new technology is received from at least one of the partners, or on joint ventures having some R&D program. Other types of agreements such as production and marketing alliances are not included. Agreements formed between companies and governmental or academic institutions are generally not included in the database unless they involve at least two commercial companies. The current paper focuses on those partnerships that were established in the period 1970-1999. In the CATI databank a total of 706 global R&D agreements in the computer industry involving 391 firms were recorded during this time frame. Our data include equity agreements, joint ventures, as well as non-equity alliances that consist of joint R&D pacts and joint development agreements. The data excludes agreements that are established within the context of national and international, government sponsored, R&D cost-sharing programs. For our purpose, the most relevant information for each partnership is the number of companies involved, their names as well as the year in which the agreement was established.

83

John Hagedoorn, “Understanding the rationale of strategic technology partnering: inter-organizational modes of cooperation and sectoral differences,” Strategic Management Journal 14 (1993): 371-385.

40

APPENDIX II: NAJOJO To facilitate our analysis and visualize the different R&D networks that have come into existence during each of the five-year sub-periods examined in this paper, we make use of our own network visualization software tool Najojo. As existing visualization software has serious difficulties in handling this kind of large-sized research networks, we developed our own software. This tool, capable of visualizing large, dense networks involving more than 500 companies, was ultimately created by Johan Willekens. There are two separate input (text) files underlying the generation of networks in Najojo: one file holding the MDS coordinates for each of the individual companies participating in the network and one file holding all unique company pairs and their numbers of research partnerships. On the basis of the first input file, Najojo determines whether the particular network will be visualized in landscape (see for example figures 3-8) or portrait orientation (not applicable in this study). As a second step in the visualization process, the tool divides up the landscape in an X number of points. The firm coordinates held by the first input file are then mapped onto these points and visualized as dots. While creating this scatter plot, the program makes sure that the relations between dots are held constant and that dots belonging to different companies do not overlap. Thirdly, company labels are placed with the dots in such a way that they do not overlap with other labels or dots. Najojo variably determines the font size of company labels depending on network density and the number of companies participating in the network. Fourthly, on the basis of the second input file, Najojo visualizes the total number of partnerships entered into by all unique company pairs making up the network. The tool first identifies both research partners, i.e. the beginning and ending dots, and subsequently draws polybezier lines between these dots, making sure that these lines do not cross dots belonging to companies that are not part of the partnership. The type of line (dotted, solid, thick solid) can be determined by the user.

41

APPENDIX III: LISTING OF NETWORK PARTICIPANTS Company label 3COM 3M ACER ACME-CLE ACORN ADC-COM ADDAMAX ADOBE AEA-ENER AEG ALCA-AL ALGAR ALLIANT ALLIED-S ALPS AMDAHL AMP AMSTRAD AMX ANCOR AND ANDATACO APOLLO APPDATAR APPLE APRICOT ASCEND-C ASCII ASHTON-T AST AT&T AURAGEN AUTHOR AVID-T AXISAB BABC-DIS BASF BCE BULL BURROUGH CAMBR-AN CAM-DT CARLSON CASIO CBS CDC CDF

Company name 3Com Corp. Minnesota Mining & Mfg. Co. (3M) Acer Corp. Acme Cleveland Acorn Computer Group Plc ADC Telecommunications Inc Addamax Inc Adobe Systems Inc AER Energy Resources AEG Alcatel (Alsthom) Algar Group Ltd Alliant Computer Systems Allied-Signal Inc. Alps Electric Co. Amdahl Corp. AMP Inc. Amstrad Plc. AMX Corp Ancor Communications Inc. AND Andataco Corp. Apollo Computer Applied Data Research (ADR) Apple Computer Inc. Apricot Computers Plc. Ascend Communications Inc Ascii Corp. Ashton-Tate AST Research Inc. American Telephone & Telegraph Co. Auragen Systems Authorware Inc Avid Technology Inc Axis AB Babcode display products Basf A.G. BCE Inc Bull Groupe S.A. Burroughs Cambridge Animation Cambridge Display Technology CDT Carlson Holding Inc Casio Computer Co.Ltd. CBS Corp Control Data Corp.(CDC) Charbonnage de France 42

CEIEC CHANTAL CHAP-TEC CHISHOLM CHORUS CIPHER CIRRUS CISCO COGENT-R COLORAY COLOROCS COMMODOR COMPAQ COMPCONS COMP-NT COMPRESS CONCURR CONNER-P CONVERG CONVEX CORE-INT COROLLAR CORONA CRAG-TEC CRAY CRAYCOMP CREDIT-L CREO CSK CSPI DAEWOO DAIMLER DATABO DATA-GEN DATA-POI DATA-PRD DAVID-S DEC DEL&TOUC DELLCOMP DERWENT DESTINY DIALOGIC DIM-MEDI DKB DREA-SKG DSP DUPONT ECD EDINBURG

Ceiec Chantal Systems Corporation Chaparral Technologies Chisholm Corp. Chorus Systems S.A. Cipher Data Products Inc. Cirrus Logic Cisco Systems Inc Cogent Research Coloray Display Corp. Colorocs Commodore Int.Inc. Compaq Computer Corp. Computer Consoles Inc.(CCI) Computer Network Technology Compression Labs Inc. Concurrent Computer Corp. Conner Peripherals Convergent Technologies Inc. Convex Computer Core International Inc Corollary Inc Corona Data Systems Crag Technologies Inc Cray Research Cray Computers Credit Lyonnais Creo CSK CSPI Daewoo Corp. Daimler-Benz A.G. Databolin Data General Corp. Datapoint Corp. Data Products Corp. David Sarnoff Research Centre Digital Equipment Corp.(DEC) Deloitte & Touche Dell Computer Corp. Derwent Publications Ltd. Destiny Technology Dialogic Corp Dimensional Media Associates Dai-Ichi Kangyo Bank (DKB) Group Dreamworks SKG DSP-Group Du Pont de Nemours Energy Conversion Devices (ECD) Edinburgh Int. Investment Trust Plc

43

EFI ELBIT ELEC-ART EMERSON ENCAD ENCORE ENER-PS EPSON ERICSSON EUROPAY EVANS&S EXABYTE EXSYS FLASHPOI FLOAT-PS FORCE-C FORD FOREFRON FRIEND-A FRTELEC FUJI-PHF FUJITSU FUTABA FUYO GALLUS GATEWAY2 GE GEC GEMPLUS GENMAGIC GEOTEK GEOWORKS GESTETNR GETRONIC GM GMIC GOULD GRAPHTEC GROSSENB GTE HARRIS HARRISCS HEIZER HITACHI HOECHST HONEYWEL H-P HUTCH-T HYUNDAI IBM

Electronics for Imaging Inc Elbit Computers Electronic Art Emerson Electric Co. Encad Encore Computer Energizer Power Systems Epson Ericsson A.B., Telefon Europay International Evans & Sutherland Computer Corp Exabyte Exsys Inc FlashPoint Development Floating Point Systems Force Computers Inc. Ford Motor Co. Forefront Group Friends-Amis France Télécom S.A. Fuji Photo Film Co.Ltd. Fujitsu Ltd. Futaba Corp. Fuyo Group Gallus Holding AG Gateway 2000 Inc General Electric Co.(GE) GEC General Electric Co PLC Gemplus General Magic Geotek Communications Inc. Geoworks Inc. Gestetner Getronics General Motors Corp. General Microelectronics Corp. Gould Inc. Graphtec Grossenbacher Holding AG General Telephone & Electric (GTE) Harris Corp. Harris Computer Systems LTD Heizer Corp. Hitachi Ltd. Hoechst A.G. Honeywell Inc. Hewlett-Packard Co. Hutchinson Technology Inc Hyundai Corp. Int. Business Machines Corp.(IBM)

44

ICE ICI ICL ICOT IMATION IMP IMPACT INDIGO INFOCUS INFORMIX INS-ENG INTEL INTELLIG INTELLON INTERGRA INTERMET INTINTEC INTUIT INVENTEC INVISION IPS-SYST IT ITT KEYTRONX KOCH-IND KODAK KOMAG KOR-DATA KOZOKEIK KPCB KUBOTA KURTA KYOCERA LAPINE LEGEND-G LEXM-INT LGE LINK-T LOCK-M LSI LSILOGIC LTEL LUCENT-T LUCID LUCKY-G LUKON-FI MACRON2 MADGE MAGNA MARTIN-M

Integrated Computing Engines ICE Imperial Chemical Industries Plc. Int. Computers Ltd. (ICL) Icot Imation Corp Integrated Micro Products Impact Int.Ltd. Indigo N.V. In Focus Systems Inc Informix Corp. INS Engineering Corp. Intel Corp. IntelliGenetics Inc. Intellon Intergraph Corp Intermetrics Integrated Information Technology Intuit Inc Inventec Group Invision Technologies IPS Systems IT Solutions Inc Int. Tel.& Telegraph Corp.(ITT) Keytronics Koch Industries Inc. Eastman Kodak Co. Komag Inc. Korean Data Systems Kozokeikatu Engineering Inc. Kleiner Perkins Claufield & Byers Kubota Corp. Kurta Corp Kyocera Corp. LaPine Technology Legend Group Lexmark International Group LG Electronics Inc. Link Technologies Lockheed Martin Co Lear Siegler Inc. LSI Logic LTEL Corp Lucent Technologies Inc Lucid Inc Lucky Group Ltd. Lukon Financial-Industrial Group Macronix International Co Madge Networks Ltd Magna Corp. Martin-Marietta Corp. 45

MASPAR MATRA MATSUSHT MATTEL MAXTOR MEDLOG MEIKO MEMOREXT MENTOR MICROSFT MICROWAR MIP-EF MIPS-CS MIT MITAC MITSUBIS MITSU-E MITSUI MITSUMI MOB-TTC MODI MOTIF MOTOROLA NAIT NAM-TAI NAS NASA NASHUA NAT-SEMI NCR NCUBE NEC NETCOMM NETPOWER NETSCAPE NETW-CD NETWCORP NETW-ET NEURALWA NIIAO NINTENDO NIP-MING NIXDORF NMB-TECH NOKIA NORSAM-T NOVELL NTT NUVISION NVIEW

Maspar computer corporation Matra S.A. Matsushita Elect.Industrial Co.Ltd. Mattel Inc Maxtor MEDIA LOGIC Meiko Scientific Memorex Telex Mentor Graphics Microsoft Corp. Microware Systems Corp MIP Equity Fund Mips Computer Systems MIT Massachusettes Ins. of Techn. Mitac Mitsubishi Corp Mitsubishi Electric Corp Mitsui Group Mitsumi Electric Co. Ltd. Mobile Telecommuni. Technologies Co Modi Motif Motorola Inc. N A I Technologies Inc Nam Tai Electronics Inc. National Advanced Systems (NAS) Nasa Nashua Corp. National Semiconductor Corp. National Cash Register Corp.(NCR) Ncube Nippon Electric Corp.(NEC) Netcomm Ltd Netpower Inc Netscape Communications Corp Network Computing Devices NCD Network Systems Corp Network Equipment Technology Neuralware NIIAO Nintendo Co. Ltd Nippon Mining Co.Ltd. Nixdorf NMB Technologies Inc Nokia Oy. Norsam Technologies Novell Inc. Nippon Telegraph & Telephone (NTT) Nuvision technologies Nview Corp

46

OBM OCE-VDG OIS OLIVETTI OPTITEK OPTOEL OPUS ORACLE ORBITA PACK-BEL PANDA-EG PARK-E PARSYTEC PERF-DC PERMABYT PERQ PHILIPS PHOTONCS PICTELCO PIONEER PIXEL PLANAR PLESSEY POLAROID POLYCOM POWERSOF PRIMAGRA PROXIM PROXIMA PYRAMID QSSL QUALCOM QUANTA-C QUANTUM R&R RAYTHEON READ-RIT REFLECT RICH RIDGE ROBOSYS ROBOTRON ROCH-PHO ROCK-INT ROCKWELL SAABSCAN SAGEM SAMSUNG SANDIA SAP

Optical Business Machines Océ-VanDerGrinten N.V. Optical Imaging Systems Olivetti SpA. Optitek Opto Electronics&Systems Laboratory Opus Systems Oracle Corp. Orbita Packard Bell Electronics Inc Panda Electronics Group Company Park Electrochemical Parsytec Perfect Data Corp. Permabyte Magnetics Perq Systems Philips Gloeilampenfabrieken N.V. Photonics Picturetel corporation Pioneer Electronic Corp. Pixel International Planar Systems Inc Plessey Co. Polaroid Polycom Inc Powersoft Primagraphics Proxim Inc Proxima Corp Pyramid Technology Corp. QNX Software Systems (QSSL) Qualcomm Inc. Quanta Computers Quantum Chemical Corp. Reynolds & Reynolds Raytheon Co. Read-Rite Corp Reflection Technology Rich Inc. Ridge Computers Robotique Systeme Robotron Rochester Photonics Rockwell International Corp Rockwell Int.Corp. Saab-Scania Sagem S.A. Samsung Co.Ltd. Sandia National Laboratories SAP A.G.

47

SC-AI SC-ATLAN SCHN-FRG SCO SCRIPTEL SDL SEAGATE SECOMSA SEIKO-E SEQUENT SEQUOIA SHARP SH-FIELD SHOWA-EL SH-PT SIDIAMON SIEMENS SIERRA-W SIGNAL SILICONG SILSTOR SIROS-T SMART-MT SONY SPC SPECTRAV SPERRY SP-IMC SSPT-Z STANDISH STANFTEC STC STORAGE STRATUS SUMITOMO SUMMAGRA SUN-MICR SUPERMAC SUPERSCA SYBASE SYMBIOS SYMBOLIC SYMBOL-T SYNOPSYS SYNTRON TADPOLE TANDEM TANDON TANDY TAO-SYS

Science Applications Int. Corp Scientific Atlanta Inc Schneider Rundfunkwerke A.G. Santa Cruz Operation (SCO) Scriptel Holdings Inc SDL Inc Seagate Technology Inc. Secomsa Seiko Epson Corp. Sequent Computer Systems Inc. Sequoia Systems Sharp Corp. Shanghai Field Showa Electric Wire & Cable Co.Ltd. Shanghai Post&Telecommunications SI Diamond Technology Inc Siemens A.G. Sierra Wireless Inc Signal Companies Inc. Silicon Graphics Inc SGI Silstor Siros Technologies Inc. SMART Modular Technologies Sony Corp. Software Productivity Consortium Spectravideo Inc. Sperry Spacetec IMC South Softw. Park Technology Zhuhai Standish Industriues Stanford Telecommunications Inc Standard Telephone Co. Storage Technology Corp.(Storagetek) Stratus Computer Sumitomo Corp Summagraphics Corp Sun Microsystems Supermac Superscape VR Plc Sybase Inc Symbios Inc. Symbolics Symbol Technologies Inc Synopsys Syntronics Tadpole Technology Plc Tandem Computers Inc Tandon Corp. Tandy Corp. Tao Systems

48

TATA TEIJIN-A TEKTRONX TELE-COM TELESIS TELEX TERASTOR TETRA-P TEXTRON THINKMAC THOMSON THORN-EM TI TIMEWAR TOKYO-K TOPOLOGX TORCH TOSHIBA TRIAD-S TRIGEM TRIPOS TULIP UNISYS UN-TECHN USAF US-ROBO VCIT VERIPHON VERITAS VERTIMAG VISA-ISO VISI VISIONEE VISUAL VLSI VTEL WAVEFRNT WESTINGH WINDOWS WYSE XEROX ZENITH ZENITH-E ZONIC

Tata Engineering & Locomotive Co. Teijin Advanced Products Tektronix Inc. Tele-Communications Telesis Systems Corp. Telex TeraStor Corp Tetra Pak Alfa Laval Group Textron Inc. Thinking Machines Corp Thomson S.A. Thorn-EMI Plc. Texas Instruments Inc. Time Warner Inc Tokyo Keiki Co.Ltd. Topologix Torch Computers Toshiba Corp. Triad System Corp TriGem Tripos Inc Tulip Computers Unisys Corp. United Technologies Corp.(UTV) USAF Rome Laboratory US Robotics SA Virginia's Centre for Innovative Te Veriphone Veritas Software Corp. Vertimag Visa International Service Organisation Visi Visioneer Inc Visual - the Gipsi SA VLSI Technology VTEL Corp Wavefront Technologies Westinghouse Electric Corp Windows Wyse Technology Xerox Corp. Zenith Electronics Corp Zenith Electronics Corp Zonic Technical Labs.

49

Table 1. A comparison of the top ten firms with the most R&D partnerships in computers in 1970-74, 1975-79, 80-84, 85-89, 90-94, and 95-99 (numbers in brackets). 1970-74 1. Siemens

1975-79 (7) Sperry

1980-84 (5) DKB

(11)

2. Bull

(6) Mitsui

(3) CDC

(8)

3. AEG

(5) Mitsubishi

(3) Burroughs

(7)

1985-89 Sun Microsystems Sequent Computer Systems DEC

(9)

1990-94 Apple Computer IBM

(7)

4. ICL

(5) Fuyo

(3) IBM

(7)

Intel

5. Mitsubishi

(3) DKB

(3) Matsushita

(7)

6. CDC

(2) Burroughs

(3) Sumitomo

7. DKB

(2) Tandy

8. Mitsui

(10)

(27)

1995-99 IBM

(27)

(23)

HewlettPackard

(20)

Thomson

(17)

Intel

(17)

(7)

Philips

(16)

(14)

Olivetti

(7)

Sony

(16)

Compaq Computer Microsoft

(7)

Matsushita

(6)

Bull

(15)

Siemens

(10)

(2) Hitachi

(6)

Apple Computer

(5)

(14)

(2) Olivetti

(6)

Siemens

(5)

(13)

Apple Computer Eastman Kodak

(9)

(2) Honeywell

9. Philips

(2) CDC

(2) Philips

(6)

Sony

(5)

Sun Microsystems Compaq Computer Toshiba

(8)

10. Sperry

(2) Olivetti

(1) Honeywell

(5)

Thomson

(5)

DEC

(11)

Texas Instruments Motorola

Source: MERIT-CATI databank.

(12)

(12)

(8)

(7)

Figure 1. Growth of numbers of newly established R&D partnerships in the computer industry and their share (%) in all partnerships, 1970-99; source: MERIT-CATI. 60

0,18 0,16

50 0,14 40

0,12 0,1

30 0,08 0,06

20

0,04 10 0,02

Computers

Computers / Total

51

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

1987

1986

1985

1984

1983

1982

1981

1980

1979

1978

1977

1976

1975

1974

1973

1972

1971

0 1970

0

Figure 2. The share (%) of contractual modes in all newly established R&D partnerships in the computer industry, three year moving averages, 197099; source: MERIT-CATI.

100% 90% 80% 70% 60% 50% 40% 30% 20% 10%

52

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

1987

1986

1985

1984

1983

1982

1981

1980

1979

1978

1977

1976

1975

1974

1973

1972

1971

0%

HITACHI

DKB

HEIZER CDC NCR

ICL

CBS TOSHIBA BURROUGH

SUMITOMO

NIXDORF AEG SIEMENS BULL

HONEYWEL

FUYO

MITSUBIS

MITSUI

SPERRY

Figure 3. Inter-firm R&D partnerships amongst cooperating companies in computers, 1970-74; source: MERIT-CATI.

PHILIPS

HONEYWEL CDC

BULL

ICL

DATA-POI TANDY COMMODOR

HITACHI

FRIEND-A OLIVETTI

MATSUSHT

GEC DEC

SAABSCAN

FUYO MITSUBIS

VERTIMAG

UN-TECHN R&R

SPERRY MITSUI

TEIJIN-A

DATA-PRD

ZONIC TOSHIBA

AMDAHL

OBM SIEMENS DKB

TATA


BURROUGH

XEROX GE

LUCKY-G

INTEL IPS-SYST

ICOT

AT&T

HONEYWEL CHISHOLM

MITSUBIS 3M

SPECTRAV

RIDGE

OLIVETTI

SUMITOMO

BULL

BURROUGH CONVERG

TOKYO-K

TELESIS

IBM

PERMABYT TANDON

PERF-DC STC

POLAROID

SPERRY

FUYO MATSUSHT

TANDY

PERQ DUPONT

ALPS

STORAGE

DEC

PHILIPS SCHN-FRG

AMSTRAD

DKB

TOSHIBA

HITACHI SECOMSA DATA-GEN KOZOKEIK

CORONA

CDC

AURAGEN NIXDORF AMDAHL

SIGNAL

COMPCONS

SYNTRON APPDATAR TELEX

H-P

BASF ELBIT


STRATUS

TI

MEIKO

STC CONNER-P

ICI GM

MATRA FUJI-PHF

NAT-SEMI

NIP-MING

MIP-EF APRICOT

LAPINE

MIPS-CS

APOLLO

NCUBE

KYOCERA

PRIMAGRA

CONVEX MAXTOR SEQUENT

CRAY

GETRONIC

CIPHER

AT&T

COGENT-R

CDC

LINK-T

3M

CREO

FLOAT-PS

PHILIPS UNISYS

IMPACT

PYRAMID

SIEMENS

HITACHI

ENCORE

GESTETNR

OLIVETTI

KODAK

GOULD

BASF

SUN-MICR GE

ACER

NIXDORF

ORBITA

DKB

BURROUGH

PLESSEY DESTINY

THOMSON

MODI

CONVERG

CEIEC

ACORN

TOPOLOGX

SUMITOMO HONEYWEL

CSPI

TORCH

BULL

KUBOTA

INTEL

CONCURR

TEKTRONX

EMERSON THORN-EM

MENTOR

GMIC

FUYO

PARSYTEC TULIP DEC CDF

EVANS&S

TANDON

RICH

SAMSUNG

COMPAQ

H-P IBM

APPLE

MATSUSHT

TANDY

INTERGRA MICROSFT

SONY

TOSHIBA

SYMBOLIC


NAS

ERICSSON AT&T

NCR SYBASE UNISYS CONVEX ASHTON-T PIXEL DATABO ALLIANT MICROSFT KOCH-IND ALPS ELEC-ART STC NCUBE ACER DELLCOMP KPCB FUTABA RAYTHEON DSP NOVELL ENER-PS ZENITH-E TIMEWAR AUTHOR STRATUS CDC SYNOPSYS NAT-SEMI DAEWOO HYUNDAI CIRRUS ORACLE SUPERMAC LUCKY-G CSK NEURALWA NAIT FORCE-C DKB POWERSOF COMPRESS MADGE INTINTEC IMP TI COLORAY ADOBE PYRAMID NTT COMPAQ VISUAL WAVEFRNT SANDIA COROLLAR KUBOTA MASPAR DEC MICROWAR MIT DEL&TOUC ITT LUCID PICTELCO ALLIED-S SAMSUNG SILICONG CHORUS AMP SILSTOR QUANTUM LINK-T BABC-DIS THINKMAC SEQUOIA STORAGEINTERMET CRAY TANDEM EXSYS CRAYCOMP GESTETNR DERWENT OPTOEL LSI ZENITH NETW-ET SCO SUMITOMO NASA SIEMENS SUN-MICR INTELLIG MARTIN-M MEMOREXT MATSUSHT GENMAGIC REFLECT NETWCORP BULL VISI DAVID-S SPC OPUS H-P NINTENDO NASHUA THOMSON IBM INTERGRA SIDIAMON HARRIS GM PACK-BEL APPLE PARK-E COLOROCS EVANS&S INS-ENG EDINBURG TOSHIBA CORE-INT TADPOLE ROCKWELL AEA-ENER MOTOROLA CHANTAL MACRON2 HOECHST AST NIIAO OLIVETTI ROBOTRON USAF GALLUS EPSON SONY DAIMLER SC-ATLAN INFOCUS HITACHI PHILIPS SHARP VCIT KODAK TETRA-P TAO-SYS INFORMIX PIONEER WINDOWS FUYO AND CARLSON SAGEM FRTELEC ROBOSYS INTEL

TRIAD-S

ADDAMAX

MEDLOG

TEKTRONX

GROSSENB MAGNA TEXTRON


OIS

PLANAR PHOTONCS

STANDISH

SH-PT

CREDIT-L LOCK-M

SH-FIELD DIALOGIC SHARP INVISION

GTE

KODAK BULL

ROCH-PHO

ROCKWELL PANDA-EG

OPTITEK

NETW-CD ACORN

MOTOROLA

QUANTA-C

SAMSUNG

SSPT-Z DELLCOMP HUTCH-T

IMATION

EUROPAY

APPLE IBM

LGE FUJITSU MATSUSHT

SIEMENS

INTUIT ALPS SP-IMC TRIGEM SIDIAMON ITT FOREFRON SMART-MT SHOWA-EL KURTA ADC-COM TELE-COM GRAPHTEC NETCOMM AMX VERITAS ENCAD LUCENT-T NMB-TECH ANDATACO ASCEND-C KOMAG GATEWAY2 THORN-EM TI FLASHPOI WYSE SEIKO-E IT DIM-MEDI READ-RIT NAT-SEMI ICE SCRIPTEL PROXIM LSILOGIC CAM-DT HARRISCS NCUBE SUMMAGRA TRIPOS LEXM-INT EFI WESTINGH EXABYTE 3COM SUPERSCA GEOTEK SYMBIOS LUKON-FI GM US-ROBO OCE-VDG VLSI TANDEM PACK-BEL

MITSUBIS

AT&T

TOSHIBA

SIERRA-W

MITAC

SUMITOMO

3M

ANCOR

SYBASE

NOKIA SEAGATE

GEOWORKS

ACME-CLE

AXISAB SCO

INTELLON INVENTEC

MATTEL

COMPAQ

DEC

THOMSON

INFORMIX

SUN-MICR

STORAGE

GEMPLUS INTERGRA

SONY SAP H-P

INTEL EMERSON

ORACLE

POLYCOM INDIGO

KEYTRONX NETPOWER

MITSU-E

MOB-TTC

CISCO

DATA-GEN

AVID-T STANFTEC MICROSFT

SEQUENT

VERIPHON

COMP-NT

BCE HITACHI

POLAROID

CRAG-TEC ASCII SYMBOL-T

TERASTOR

NORSAM-T

ECD

SC-AI

VISA-ISO

SILICONG ALCA-AL NETSCAPE NTT NUVISION CAMBR-AN VISIONEE DREA-SKG MITSUMI PLANAR QUALCOM KOR-DATA LUCKY-G VTEL PROXIMA RAYTHEON ROCK-INT NVIEW LEGEND-G CHAP-TEC ADOBE NAM-TAI QSSL PHILIPS MOTIF LTEL FUTABA SIROS-T

ALGAR

SDL

XEROX

NEC

CASIO FORD


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