MIT Sloan Management Review

Corporate Strategy, Management of Technology and Innovation

 

Strategies to Turn Adversity into Profits

By Allan Afuah

January 15, 1999

A combination of efforts — technology licensing, defense of intellectual property, and judicious partnerships —helped firms protect profits and remain competitive.

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During the 1980s, the United States’ market share of semiconductor sales began to decline. Several explanations were advanced to explain the trend. For example, the MIT study Made in America attributed this decline to outdated strategies, short-term horizons, technological weaknesses in development and production, neglect of human resources, and failure of cooperation between government and industry.1 Other researchers attributed the sales decline to industry structure: the vertically integrated and diversified Japanese semiconductor firms had been cross-subsidized by downstream businesses, whereas U.S. semiconductor makers had arm’slength customer and supplier relations.2 Still others blamed the decline on the high cost of capital, unfavorable exchange rates, and government policies in the United States.

Interestingly, despite these interpretations, Intel, Micron Technology, LSI Logic, Texas Instruments, and other corporations performed well during this time, and, by the early 1990s, the United States had reclaimed its leading position in the industry.

In this article, I argue that examining the causes of decline and resurgence in U.S. leadership may be incomplete without a firm- and product-level perspective that explores the role of corporate strategies. Such a perspective can provide insights into how a firm is able to react to its local environment, influence it, or profit in spite of it. I argue that a firm can, through its strategic... To read the complete article, login or sign-up using the form below.

 
 

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