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Open Access Publications from the University of California

The Information Storage Industry Center (ISIC) at the University of California, San Diego is a non-profit research program studying the rapidly-evolving and highly-competitive information storage industry. ISIC's research areas include product development, manufacturing, competitive dynamics, economics of organization, and storage system reliability and data integrity. Established in 1998 with a grant from the Alfred P. Sloan Foundation, ISIC is affiliated with UCSD's Graduate School of International Relations and Pacific Studies (IR/PS), one of world's top international graduate programs specializing in the Pacific Rim.

Cover page of Optical Storage In China:  A Study in Strategic Industrial Policy

Optical Storage In China: A Study in Strategic Industrial Policy


China’s industrial policy for high-technology industries combines key features of the policies adopted elsewhere in East Asia: judicious opening to foreign investors and support for local firms.

However, unlike the developing economies of East Asia, China is a transition economy that already had a relatively well-developed, if somewhat dated, technology base of its own before its opening to outside investors at the end of the 1970s. Although the initial technology level of individual firms was low, a network of universities and government research institutes provided a strong foundation for future developments.

Like the other high-growth economies of East Asia, China has attracted foreign investment to rapidly expand its industries. But China has been able to leverage the enormous attractiveness of its domestic market to obtain technology transfers from its foreign investors on a scale that was unattainable in the regions other countries. Today, revamped state-owned firms and a host of newly-minted private ones are steadily building local competitive advantage.

China’s effort to move beyond dependence on foreign know-how to develop its own intellectual property (IP) in the electronics industry has been moving forward on several fronts, including optical storage, digital television, semiconductor design, and cellular telephony. The indigenous development of IP is a point of national pride, secures China a measure of technological independence and may serve a role in reducing burdensome royalty payments by local producers of high-tech goods.

This paper analyzes the experience of this Chinese high-technology policy in the optical storage industry. It begins with a brief overview of industrial policy for the electronics sector in East Asia, then discusses the relevant policies for two successive generations of optical storage: Video CD and DVD. Examples of similar policies in other industries are given, and a final section recaps and analyzes the optical storage case.

The research for this paper was conducted over a period of years using publicly available sources on the Internet and various news databases as part of the author’s ongoing research on the evolution of the electronics industry in East Asia.




Firms entering an industry de novo (start-up) and firms entering de alio (diversification away from another industry) differ in the initial entry conditions. In this paper I propose that the differences in resource endowment, previous experience, and structural flexibility between de novo and de alio firms at the time of entry have long-lasting imprinting effects on their innovation behavior. In particular, I predict that de novo firms exert greater efforts and achieve greater technological outcomes in product innovation than de alio firms. Furthermore, I argue that firm entry mode explains additional variance in firm innovative behavior, which is not explained by entrant-incumbent status alone. I find strong empirical support for these predictions when analyzing product innovation of all firms that ever participated in the worldwide optical disk drive industry, 1983-1999. I discuss the implications of my findings for the entrant-incumbent research in the literature of the management of innovation.

Cover page of Ecological  Dynamics of De Novo and De Alio Products in the Worldwide  Optical Disk Drive Industry, 1983-1999

Ecological Dynamics of De Novo and De Alio Products in the Worldwide Optical Disk Drive Industry, 1983-1999


In this paper we developed a concept suggesting that initial entry conditions experienced by start-ups and diversified firms affect the behavior and fates of their products. Specifically, we predicted that in capital intensive industries, initial entry conditions confer advantages to diversifiers from related industries. As a result, these firms are likely to ship more models of products than start-ups. Products made by diversifiers are likely to have a longer market life span and exert a stronger competitive pressure than those made by start-ups. We tested these predictions on all products ever shipped in the worldwide optical disk drive industry, 1983-1999. The statistical analysis largely supported our theoretical predictions.

Cover page of The Organizational Evolution of Global Technological Competition

The Organizational Evolution of Global Technological Competition


Various industries are marked by rapid technological change and increasingly global competition. We explain how such developments provide a context for "Red Queen" competition, where organizational learning and competition accelerate each other over time. Arguing that competition stimulates organizational development, we predict that organizations experiencing a history of competition are less likely to fail. This implies that a strategy of technological differentiation generates short-run survival advantages, but backfires over time as isolated organizations suffer from increasing rates of failure. Also, we argue that the Red Queen magnifies differences in competitiveness among organizations due to underlying differences in their propensities to learn, so that technologically leading organizations are especially strong competitors. This strength, paradoxically, makes technological leadership a hazardous strategy because technological leaders must compete against stronger rivals. We find support for these conjectures in a study of the worldwide hard disk drive market, estimating organizational ecology models that allow for increasing global competition over time and that help to explain national differences in organizational survival rates.

Cover page of In the Bud?  Disk Array Producers as a (Possibly) Emergent Organizational Form

In the Bud? Disk Array Producers as a (Possibly) Emergent Organizational Form


When and where will a new organizational form emerge? Recent theory says that as the number of organizations using a particular external identity code first increases beyond a critical minimal level, the code becomes an organizational form. But how is an external identity code established? We assume that the identity code derives from the aggregated identities of individual organizations. Our core argument holds that when the identities of individual organizations are perceptually focused, they will more readily cohere into a distinct collective identity. We develop ideas about how two observable aspects of organizations might generate perceptually focused identities in a common market: (1) de novo entry and (2) agglomeration in a geographic place with a related identity. Using comprehensive data from the market for disk drive arrays, we analyze these ideas and an alternative by estimating effects of different specifications of organizational and product densities on rates of entry and exit for array producers. The findings show that the density of de novo firms affects all (de alio as well as de novo) disk array producers in form-establishing ways: de novo density significantly increases all firm entry and significantly reduces all firm exit. Analyzing densities of certain geographic areas, we also find evidence of faster form development in a place with a related identity and a geographic agglomeration of disk array producers. Finally, we find that joint operation of the two processes, geographic agglomeration of de novo producers in a place with a related identity, serves to enhance form emergence even faster. Overall, the analysis supports the notion that firms with perceptually focused identities aid in establishing an organizational form. It does not show empirical support for a common sense alternative interpretation based on product proliferation.

Cover page of On the Genesis of Organizational Forms: Evidence from the Market for Disk Arrays

On the Genesis of Organizational Forms: Evidence from the Market for Disk Arrays


This paper asks a basic question of organizational evolution: When and where will a new organizational form emerge? Contemporary organization theory proposes two answers. The first holds that formal institutions such as industry associations and standard-setting bodies will result in a taken-for-granted organizational form. The second answer contends that increasing organizational density (number of organizations in a population) will generate a legitimated organizational form. Our detailed historical case study of the disk array market and its associated technologies suggests each of these theoretical arguments is limited. Although we find significant collective activity in association-building and standard-setting among disk array producers, these have not yet led to an organizational form. Similarly, an observed trajectory of organizational density showing rapid growth followed by stabilization has not yet generated an organizational form. In our view, the diversity of origins and other activities of those organizations operating in this market contribute to the lack of institutionalization of the disk array organizational form. We reason that if firms in the market derive their primary identities from other activities (implying that there are few highly focused firms deriving their primary identity from disk arrays), then the disk array producer identity cannot cohere into a code or form. This observation suggests a respecification of the legitimation component of the density-dependent model of organizational evolution.

Cover page of A Demand-based View of Technology Competition: Demand Structure and Technology Displacement

A Demand-based View of Technology Competition: Demand Structure and Technology Displacement


This paper investigates how the structure of market demand affects the nature and extent of competition over consumer subgroups in the market. It develops an analytic model to examine how the satisfaction of consumers¹ requirements and the relationships between consumers¹ preferences interact to affect competitive interactions. The model, tested using simulation, reveals demand-side influences on the emergence of three distinct competitive regimes: isolation, in which technologies do not interact throughout the course of their evolution; convergence, in which technologies evolve to compete head-on for the same consumer groups; and displacement, in which one technology cedes dominance of its home market to its rival. The model highlights the critical role played by price in influencing technology displacements and sheds some new light, supported by empirical data from the disk drive industry, on the important phenomenon of disruptive technologies.