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Flexibility and Stability in the Innovating Economy$
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Maureen McKelvey and Magnus Holmén

Print publication date: 2006

Print ISBN-13: 9780199290475

Published to Oxford Scholarship Online: May 2006

DOI: 10.1093/0199290474.001.0001

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Changing Boundaries of Firms in the Evolution of the Computer Industry: Towards a History‐Friendly Model

Changing Boundaries of Firms in the Evolution of the Computer Industry: Towards a History‐Friendly Model

Chapter:
(p.157) 7 Changing Boundaries of Firms in the Evolution of the Computer Industry: Towards a History‐Friendly Model
Source:
Flexibility and Stability in the Innovating Economy
Author(s):

Franco Malerba (Contributor Webpage)

Richard Nelson (Contributor Webpage)

Luigi Orsenigo

Sidney Winter (Contributor Webpage)

Publisher:
Oxford University Press
DOI:10.1093/0199290474.003.0007

This chapter analyzes the changing boundaries of firms in terms of vertical integration and dis-integration (specialization) in dynamic and uncertain technological and market environments. In particular, it addresses the question of stability and change in firms’ decisions to ‘make or buy’ in contexts characterized by periods of technological revolutions punctuating periods of relative technological stability and smooth technical progress. The chapter is inspired by the case of the computer and semiconductor industries, and proposes the building blocks of a model in the ‘history-friendly’ style, showing how alternative dynamics of demand and technical change might generate profoundly different patterns of evolution in the two industries. The main argument proposed concerns the role of co-evolution in the upstream and downstream industries in explaining the changing boundaries of firms.

Keywords:   vertical integration, dis-integration, computer industry, semiconductor industry, upstream industry, downstream industry, co-evolution, boundaries of firms

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