A Duration Approach to High-Tech Industry: An Evidence from the Rigid Hard Disk Drive Industry

Abstract

This paper analyzes an everlasting paradoxical phenomenon why technically superior firmstend to exit earlier. We tackle this issue using probit analysis as well as survival analysis. We mainlyfocus on four variables: absolute technology superiority, relative technology superiority, portfolio capability,and marketing ability. The absolute technological superiority is measured by the smallestdrive production ability and the relative technological advantage represents the degree of superiorstorage capacity a firm owns against rival firms. The portfolio capability is measured by the numberof disk drive inches produced annually and so it is a proxy for the economies of scope and the numberof model out of each disk drive category is a proxy for marketing ability. Estimation results suggestthat the absolute technological superiority affects negatively on firm longevity whilst the relativetechnological advantage, measured by normalized technology position index, affects positively.Further, portfolio capability rather than relative technological superiority turn out to be more importantto firm survival, which implies that superior technology cannot guarantee long-run survivalalone, quite differently from a conventional wisdom