How to Succeed in the Presence of Financial and Technological Gaps: From the Perspective of Governance Innovation

Abstract

Conventional wisdom would predict firms with little financial and technological capabilities to fail. This is especially true for such firms in the high-tech sector during periods of industry downturn. In this paper, we ask how firms experiencing financial and technological gaps can succeed by transforming current challenges into opportunities via governance innovation. We select Hynix and the semiconductor industry for the investigation. Hynix emerged from near bankruptcy become the number two player in the global semiconductor memory market. We find that Hynix`s case requires extending prevailing theory to focus on governance and control. We pinpoint specific factors that contributed to Hynix`s success from the perspective of governance innovation for the theoretical extension and suggest practical implications.