Locating Global Advantage: Industry Dynamics in the International Economy

352 Pages·2003·3.25 MB·English

by  Martin Kenney

Locating Global Advantage
Industry Dynamics in the
International Economy
Innovation and Technology in
the World Economy
a series edited by
Martin Kenney, University of California, Davis / Berkeley
Round Table on the International Economy
Bruce Kogut, Wharton School, University of Pennsylvania
Urs von Burg, The Triumph of Ethernet: Technological Communities and the Battle
for the LAN Standard
Gary Fields, Territories of Profit: Communications, Capitalist Development, and the
Innovative Enterprises of G. F. Swift and Dell Computer
Martin Kenney and Richard Florida, eds., Locating Global Advantage: Industry
Dynamics in the International Economy
Locating Global Advantage
Industry Dynamics in the
International Economy
Edited by
Martin Kenney
with
Richard Florida
Stanford University Press, Stanford, California, 2004
Stanford University Press
Stanford, California
©2004 by the Board of Trustees of the Leland Stanford Junior University
Printed in the United States of America
Library of Congress Cataloging-in-Publication Data
Kenney, Martin
Locating global advantage : industry dynamics in the international economy / edited
by Martin Kenney with Richard Florida.
p. cm. — (Innovation and technology in the world economy)
Includes bibliographical references and index.
isbn 0-8047-4757-1 (alk. paper) — isbn 0-8047-4758-x (pbk. : alk. paper)
1. International economic integration. 2. International business enterprises.
3. Globalization. 4. Electronic industries—Location. I. Kenney, Martin.
II. Florida, Richard L. III. Series
hf1418.5 .l33 2004
338.8'8—dc21 2003018429
This book is printed on acid-free, archival-quality paper.
Original printing 2004
Last figure below indicates year of this printing:
13 12 11 10 09 08 07 06 05 04
Typeset at Stanford University Press in 10/12.5 Minion
Acknowledgments
The papers in this book are the result of four workshops funded by the Sloan
Foundation. We also thank three graduate students, Jennifer Bair, Theresa
Lynch, and Greg Linden, who helped organize parallel graduate student work-
shops. Our workshops were enriched by the participation of Avron Barr, Lee
Branstetter, Tim Bresnahan, Steve Cohen, Rob Feenstra, Gary Gereffi, Gor-
don Hanson, Bruce Kogut, William Miller, Shirley Tessler, and John Zysman.
The authors of all eight industry chapters and the editors acknowledge the
Alfred P. Sloan Foundation for the research support that made these papers
and this book possible. Special thanks go to Hirsh Cohen, Frank Mayadas,
and Gail Pesyna, the project officers, who encouraged all of the contributors
to pursue their interest in better understanding how industries globalize. Pa-
tient, understanding, and committed project officers are essential for this
type of research.
We would like to thank Gary Fields, Nichola Lowe, and Tim Sturgeon for
invaluable suggestions, and we gratefully acknowledge the efforts and sug-
gestions of three reviewers. We also thank Sarah Brassmassery and Allison
Gillespie for their assistance throughout this project. We both thank the au-
thors for being so willing to help facilitate the process of putting this volume
together. Patricia Katayama and Nathan McBrien of Stanford University
Press helped mightily in making this book a reality.
M.K.
R.F.
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Contents
Preface: In Vino Veritas? xiii
paul duguid
Contributors xxvii
1. Introduction 1
martin kenney
PART ONE
2. Globalization in the Apparel and Textile Industries: What Is
New and What Is Not? 23
frederick h. abernathy, john t. dunlop,
janice h. hammond, and david weil
3. Globalization, Deverticalization, and Employment in the Motor
Vehicle Industry 52
timothy sturgeon and richard florida
4. The Shifting Value Chain: The Television Industry in North
America 82
martin kenney
PART TWO
5. The Organizational and Geographic Configuration of
the Personal Computer Value Chain 113
james curry and martin kenney
viii / Contents
6. Leveraging Locations: Hard Disk Drive Producers in
International Competition 142
david g. mckendrick
7. Industry Creation and the New Geography of Innovation:
The Case of Flat Panel Displays 175
thomas p. murtha, stefanie ann lenway,
and jeffrey a. hart
8. Globalization of Semiconductors: Do Real Men Have Fabs, or
Virtual Fabs? 203
robert c. leachman and chien h. leachman
9. The Net World Order’s Influence on Global Leadership in the
Semiconductor Industry 232
greg linden, clair brown, and
melissa m. appleyard
PART THREE
10. Conclusion: From Regions and Firms to Multinational
Highways: Knowledge and Its Diffusion as a Factor in the
Globalization of Industries 261
bruce kogut
References 283
Index 301
Tables
2.1 Change in Import Share for Quota Constrained and Unconstrained
Product Baskets, China/Hong Kong Quotas, 1990–1998 34
2.2 Top Ten Imports by Product Category and Volume Shipped:
Mexico and China, 1991 and 1999 36
2.3 Product Composition and Replenishment Status: Mexico and
China, 1991 versus 1999 38
3.1 The Eight Effects of Globalization 56
3.2 Vehicle and Parts Trade between Mexico and the United States,
1994–1998 61
3.3 Total and Intra-regional Exports of Finished Vehicles from
Canada, Mexico, Spain, and East Europe, 1994–98 62
3.4 Top Fourteen Motor Vehicle Parts Suppliers, 1995 and 2000:
Rank by Home Region and Country, 1995–2000 Compound
Annual Growth Rate 72
3.5 Top Fourteen Motor Vehicle Parts Suppliers, Percentage of
Sales in North America, 1995 and 2000 73
3.6 Regional Share of Motor Vehicle Sector Employment and
Relative Wages 76
4.1 The Ten Largest CTV Manufacturers in the World, 1978 84
4.2 The Ten Largest CTV Manufacturers in the World, 1987 84
4.3 The Ten Largest CTV Manufacturers in the World, 1997 85
4.4 The Status of Japanese Television Assembly Plants in the U.S. as
of 1999 95
4.5 Television Assembly Plants in tU.S., by Location, Product, and
Employment, 1999 100
4.6 World’s Largest Television CPT Producers in Units, 1981 and 1995 107
x / Tables
5.1 PC Assembler Business Models 121
5.2 Global Ranking of PC Sales by Units, First Quarter 2003, 2001,
1999, 1997, and 1990 127
5.3 Global Location of U.S. PC Firms’ Factories 128
5.4 The Value and Time Sensitivity of Personal Computer
Components 130
5.5 Financial Results for Selected Firms in the PC Value Chain, 2000 131
6.1 Dynamics of Industry Location and Benefits: HDD in Southeast
Asia 160
6.2 The Geographic Pattern of Employment in Seagate, 1981–98 164
6.3 Summary Characteristics of Firms Assembling in Southeast Asia 170
7.1 Main Commercial Generations of Color TFT LCD Substrates 185
8.1 Comparison of Revenue per Wafer in Different Segments of the
Industry 207
8.2 Regional Shares of Worldwide Fabrication Capacity 210
8.3 Distribution by Country of Fabrication Capacity in the Asia
Pacific Region 210
8.4 Distribution of Worldwide Fabrication Capacity by Region of
Ownership 211
8.5 Distribution of Fabrication Capacity by Product Type 212
8.6 Distribution of Pure-Play Foundry Capacity 212
8.7 Industry Ranking of Criteria for Locating Fabrication Facilities 226
9.1 The Chip Markets of the Net World Order 236
9.2 Market Attributes in the Net World Order 237
9.3 The Relevance of Competencies in the Net World Order 240
9.4 Value Chain Configurations of the Net World Order 244
9.5 Regional Chip Consumption by Product Markets, 2000 248
9.6 Home Substitution Index for Global Semiconductor Sales,
1992–2000 253
10.1 Estimated Failure Rates of Foreign Subsidiaries 271