INDUSTRY VALUE CURVE AND THE VALUE CREATION OF THE FIRM:AN EMPIRICAL INVESTIGATION ON TAIWANESE AND US FIRMS IN COMPUTER AND INFORMATION INDUSTRIES

• Main Authors: YEH, KUO-CHUNG, 葉國忠
• Other Authors: LEE, JI-REN
• Format: Others
• Language: zh-TW
• Published: 2000
• Online Access: http://ndltd.ncl.edu.tw/handle/68340358580696364104

碩士 === 國立臺灣大學 === 國際企業學研究所 === 88 === Corporate managers and investors interested in computer and information industries have long been informed of the existence of a "smile curve" in computer and information industries, which indicates an uneven distribution of value added across different industry segments. However, very little empirical investigation has been conducted to verify the heterogeneity of profitability potential and the logic of value creation across different industry segments in computer and information industries. The purpose of this research is to provide a systematic investigation on this important yet unclear issue. To tackle this research issue, we first decompose the broadly defined computer and information industries into 7 macro layers (or segments); they are Software, Semiconductor, Peripheral, Motherboard & Add-on Card, Peripheral, System, and Channel. Each macro layer is further decomposed into several well-defined Micro Layers. Totally there are 24 micro layers included in our investigation. Based on this analytical industry architecture, we then identify 565 Taiwanese and US firms operating in these segments and collect publicly available accounting information of these firms covering from 1996 to 1998, which constructs as the basis for our quantitative analyses. Our analyses are two folds, one is to evaluate the magnitude of a firm''s value creation in each macro and micro layers, and the other one is to investigate the impact of differential operational cost structure on the degree of value creation. After thorough analyses, several concrete outcomes can be documented. First of all, taking operating income & ROE as performance index, we find that software companies reveal a significantly lower level of performance than any other types of companies. However, there is no statistically firm-level performance difference among the rest of segments. Meanwhile, Taiwanese firms significantly outperform their US counterparts in the Motherboard & Addon Card segments. For the rest of segments, there is no significant statistical difference between Taiwanese and US firms. Second, as far as the impact of differential operational cost structures is concerned, the percentage of cost of sales and operating expenses will negatively affect the level of ROE, while the relationship between asset turnover rate and ROE will critically depend upon the industry & firm conditions. In addition, as far as country difference is concerned, US firms tend to be more sensitive on the impact of cost of sales and operating expenses on ROE than Taiwanese firms. Interestingly, the relationships between asset turnover rate and ROE of these two country groups appeared to be opposite. Overall, the present research empirically demonstrates counter evidence to the well-known "smiling curve". Meanwhile, we proposed several strategic suggestions to firms in response to the evidence we find concerning how to establish sustainable competitive advantages under the vertically de-integrated and highly competitive environment as exhibited in Computer and Information industries. Suggestions for future research on this issue are also provided.