Dynamic resource redeployment in global semiconductor firms

Abstract

This study explores how firms decide in which businesses to further invest and from which businesses to withdraw resources by examining the detailed product portfolios of firms in the global semiconductor industry. Results show that resource redeployment within incumbent businesses is more prevalent than via new entry or complete exit, since the former is more flexible and easily reversible than the latter. This study further finds that, while underutilized resources may drive resource redeployment, resource shortage by a newly entered or expanding incumbent business may also siphon resources away from other incumbent businesses, leading to their exit or temporary retrenchment. Fabless firms with resource that are more fungible, scalable, and decomposable vis‐a‐vis integrated device manufacturers show a more flexible and gradual pattern of resource redeployment. Managerial summary In fast‐moving environments, firms should quickly redeploy resources to more promising business areas. We find fabless firms with more fungible, scale free, and decomposable resources engage in more active resource redeployment than integrated device manufacturers with specialized fabs and equipment, like Intel or Samsung. Redeployment among the latter requires a well‐planned, synchronized approach so as to avoid idle resources. As such, in order to take advantage of dynamic resource redeployment, managers should begin by assessing the characteristics of firm resources along these dimensions. Managers may also consider business model transformation to separate their activities by specializing in areas in which they can best utilize their resources and capabilities, like fabless firms and foundries in the semiconductor industry.

The demand-side dynamics of firms' within-industry geographic scope

“…Most studies on temporally heterogenous scope tend to focus on the dynamics of firms' within-industry product scope decisions and/or their performance implications (e.g. Cottrell and Nault, 2004; de Figueiredo and Silverman, 2007; Bayus and Agarwal, 2007; Chang and Matsumoto, 2022; Stagni et al. , 2020; Giarratana et al.…”

“…Most studies on temporally heterogenous scope tend to focus on the dynamics of firms' within-industry product scope decisions and/or their performance implications (e.g. Cottrell and Nault, 2004;de Figueiredo and Silverman, 2007;Bayus and Agarwal, 2007;Chang and Matsumoto, 2022;Stagni et al, 2020;Giarratana et al, 2021). Consequently, the inadequate explanation of the dynamics of firms' within-industry geographic scope has resulted in a lop-sided development of the nascent stream of literature on dynamics of competitive scope.…”

Supply‐side inducements and resource redeployment in multiunit firms

“…Changes in relative resource supply, which can arise from various factors that differentially affect resource stock accumulation across firm units, can also prompt redeployment. This insight broadens our understanding of the scope of the theory and implies that redeployment can create value not only in diversified firms, which have been the focus of empirical studies of redeployment (e.g., Belenzon & Tsolmon, 2016; Chang & Matsumoto, 2022; Dickler et al, 2022; Dickler & Folta, 2020; Giarratana et al, 2021; Lieberman et al, 2017; Sabel & Sasson, 2023; Sohl & Folta, 2021), but also in nondiversified, multiunit firms. We also extend theory by illuminating the distinct patterns of intra‐firm resource flows that result from different sources of inducements.…”

Renewing the resource‐based view: New contexts, new concepts, and new methods

“…As an alternative to complete exit, a firm may partially exit one business and redeploy the available resources to another business (Helfat & Eisenhardt, 2004). Thus, the redeployability of resources provides firms with the flexibility to expand their more attractive businesses while shrinking less attractive businesses (Chang & Matsumoto, 2022; Dickler & Folta, 2020; Dickler, Folta, Santaló, & Giarratana, 2022). The flexibility provided by the redeployability of resources can also help firms adapt to external or internal constraints.…”