Proper

Abstract

When a firm’s technology is measured by marginal production cost, its production becomes the function of the marginal cost. This paper takes this feature into consideration for analyzing how a technology follower can leapfrog a technology leader. According to a theoretic analysis, a technology leader’s chance to develop another top-edge technology is critical in technology competition. Only when its chance to earn a top-edge technology through creative destruction process is high enough, the leader can lead its market persistently. Also, an initial technology gap between the leader and the follower plays an important role in leapfrogging; if the gap is not big enough, the follower’s leapfrogging can occur at any time. Empirical works done by OLS (ordinary least squares) and survival analysis are designed to examine if firm level product capability is able to extend firm-wise survival. According to the main results, those firm-level product capabilities such as developing the smallest disc drive, product capability, and marketing are helpful to enhance firm survival indeed.