The Determinants of Business Unit Competitive Position: Evidence from the Integrated Circuits Industry

This paper examines the sources of competitive advantage and the mechanisms that determine individual business’ market share within the contest of the integrated circuit (IC)segment. We propose within industry diversification and innovation strategy as the major determinants of competitive advantage. We address the issue identifying major market niches within the IC industry. Results show that diversification within the same product family, to which activities are related by input factors, functional technology, degree of customization, positively affects firm performance. Moreover, the introduction of substantially incrementally new products, either new to the industry or new to the firm, also has a significant effect.