Asia Pacific Journal of Management, 19, 467–488, 2002

c 2002 Kluwer Academic Publishers. Manufactured in The Netherlands.

Competitive Advantages of the Latecomer Firm:

A Resource-Based Account of Industrial
Catch-Up Strategies
JOHN A. MATHEWS
Macquarie Graduate School of Management, Macquarie University, Sydney NSW 2109, Australia

Abstract. The resource-based view of the firm provides a satisfactory account of how firms go about sustaining
their existing competitive advantages, but it is less successful in accounting for how firms create such advantages
in the first place, or overcome incumbent advantages, when the firms start with few resources. The paper utilizes
the case of latecomer firms from the Asia-Pacific region breaking into knowledge-intensive industries such as
semiconductors, to illustrate the issues involved and the resource-targeting strategies utilized. This results in a
strategic theory of the overcoming of competitive disadvantages through linkage, resource leverage, and learning.
The dynamic capabilities of such firms are enhanced through repeated applications of linkage and leverage. The
resources strategically targeted are characterized as being those most amenable to such linkage and leverage,
namely those that are least rare and most imitable and transferable, i.e. as positive versions of the criteria utilized
in the conventional resource-based view of the firm. It is argued that this adaptation of the RBV is potentially of
wide applicability, and is the needed amendment that makes it of prime significance in accounting for latecomer
success within the conceptual framework of strategic management.

Keywords: latecomer firm, resource-based view of strategy industrial catch-up

1. Introduction

The issue of world industrial development presents itself as a pressing concern in the 21st
century, and one which turns on the successful creation of sophisticated and competitive
firms within industrializing countries (UNIDO, 2002). The industrial developmental lit-
erature is rich in economic analysis, and has acquired an extensive toolbox of concepts
involving the development by firms of technological capabilities, technological effort and
industrial upgrading (Enos, 1992; Lall, 2000; Amsden, 2001; Amsden and Chu, 2002;
Hobday, 1995a, b). But this literature has yet to make much connection with the literature
on strategic management, where an equally rich toolbox of concepts, such as resource lever-
age, interfirm linkage and network advantages and the use of combinative capabilities, has
been developed to make sense of firms’ competitive behavior (Prahalad and Hamel, 1990;
Gulati, 1999; Gulati, Nohria and Zaheer, 2000; Kogut and Zander, 1992). It would seem to
be a worthwhile project to explore the extent to which these conceptual frameworks overlap,
and to investigate their mutual enrichment. In this paper a first, tentative step is taken in this
direction.
There are by now many cases of Asia-Pacific firms that have established themselves in
high technology sectors such as IT and semiconductors—firms like Acer, Samsung, LG,
468 MATHEWS

TSMC, SK Telecom. While the successes of these newly arrived firms in high technology
sectors is widely acknowledged in the business literature, accounts of their success that
are consistent with organization and management theory are sparse. The problem is that
in terms of existing theory, their achievements are puzzling. The literature emphasizes the
first mover advantages enjoyed by incumbent innovators, at the expense of followers and
imitators (Lieberman and Montgomery, 1988, 1998). It emphasizes the barriers to entry
erected by incumbents through industrial and technological advantages such as returns to
scale and “switching costs” away from established products and brands. It emphasizes the
sustainability of competitive advantages—from the perspective of firms that already possess
such advantages—rather than the creation or acquisition of advantages by those that do not
have them (Porter, 1985; Barney, 1991, 1995). Yet the arrival of the latecomer firms, in such
high technology sectors as semiconductors, in practice, shows that competitive advantages
which appeared to be sustainable can be undermined; that barriers to entry can be overcome;
that advantages of imitation and fast followership can balance advantages due to innovation.
To account for their success in terms of the concepts of strategic management is the primary
object of this paper.
While it is of obvious importance to embed the approach by firms in industrializing
countries in a wider strategic management literature, there are other surprising gains to be
made by pursuing this approach. It turns out that the strategic management literature itself
is especially strong in accounting for the success of incumbents, and on their prolonging of
achieved competitive advantages, where their resource accumulation is plentiful. But it is
less successful in accounting for challenger firm success, and even less so in the case of late-
comer firms from late-industrializing countries whose resources are initially deficient. Thus
it turns out to be an intriguing theoretical challenge to account for the success of latecomer
firms, in terms of the categories of strategic management. The conventional account, as
provided by the now-dominant resource-based view of the firm’s competitive advantages,
is to argue that firms build their strategic distinctiveness on resources that are valuable,
rare, non-imitable, and non-transferable (Barney, 1991). The contribution of this paper is
to argue that such an account is not necessarily helpful in accounting for the success of the
latecomer firm—and that a broader perspective is needed on resource targeting criteria when
challenger firms, and in particular latecomer firms, are included in the scope of the analysis.
The approach adopted in this paper is to develop an abstract category of the “latecomer
firm” (LCF) and then to explore its strategic behavior, drawing on the empirical evidence
of latecomer success from the Asia-Pacific in penetrating advanced industries such as elec-
tronics, semiconductors and communications, and on the theoretical strategic management
literature. On the basis of this exploration, a strategic account is developed of the activities
of the latecomer firm, aimed at helping to explain how it can overcome severe “resource
position barriers” (Wernerfelt, 1984) by exploiting the few advantages it has available to
it as a latecomer—such as linking with advanced firms in various kinds of contracting or
licensing arrangements, and leveraging resources (knowledge, technology, market access
channels) from such linkages. In doing so the latecomer has to craft its strategy so as to com-
plement the strategic initiatives of incumbents—offering contract manufacturing services,
for example, in response to incumbents’ outsourcing initiatives. The case can be made that
latecomer firms go through several iterations of this linkage and leverage process, each time
COMPETITIVE ADVANTAGES OF THE LATECOMER FIRM 469

enhancing their capabilities and technological competences, in a process best described as

learning.
The process of resource leverage, a concept developed and elaborated in the strategic
management literature, is utilized as a central category in the account of latecomer firm
strategic orientation. But what kinds of resources is the latecomer to target? The paper
makes its primary original contribution by developing a set of resource evaluation criteria
for this case of the LCF that differ radically from those ascribed by the conventional RBV to
the incumbent firm. It is argued that the LCF will seek to overcome its resource deficiencies
by targeting resources (from incumbents) that are least rare, most transferable, and most
imitable. In this article I am concerned to defend such a claim, on grounds of its plausibility,
and of its realism in describing actual strategic postures of latecomer firms successfully
penetrating advanced industries. If accepted, such an account can shed fresh light on the
strategies pursued by latecomer firms in industrializing countries, and can shed new light
on the theoretical apparatus of strategic management itself, in extending the framework of
strategic resource evaluation criteria utilized by different kinds of firms, in the setting of
the economy as a whole.1
The paper starts from the assumption that latecomer firms have a small range of strategic
options in seeking to become players in world industries, and that they can indeed succeed
in this endeavor, and enhance their capabilities, through judicious understanding of their
latecomer status. In this way the strategic management literature can be utilized to provide
a sound basis for industrialization strategies within the presently least developed parts of
the world, as well as for those in further stages of industrial development. Thus the paper
seeks to generalize the category of the LCF, beyond its origins in the Asia-Pacific area.
It can be argued that successful development approaches being pursued in Latin America,
or in Central and eastern Europe, involving linkage with wider production networks and
incumbent firms, are equally drawing on latecomer firm strategies, learnt from the East
Asian pioneers. Thus the category of the LCF and its distinctive strategic orientation, could
turn out to be of widespread importance for the future of successful industrial development.

2. The latecomer firm

The category of the latecomer firm can be applied in all industries where latecomers make
their mark—as they did initially in the 1950s and 1960s with mass production industries,
led by latecomers from Japan, and quickly followed by latecomers from Korea, Taiwan
and elsewhere. But the category is of greatest interest in the context of high-technology
industries, which are knowledge-intensive, for these are the hardest to penetrate, where cost
advantages are minimal, and where strategies of linkage and leverage are all-important.
The past decade has witnessed a most remarkable penetration of high technology industry
sectors, such as semiconductors and information technology, by newly emerging firms from
East Asia. The Korean and Taiwanese semiconductor sectors, for example, rose in the space
of no more than a decade to become third and fourth largest in the world by 1996—and
maintained this position, despite the damaging effects of the Asian financial crisis of 1997–
98. Lying behind these successes are remarkable “latecomer firms” such as Samsung, LG
470 MATHEWS

Semicon and Hyundai Electronics from Korea, and Taiwan Semiconductor Manufacturing
Corporation (TSMC), United Microelectronics Corporation (UMC) and Winbond, Mosel
Vitelic and Macronix, from Taiwan. Likewise the Taiwanese information technology sector
has flourished in the past decade, with PC producers such as Acer, Mitac and Umax becoming
global players of significance. There is by now a substantial literature documenting these
successes (Amsden, 2001; Enos, Lall and Yun, 1997; Hikino and Amsden, 1994; Kim,
1995, 1997, 1999; Hobday, 1995a, b; Lall, 2000; Mathews, 1997, 1999, 2001; Mathews
and Cho, 1999, 2000).
The idea of a “latecomer” turning disadvantages into sources of advantage, was formu-
lated most clearly by the historian, Alexander Gerschenkron. It was he who studied the rise
of “late industrializing” countries in Europe in the 19th century (e.g. Germany, Austria)
and saw them as being able to secure advantages by entering industries utilizing the most
advanced technologies, at a greater scale of activity, and without the hindrance of insti-
tutional forms (such as established trade associations and professional training systems)
which harked back to earlier periods and acted as a brake on the innovative potential of
earlier industrializers (Gerschenkron, 1962). Gerschenkron saw especially an important
role for state agencies to play (such as in amassing capital and making it available for in-
vestment in large-scale plant, or in reducing risks by public sector development) in helping
latecomer nations to overcome their disadvantages and “catch up” with earlier leaders. The
case of Germany, which caught up with Britain as a steel and textiles producer, and rapidly
moved to a position of leadership in science-based industries such as chemicals, provides a
compelling instance of Gerschenkron’s argument.
The rise of East Asian countries in the 20th century, starting with Japan and then in the
post-war era moving to encompass Korea, Taiwan, Hong Kong and Singapore, provides
a more recent instance of Gerschenkron’s general thesis. It is now recognized that these
countries have behaved in classic “latecomer” fashion in utilizing state agencies to engineer
their entry into export markets and then into high technology sectors. Business historians
like Abe (1997) have utilized Gerschenkron’s latecomer concept and applied it to firms
in East Asia, particularly to Japanese firms in their early catch-up efforts. Likewise tech-
nology theorists such as Hobday (1995 a, b) have described East Asian firms from Korea,
Taiwan and Singapore as pursuing latecomer strategies in order to catch-up with their more
technologically advanced rivals.
The first goal in this paper is to formalize and generalize this usage, introducing a category
of “latecomer firm” in order to capture the essential features of the latecomer strategy,
and to embed the category in the organizational and management literature. Latecomer
firms, like latecomer nations, are able to exploit their late arrival to tap into advanced
technologies, rather than having to replicate the entire previous technological trajectory.
They can accelerate their uptake and learning efforts utilizing various forms of collaborative
processes and state agencies to assist with the process, bypassing some of the organizational
inertia that holds back their more established competitors.
Some distinctions are in order to clarify what is at stake here. There is a vast literature
on “order of entry” issues, and the respective merits of being a “first-mover” or “late
entrant” into a market. Lieberman and Montgomery (1988) initiated what has become
a rich and vigorous area of scholarship; indeed they recently reviewed progress made
COMPETITIVE ADVANTAGES OF THE LATECOMER FIRM 471

in the decade since their influential study was published (Lieberman and Montgomery,
1998). While early entrant advantages are well recognized, much of this literature has been
concerned to clarify the advantages of holding back (Golder and Tellis, 1993; Shankar,
Carpenter and Krishnamurthy, 1998). The typical late entrant makes a strategic choice to
hold back, and allow the market pioneers to search out the nature of consumer response
to an innovation, before unleashing the full force of their technological and marketing
capabilities in replicating and elaborating on the market-tested features of a new product.
IBM exemplified such a late entrant strategy with its entry into the personal computer
market in the early 1980s; IBM allowed pioneers like Apple, Commodore and Tandy to
define the features of the new market, before it unleashed its own product and commanded
the field. Lieberman and Montgomery (1988) acknowledge these as being strengths of the
late entrant, while Schnaars (1994) describes numerous instances of product innovations
where late entry and “management of imitation” have been far more lucrative for firms
than seeking elusive “first-mover” advantages. The strategic choice involved is one of
securing market advantages while avoiding the costs of technological lockout (Schilling,
1998).
But the latecomer firm is not a “late entrant.” Its choice to enter a market late is not a
matter of strategy. It is condemned to be a follower by history, and it has to make the best
of its resource-poor initial situation. It starts not from the powerful position of an IBM,
but from the resource-meager position of an isolated firm seeking some connection with
the technological and business mainstream. It is through this initial connection that it can
leverage its foothold, and through strategic innovation, seek advantages that are intrinsic
to its latecomer status and to its earlier experiences in less technologically demanding
industries. (Korean firms like Samsung had extensive experience in mass production of
basic electronics, and in mass marketing, prior to seeking to enter high technology fields
like memory chips.) The latecomer firm can exploit the same advantages of “management of
imitation” that are available to much better resourced firms, through for example licensing
the most recent technologies, as exemplified dramatically in the Korean decision to ride a
new technological wave initiated by CDMA cellular telephony, discussed below. But the
fundamental distinction between a “latecomer” and a strategic “late entrant” is couched in
terms of the resources available—few to the former, many to the latter.
Likewise, the latecomer firm is not a “start-up” like any one of the numerous start-ups
that populate Silicon Valley. It is useful to separate the construct of the latecomer firm
from a startup. Such firms also derive advantages from making a fresh start, unencumbered
by previous technological or market commitments. This is the key to their flexibility and
responsiveness. But they “start” with access to all the resources of their parent firms as
well as to the networks of firms and resources that make up a successful region like Silicon
Valley. These are resources that are denied the latecomer in its early market forays. One
of the skilful strategies it can employ is to create its own “window” or listening post in a
high-tech region like Silicon Valley, starting its own subsidiary there or taking an equity
position in a capital-poor start-up—all strategies employed by Korean and Taiwanese firms
as they sought entry to the semiconductor industry.
Thus it seems to be theoretically sound to introduce a time-bound category of the “late-
comer firm” (LCF) as something distinct from the recognized categories of late entrants and
472 MATHEWS

start-ups, on the understanding that the goal of a latecomer is to move out of this category
as fast as it can (Mathews and Cho, 1999). Its goal is to become a player in the industry,
so that it too can exercise some strategic choice as to whether to be a first mover or late en-
trant as new technologies evolve, or to spin-off new start-ups as business conditions permit.
Indeed, this is precisely what the East Asian latecomers like Samsung, Acer, and UMC are
now doing. But they have to start somewhere, and create competitive advantages through
exploitation of their latecomer status. We encapsulate this discussion in a definition, as
follows.
Definition. The latecomer firm is one which meets the four conditions:

• Industry entry: The LCF is a late entrant to an industry, not by choice but by historical
necessity;
• Resources: The LCF is initially resource-poor, e.g. lacking technology and market access;
• Strategic intent: The LCF is focused on catch-up as its primary goal;
• Competitive position: The LCF has some initial competitive advantages, such as low
costs, which it can utilize to leverage a position in the industry of choice.

This definition is a generalization and abstraction of definitions employed in the develop-

mental literature. Hobday (1995b) for example defines latecomer firms in terms of their
deficiencies of technology and market access; this is captured in the notion of “resource
deficiency” in the present definition. The definition is couched in general terms, but it can
be seen to include all the examples of firms mentioned from East Asia, as well as fu-
ture examples from other late developing countries. It excludes “late entrants” through the
specification of lack of initial resources, and it excludes “start-ups” through its emphasis on
imitation, on creating efficient production systems, and through its dependence on collective
institutional resources.
It is in recognizing its deficiencies that the LCF secures its first “competitive advantage.”
It formulates a strategy commensurate with its deficiencies and limitations. It harbors no
illusions as to its own capabilities, and looks instead to the wider world for sources of
technology, knowledge and market access. It is in securing access to these resources, for
example through low-cost contract manufacturing, that it secures a foothold in the world’s
production chains. Like a mountaineer scaling a precipitous rockface, the latecomer is then
able to use this foothold to leverage further resources and turn them into further capabilities,
gradually increasing the quality and reliability of production, and the range of functional
capabilities.

3. Arrival of latecomer firms in high technology sectors

Let us establish the plausibility of this definitional approach by examining the active pro-
cesses of technology acquisition that underpinned successes by latecomer firms from East
Asia. Let us briefly consider just three cases, that of Korean firms’ arrival in semiconductors
in the 1980s, Taiwan’s arrival in semiconductors in the 1980s (logic chips and ASICs) and
in the 1990s (memory chips), and Korea’s advances into cellular communications in the
1990s. This is a process that is best described as repeated and systematic resource leverage.
COMPETITIVE ADVANTAGES OF THE LATECOMER FIRM 473

3.1. Korea, semiconductors

In Korea, initial technology leverage for VLSI chip fabrication was executed by firms such as
Samsung and Hyundai in the early 1980s, utilizing their already considerable manufacturing
and financial prowess acquired through successful mass production and marketing of elec-
tronic products (Kim, 1997; Choung et al., 2000). They acquired product technology from
small US producers such as Micron, and process technology from such Japanese firms as
Sharp as well as vendors of fabrication equipment, and from important Original Equipment
Manufacturing (OEM) orders from US majors such as Intel and Texas Instruments. Each
round of leverage was accompanied by in-house deepening of technological competences,
for new product development, new production line installation, and for mass production of
chips. All this had to take place in the context of the ultra-demanding industrial dynamics
of the DRAM sector, where product generation succeeded product generation in less than
three years—as shown in figure 1.
Focus on relatively standardized products like dynamic random access memories
(DRAMs) enabled the companies to obtain most result for their leveraging efforts. The
institutional framework within which these efforts were accelerated included the initial
uptake of skills in public agencies such as the Electronic Technology Research Institute
(ETRI), and inter-organizational collaboration to produce new generations of Dynamic
Random Access Memory (DRAM) chips, such as the 1M and 4M DRAMs, where the prod-
uct of collaboration was not joint products but accelerated development through exchange

Figure 1. Successive product generations in semiconductors: DRAMs. (Source: ICE.)

474 MATHEWS

of pilot production data. By the 1990s, the Korean semiconductor industry had become
established as a serious player, challenging Japan for leadership in the memory chips
segment.

3.2. Taiwan, semiconductors

In Taiwan, the first semiconductor capabilities were acquired by the public sector research
agency, the Industrial Technology Research Institute (ITRI), founded in 1973 (Chang, Shih
and Hsu, 1994; Lin, 1994). One of its laboratories entered into a technology transfer agree-
ment with the US firm, RCA, in 1976, thereby acquiring initial semiconductor fabrication
and design capabilities. The technology transferred was considered obsolete by RCA—but
it served as training ground for ITRI, which then diffused the skills to the private sector,
by spinning off a new company, United Microelectronics Corporation (UMC) in 1980.
UMC has since then repeatedly entered into new alliances with advanced firms, bringing
itself up to world class technological levels. In 1986, the public agency ITRI entered into
a further technology transfer agreement with the European multinational Philips, to form
a new VLSI spin-off, giving Philips’ new fabrication capacity and privileged access to
the Taiwan market. In order to avoid competing directly with Philips, this new company,
Taiwan Semiconductor Manufacturing Corporation (TSMC) elected to produce chips only
for third parties, thereby inventing the notion of the “silicon foundry.” This has proven to
be remarkably successful, and TSMC has continuously enlarged and deepened its techno-
logical capacities by transferring the technological specifications of its customer firms as it
takes orders to produce their chips. In the 1990s Taiwanese firms like Nan Ya Technology,
Umax, Winbond and Mosel-Vitelic have entered DRAM production, through technology
transfer agreements with mainly Japanese firms (which are looking for reliable “second
sources” of supply for their products). Thus the initiative for technology and knowledge
leverage has moved from the public sector in Taiwan to the private sector, as firms gain in
sophistication and capabilities.

3.3. Korea, CDMA cellular communications

In the 1990s, Korean firms have extended their knowledge leverage strategies to enter totally
new technology sectors such as cellular telephony. Again the strategy has been to bet on
a new technological standard and then to “leapfrog” ahead of established players. Korean
government agencies and firms committed to a new and untried technological standard, Code
Division Multiple Access (CDMA) as early as 1993, when it was first being developed by
its US inventor firm, Qualcomm. The technology was licensed (which was itself a boost for
Qualcomm) and developed, partly competitively and partly collaboratively by Samsung, LG
and newcomer SK Telecom. Because of this strategy of being a “fast follower” Korean firms
have been able to win substantial export orders, such as in Brazil and in China, against the
competition of US giants such as Motorola and Lucent Technologies. The Korean domestic
market was used as testbed for the new cellular system. SK Telecom launched its Korean
cellular telephone service in 1996, and it had grown to be the world’s largest such network
by yearend (Chung and Lee, 1999).
COMPETITIVE ADVANTAGES OF THE LATECOMER FIRM 475

Many more examples could be provided, such as Taiwanese electronic and IT firms
leveraging their entry into the IBM-compatible PC industry in the early 1980s, and then
into the laptop industry in the later 1980s and the PowerPC-driven IT systems in the 1990s,
through highly focused R&D alliances formed by the public technology research institute,
ITRI, with local Taiwanese firms and overseas licensors of technology (Mathews, 2001;
2002c); or the arrival of Korean and Taiwanese firms in the flat-panel display industry in
the late 1990s, leveraging capabilities from Japan (Linden et al., 1998). Of course there are
also many failed examples, where firms and countries have over-reached themselves—as
in the Indonesian experience in the aeronautical sector (McKendrick, 1992).
None of the firms that have had success in these high technology sectors existed in their
present form ten years ago. As latecomers, these East Asian firms had to overcome enormous
initial disadvantages to achieve their positions of influence and success in high technology
markets. All of these firms survived the 1997/1998 financial crisis in Asia, which subjected
them to rigorous testing of their business and technological capabilities. It is their very
success as latecomers, in the face of overwhelming odds, that makes them such interesting
cases for theoretical analysis.

4. A resource-based view of the latecomer firm

The central goal of this paper is to construct a plausible account of the strategy and behavior
of latecomer firms, as defined above, utilizing the insights of the resource-based theory of
the firm, and applied to cases of successful industry entry such as those involving semicon-
ductors and communications as described above. Recall that the RBV theory was launched
effectively by Wernerfelt (1984), drawing on earlier work such as Penrose (1959/1995),
which argued that firms compete not just in terms of final products, but more fundamentally
in terms of the underlying “resources” which make production and product diversification
possible. This has since turned into a most productive stream of research, which has been
popularized in the form of the “core competence” view of competitive strategy (Prahalad
and Hamel, 1990; Sanchez and Heene, 1997). Fundamental efforts have been expended to
establish the criteria of firms’ resources which lend long-lasting, or “sustainable” compet-
itive advantages (Dierickx and Cool, 1989; Barney, 1991, 1995). Efforts to integrate the
resource-based theory with economic accounts of firm behavior (Peteraf, 1993) and with
dynamic accounts of firms’ capabilities enhancement (Teece, Pisano and Shuen, 1997) show
how the theory is becoming central to an understanding of firm competitive behavior.
What is remarkable is that almost all of this theoretical effort has been expended in
an effort to understand how firms prolong their competitive advantages, by extending or
broadening their underlying resource base, rather than seeking an understanding of how they
create advantages in the first place. At the outset, some resource-based theorists ruled out of
order any examination of how firms acquire strategic resources. Dierickx and Cool (1989)
declared that it might be a matter of “luck” or some other non-rational process, and was
therefore not amenable to analysis, while Barney (1986) made the point that firms probably
acquired resources without being able to anticipate their later strategic significance. This
is a perfectly comprehensible and defensible position, if one’s interest lies exclusively in
accounting for how firms prolong their acquired competitive advantages. But it makes no
476 MATHEWS

sense if one is interested in how firms go about the business of acquiring resources, as
a rational and calculated act that is a prelude to their securing a competitive position in a
highly contested market—which is, after all, the position of the latecomer firm, and of a
good many other diversifying firms which have aspirations to enter markets that appear to
lie beyond their reach. The resource-based theory of the firm, which captures their strategic
posture exactly insofar as their quest is for the resources required to sustain a competitive
position, ought to have something to say to guide their efforts.
The latecomer firm encapsulates this need better than any other category of firm, in that
it is defined as being resource-poor to start with, and is driven by a strategy that searches
for ways of capturing resources which can then be internalized and turned into dynamic
capabilities needed to compete in demanding, technology-intensive markets. As indicated
above, the strategic choices of the LCF are seen as revolving around the following:

1. Posing linkage as the initial step that generates opportunities for the LCF;
2. Posing resource leverage as the means through which the LCF is able to exploit the
linkages established;
3. Posing learning as the outcome of repeated applications of linkage and leverage by the
LCF, resulting in the acquisition of dynamic capabilities.

While this provides an over-arching strategic framework that informs latecomer firm
behavior, greater precision can be secured in characterizing the latecomer’s strategy in
terms of complementing the strategic shifts and needs of incumbents (and start-ups); and
in characterizing resources to be targeted for leverage in terms of the criteria used by the
resource-based view of the firm, namely resource imitability, substitutability and transfer-
ability. Insights are offered in this paper that draw their inspiration from the resource-based
theory of the firm, but give it a “twist” which makes it applicable to the case of a firm just
starting out on its resource-acquisition trajectory.

4.1. Linkage

Resources are secured, in general, not from open-market transactions, but through firm-to-
firm contractual connections. This is the power of the network perspective, or “strategic
networking” (Gulati, Nohria and Zaheer, 2001) that sees firms enhancing their resource
base by securing access to the resources of a wider network. It is therefore the multiplying
linkages between firms, in the globally interconnected economy, that provides the latecomer
firm with its first potential advantage. If it can fashion a strategy of linkage that complements
the strategies of incumbents, by meeting their needs and offering valued services, then it
opens the door to further advance and industrial upgrading.
For every strategic goal or initiative taken by an incumbent, there is a latecomer willing
to provide the service or resources that complements this goal. This is how the latecomer
gets its start, how it secures its competitive foothold. Consider four such strategic shifts
on the part of incumbents that create linkage opportunities: outsourcing/OEM contracting;
local sourcing; second sourcing; and technology licensing, in the context of high technology
industries like semiconductors and cellular telephony. Each of these strategic shifts on the
COMPETITIVE ADVANTAGES OF THE LATECOMER FIRM 477

part of incumbents, which serve their own strategic needs, create linkage opportunities for
latecomers which they are quick to seize, and to turn into opportunities for leveraging and
learning. This is what in the economics literature is referred to as spillovers or externalities
acquired through linkage, e.g. with foreign firms (Blomström and Kokko, 2001).
OEM contracting is a form of outsourcing where the activity contracted to a third party is a
critical, high value-adding part of the process. Many IT companies like IBM, Apple, or Texas
Instruments have outsourced the production of entire products like PCs to latecomer firms in
East Asia, thereby securing their own strategic advantages in terms of low-cost production,
but also offering the latecomers valuable learning and leverage opportunities. OEM contract-
ing has been generalized to encompass the notion of “global commodity chains” (Gereffi,
1999) or “global production networks” (Best, 2001) or, the term of preference, “global
value chains” (Humphrey and Schmitz, 2000). These global networks are created by well-
established producer firms in such sectors as electronics or apparel industries, and by global
brand buyer firms like J.C. Penney, The Gap or Timberland in clothing and footwear. Typi-
cal small-scale latecomer firms in Taiwan (Chen, 1999) or Thailand (Campbell, 1997) have
been able to upgrade their production and innovation capabilities through such linkages—as
have firms in Czechoslovakia (Deardorff and Djankov, 2000) and Mexico (Bair and Gereffi,
2001), thus revealing how extensive is the dissemination of the complementary strategies of
outsourcing (by the incumbent) and contract manufacturing (by the latecomer). It is through
inserting itself in such a global value chain, taking advantage of initial low costs, that the
LCF secures an initial linkage with the global economy that leads to leverage possibilities.

4.2. Leverage

If resources are lacking, then their leverage from external sources is the obvious way to pro-
ceed. The concept of “resource leverage” (Prahalad and Hamel, 1990; Hamel and Prahalad,
1994) matches the theoretical requirements of the latecomer firm exactly. The concept was
introduced and has been used as a means of explaining how the best competitors in the world
stay abreast of new developments, by ensuring that through alliances and various forms of
joint ventures, they identify and secure access to the resources needed to keep diversifying
their product portfolio (Markides and Williamson, 1994). But the same idea underpins the
strategy of the latecomer firm. Whereas the economic development literature discusses its
strategy in terms of technological diffusion and technology transfer, these are much weaker
concepts than “resource leverage.” They place the impetus for the transfer on firms in the
advanced countries (rather than on the latecomer’s own strategic calculations) and they
ignore the issue as to how the latecomer can shape events so that business arrangements
involving “transfer” can be turned into leverage and learning opportunities. So it is a basic
proposition that we can appropriate the concept of “resource leverage” as the over-arching
strategic framework in which to make sense of the successes of latecomers in breaking into
advanced technological sectors.
Consider the remarkable case of Taiwan Semiconductor Manufacturing Corporation
(TSMC), where a strategy of meeting the needs of incumbents has been taken all the way,
to the point that TSMC was started in the mid-1980s with the avowed goal of not producing
products of its own at all, but as a fabrication service for others. The entire strategy of
478 MATHEWS

TSMC has been built on leveraging knowledge from these customer linkages. The timing
was perfect, as so many new start-ups were being created in the USA without the means or
the desire to build their own expensive fabrication facilities. Thus TSMC exactly matched
the needs of these fabless IC producers. Moreover it has leveraged itself abreast of the
technological frontier by offering guaranteed output for specialized ICs to key corporate
customers, with the quid pro quo being that these customers provide the specifications and
the process know-how needed to produce their product. Once in possession of this knowl-
edge, TSMC integrates it with other production processes to expand its range of offerings
to other customers—without ever breaching confidentiality for the original customers, and
without ever needing to offer a product of its own. TSMC by the early 1990s was the most
successful IC foundry in the world, and has held that position ever since.

4.3. Learning

Linkage and leverage are insufficient on their own to account for latecomer success. There
also has to be a notion of learning, to correspond to the notions of “technological effort”
that are prominent in the development literature. To answer the question how does the LCF
absorb the resources leveraged, involves examining the capacities which the latecomer
brings to its task, and how it is able to build on these to enhance its dynamic capabilities.
It involves shifting perspective to view the latecomer firm as an instrument of learning,
through repeated applications of linkage and leverage.
The “knowledge-based theory of the firm” sees firms as instruments for the development
of dynamic capabilities that serve as foundation for the creation of competitive advantages.
In the formulation of Teece, Pisano and Shuen (1997) the focus is not just on the exploita-
tion of existing internal and external firm-specific capabilities (as is done in other strategic
paradigms), but on how the firm can develop new ones. Such a concern applies, a fortiori,
to the case of the latecomer firm, which is above all an instrument for rapid organizational
learning. The LCF acquires its initial resources through leverage and turns them into capa-
bilites, and then expands and deepens these capabilities through iterated rounds of leverage
and internal competence development, paced by the demands of high technology markets.
We can build a plausible account of how this is achieved through adapting conceptual cat-
egories from the organization and management literature, such as “absorptive capacities”
and “combinative capabilities” as well as “institutional resources.” The adaptation can be
accomplished as follows.
Cohen and Levinthal (1990) introduced the category of “absorptive capacity” not with
any overt interest in the LCF, but as a means of explaining the R&D behavior of advanced
firms. Arguing from the literature on cognitive theory and learning processes, they develop
the propositions that the ability to absorb new information is a function of the richness of
the pre-existing knowledge structure, and that learning performance is maximized when the
object of learning is related to what is already known. These notions are carried over to the
organizational dimension, where absorptive capacity is defined in terms of an organization’s
capability to capture, absorb and exploit new information in a way that enhances its com-
petitive and strategic options. This capability is conceived explicitly as an organizational
COMPETITIVE ADVANTAGES OF THE LATECOMER FIRM 479

capability, i.e. in terms of the firm’s ability to integrate and extend the learning and experi-
ences of its individual members. The link is made to R&D expenditures, which from this
perspective are seen to provide the firm with a greater capacity for absorbing technological
and market “shocks,” and thus enhancing its competitive prospects, rather than simply as a
means of bringing new products to market.
Now precisely the same arguments can be used in adapting the notion of “absorptive
capacity” to the case of the LCF. Since we are posing external resource leverage as the
principal means through which the LCF executes its catch up strategy, it is clear that this
strategy will depend for its effectiveness on the ability of the firm to “absorb” the leveraged
resources (product and process technologies; tacit and explicit knowledge). Absorptive
capacities for Korean firms entering the semiconductor industry were formed through earlier
experiences in mastering mass production of electronics goods, in conceiving and executing
major investments in plant and equipment, and most fundamentally of all in appraising a
new business area and executing an entry strategy. These were well-honed skills when the
Korean firms elected to enter the semiconductor sector.
Likewise, Kogut and Zander (1992) introduced the category of “combinative capabili-
ties” not for purposes connected with the LCF, but to lay out an ambitious organizational
foundation for a “theory of the firm.” While their efforts have been subjected to sustained
discussion (Kogut and Zander, 1996), our interest lies not in the question of foundations,
but in the applicability of the notion of combinative capabilities to the operations of the
LCF. Combinative capabilities are conceived as an organizational capacity to generate new
applications for existing knowledge. By combinative capabilities, Kogut and Zander mean
“the intersection of the capability of the firm to exploit its knowledge and the unexplored
potential of the technology” (1992:391). Combinative capabilities are proposed as an ex-
planation for competitive success that is independent of considerations of market position
and industry structure.
Again, it seems plausible to adapt this notion to the needs and activities of the LCF. It
is concerned most assuredly to develop its capacities through “learning,” i.e. through the
absorption of resources leveraged externally and their internalization into manufacturing
and product development capabilities. In such a venture, the LCF is not concerned to
generate “new knowledge” but to adapt existing technologies as fast as possible for its own
catch-up endeavors. These technologies are unlikely to be presented to the LCF in a discrete
“chunk”; rather, they will have to be assembled from a variety of existing sources. This was
certainly the case with the semiconductor industry, where chip fabrication equipment was
progressively made available by commercial vendors through the 1980s, but Korean and
Taiwanese firms had to be able to “mix and match” in order to build competitive production
systems (Mathews and Cho, 1999). While their internal organizational learning strategies
for accomplishing such a goal certainly differed, a common conceptual precondition for
their success would seem to be a sophisticated degree of “combinative capabilities.”
But there is a further factor. Firms in East Asia do not undertake their learning on their
own. They are buttressed, supported and disciplined by an institutional framework that ac-
celerates and guides their learning. Public agencies and various forms of inter-organizational
superstructures create the conditions in which the processes of learning and leverage can be
applied, over and over again, each time at higher levels of technological and organizational
480 MATHEWS

Figure 2. Extended resource leverage and the cone of capabilities. (Source: Mathews and Cho (1999)).

capability—as demonstrated in the examples of Korea and Taiwan (Amsden, 1997, 2001;
Lin, 1998; Kim, 1997).
The whole process of linkage, leverage and learning, within its institutional setting which
can be termed “developmental resource leverage,” can be depicted as a spiral of expand-
ing capabilities, each iteration serving as the platform for the next—as shown in figure 2
(Mathews and Cho, 1999).
Attempts to enter high technology sectors are not always successful; indeed, success
is the exception rather than the rule. But in cases such as semiconductors in Korea and
Taiwan, the institutional framework can be seen to have ushered the newly created industry
through four clear phases, of preparation (laying the groundwork in terms of basic skills),
seeding (leveraging the targeted technology), propagation (diffusion of capabilities to as
many firms as possible) and sustainability (deepening the roots of capabilities through R&D
expenditures, globalization of production and marketing, or through entering alliances with
advanced firms).
The strategic implications of the dynamic capabilities perspective is that a firm is involved
in “choosing among and committing to long-term paths or trajectories of competence de-
velopment” (Teece, Pisano and Shuen, 1997:529). How should such strategic choices be
made? What criteria should be appealed to in making such choices? Here we enter territory
which is, at least theoretically, under-explored.

5. Strategic targeting of resources to leverage

In the Resource-based view of the firm, it is claimed that firms will seek to extend their
competitive advantages by basing them on resources which are difficult to imitate or replicate
by rivals, or difficult to substitute through alternative technological channels. This leads
authors such as Dierickx and Cool (1989) to develop a set of criteria characterizing those
COMPETITIVE ADVANTAGES OF THE LATECOMER FIRM 481

resources which, they claim, are most amenable to being sustained as a source of competitive
advantage. These are that the resources should be:

• Valuable and rare—i.e., distinctive;

• Non-imitable—i.e., not easily imitated by rivals;
• Non-transferable—i.e., not easily bought or sold on markets, but having some intrinsic
connection to the firm.

Viewed from the perspective of the latecomer firm, these criteria characterize the chal-
lenge that it faces. How is the firm to overcome such a “resource position barrier” (Wernerfelt,
1984)? One plausible answer is that the latecomer twists the question. It asks not “How am
I to overcome this insuperable barrier?” but “Where can I find the resources that are most
amenable to leverage?” From this perspective, the criteria utilized by the Resource-based
view turn out to be exceedingly useful—but in inverted fashion.
In practice, we know that resources are never completely inimitable, durable or non-
transferable. If they were, there would be no diffusion of innovations, no high-technology
competition, and certainly no LCFs. Indeed, we know that leading high-technology firms
like Intel, Motorola or Texas Instruments do not regard their resources as non-imitable,
non-durable and non-transferable. They exploit their resources for their own benefit, in
the early stages of development of a new market, and then disseminate them for further
profit through licensing to third parties and technology transfer to affiliates. In some cases,
such as Intel’s celebrated withdrawal from memory chips production in the mid-1980s,
they formulate their strategies precisely on the understanding that resources have become
imitable and have been transferred, in this case to Japanese competitors (Burgelman, 1994).
Why should the latecomer firm not draw similar conclusions?
This gives us a clue as to how to reformulate the conditions specified in the resource-
based theory of the firm, so as to render intelligible the strategy of the LCF. Let us turn these
criteria into their positive variants. In this form, they clearly do not apply to the resources
being developed or extended within the firm. But they certainly can be applied to the types
of resources that LCFs might wish to leverage, from external sources. Specifically, we may
postulate that the LCF is likely to target those resources which are:

• Least rare;
• Most imitable—i.e., most easily imitated (through reverse engineering, for example);
• Most transferable—i.e., most easily transferred as explicit technical knowledge (available
through consultants) or on the open market in the form of specialized equipment.

These criteria thus provide us with a framework for characterizing the strategy of the LCF
consistent with existing organization and management theory. The LCF targets resources
for leverage which are least rare and most imitable and transferable. Let us further probe
these criteria, emphasizing high tech industries such as semiconductors, since this is where
we know that Korean and Taiwanese firms have made their most successful incursions.
482 MATHEWS

5.1. Rareness

Resource availability is what guides the targeting of industries by latecomers for strategic
entry. This is done by firms on their own, but also in conjunction with governments and
institutions in latecomer countries. The kinds of industries targeted for entry are those
where standardization has been taken farthest, and products are acquiring the character of
commodities. Spence (1981) argued that incumbent firms draw learning curve advantages
only for as long as critical technologies remain proprietary. As they diffuse, so they cease
to become sources of advantage for incumbents. Latecomer firms can then target them for
strategic entry. To do so they have to have some initial advantages, such as low costs, or local
supply to multinationals, which serve as a platform for development; these are the essential
preconditions without which no development could take place.2 It is the very availability
of resources, once technologies have been standardized, that provide latecomers with a
foot in the door, and with their first set of strategic choices—driven by the fundamental
Schumpeterian dynamics of industries (Schumpeter, 1912/1934/1983).

5.2. Imitability

For the latecomer firm, resources that are of strategic significance are those that are not just
accessible (i.e. least rare) but also those that are most imitable. Resources which are imitable
are those which are replicable by the LCF, i.e. where the LCF can appropriate the resources
in standardized form, such as through licensing a product design, or reverse engineering a
product technology which has become standardized. Resources become imitable through
the strategies of leading firms themselves, such as in the case of Intel making its micro-
processor widely available. In this connection, In this situation, “tacit knowledge” is at a
minimum—or tacit knowledge can be acquired as part of a technology transfer agreement
or a contract manufacturing arrangement. More formally, and again reversing the criteria
usually advanced in the theory of the RBV of the firm, we may say that resources are most
imitable when they are least:

• Path dependent—i.e., not having a specific history which tends towards firms having
highly specialized skills;
• Causally ambiguous—i.e., resources where it is relatively straightforward to attribute the
main factors involved in their successful practice (Reed and DeFillippi, 1990); and
• Subject to “time compression diseconomies”—i.e., they do not need long periods of prior
apprenticeship in securing the tacit knowledge needed for their practice.

In high technology industries, it is the availability of product designs under license, or

the possibility of purchasing a stake in high technology start-ups, or of opening a “listening
post” company in high technology areas such as Silicon Valley, that enables the LCF to
replicate and imitate the products of advanced firms. Provided the LCF has acquired suffi-
cient prior absorptive capacity to understand and build on such designs, it can appropriate
their underpinning rationale through perfectly legal channels. Causal ambiguity and time
compression diseconomies can be counteracted by the use of engineering consulting firms,
who embody current best practice and can pass it on—for a substantial fee; by the use of
COMPETITIVE ADVANTAGES OF THE LATECOMER FIRM 483

equipment vendors, who embody a host of previous technological learning in their latest
products; and by specially structured R&D consortia that break down resource accession
barriers (Vonortas and Safioleas, 1997; Mathews, 2002c).

5.3. Transferability

Resources are transferable if they can be bought in the form of product licenses, or particu-
larly in the form of transferable process technology from independent equipment vendors. In
the early days of high technology industries such as semiconductors, firms such as Fairchild
would develop their own process technology (fabrication equipment), in close consultation
with equipment suppliers. It was therefore proprietary technology, and non-transferable.
But as the industry matured, so these equipment vendors would look for wider markets, and
latecomer firm new entrants from Korea and Taiwan turned out to be important customers
for this equipment. Their own special capability lay in their ability to rapidly integrate
equipment supplied from a mix of vendors, typically from the USA and Japan; that is to
say, they developed and exercised their combinative capabilities. Resources could also be
transferred through OEM fabrication contracts, where product and process specifications
would be supplied as part of the contract. The commissioning firm might also insist on an
exchange of engineers (and thus an exchange of tacit knowledge) in order to ensure the
quality and reliability of chip supplies. From the perspective of the LCF, these specifica-
tions and exchanges represented an unparalleled learning opportunity. This was certainly
an important avenue for the acquisition of capabilities by Korean and Taiwanese LCFs in
the semiconductor industry.

5.4. Practical resource leverage

How are such criteria to be utilized in practice? It is feasible for a LCF to perform a study
of potential resources (through consultancies, or through fact-finding missions, or simply
through attending trade fairs) that analyzes potential resources in terms of the criteria of their
relative imitability, substitutability and transferability. Indeed, in retrospect, we may see that
this is precisely what LCF firms have done in practice, albeit without explicit reference to
the theory being developed in this paper. They have formulated in an ad hoc way a strategy
for breaking the grip of incumbents, in sectors where resources were available and where
they were most imitable, substitutable and transferable. The fact that technological change
tends to follow pathways, or trajectories, is another factor that assists the LCF in predicting
and anticipating the overall direction of change—as emphasized in the dynamic capabilities
paradigm (Teece, Pisano and Shuen, 1997).
The argument offered here provides a plausible and testable account of the acquisition
of advanced capabilities by latecomer firms. The key to the process is resource leverage.
This is certainly not unique to the LCF; on the contrary, as emphasized by Prahalad and
Hamel (1990), it is utilized by incumbents to enhance their already considerable competi-
tive advantages—such as Cisco acquiring new firms at the technology frontier rather than
investing in its own R&D. The argument is that the LCF can also utilize such a resource
leverage strategy—and make it work because it has some initial latecomer advantages, such
484 MATHEWS

as low costs. The fundamental condition for its success is the availability of resources—such
as technology and capital flows—in the global economy (Mathews, 2002a, b).
The aim of these latecomer firms is not to stay as “fast followers” forever, but to catch up
with the world’s best and to become leading players themselves—as Samsung has arguably
done already in the DRAM industry. It is in this sense that Kim (1997) claims that Korean
firms such as Samsung move “from imitation to innovation.” There is already abundant
evidence that firms that start as latecomers quickly move to become innovators—in terms
of patents acquired and range of advanced products produced (Amsden and Mourshed,
1997; Choung et al., 2000). The point is that the LCF does not stay a latecomer forever; its
goal is to catch up and become a sophisticated, advanced firm as fast as possible.
In sum, the strategic intent of the LCF is to achieve industrial catchup. Its strategic means
include linkage, leverage and learning, involving strategic choices over such measures as
the forms of linkage to seek, the resources to be targeted for leverage, and the means
through which dynamic capabilities may be enhanced. The strategic effect of the successful
application of these measures is to overcome the latecomer’s disadvantages, and converting
them to advantages by judicious strategic choice.
What is striking is that the LCF does not seek permanent “sustainable” competitive
advantages but rather analyzes the world in terms of its potential for appropriability, imitation
and transfer. It sees the world as full of customers and potential resources for leverage rather
than a world of zero-sum competitors. After all, the notion of sustainability of competitive
advantage is grounded in the prolongation of non-equilibrium distribution of resources
and profits, in the extraction over a prolonged period of monopoly rents. By contrast, the
success of LCFs in high technology industries, and of firms generally in conditions of
hypercompetition, rests in an embrace of competition, via the promotion of diffusion, as
well as of collaborative advantage, through resource leverage and complementary activities.
It is this combination of competitive and collaborative capabilities which appears, at the
most fundamental level, to account for LCF success. This pathway of “linkage, leverage and
learning” practised by latecomer firms, is clearly a powerful model of wealth generation,
of potentially wide applicability.

6. Concluding remarks

The aim of this paper has been to utilize the concepts and frameworks of strategic man-
agement to make sense of the strategies of latecomer firms in certain industries where they
have been successful to date, in order to generalize these strategies and establish their wider
applicability. The aim has been to put the concepts of linkage, leverage and learning to an
unaccustomed use—explaining the success of challengers to incumbents, rather than the
sustaining of the advantages of the incumbents themselves. This is a natural and plausible
application of the resource-based view. Once tuned to the perspective of the latecomer firm,
it provides a secure theoretical foundation for latecomer strategies of catch-up based on
linkage, leverage and learning—in conditions that favor such an approach. The final claim
of the paper is that the conditions being created by globalization, where interfirm networks
multiply, and where financial and technological resources have never been so abundant, are
precisely the conditions that favor the success of the catch-up strategies described.
COMPETITIVE ADVANTAGES OF THE LATECOMER FIRM 485

The strategies employed by the LCF—such as seeking to complement the strategic

goals of incumbents; targeting resources for leverage which are least rare and most im-
itable and transferable; and iteratively applying these approaches in an upward spiral of
enhancing levels of absorptive capacity and combinative capabilities—may also be desir-
able strategies for firms engaging with each other in advanced competitive conditions, or
for firms aspiring to enter markets which lie beyond their present reach. We noted above
that strategies of linkage and leverage characterize many cases of firms in Czechoslo-
vakia or Mexico seeking to upgrade their technological capabilities and access to markets
(Deardroff and Djankov, 2000; Bair and Gereffi, 2001). These cases are, fundamentally,
concerned with questions of knowledge leverage and securing transient competitive advan-
tages through the management of knowledge (Leonard-Barton, 1995; Grant, 1991, 1996).
In this sense, the strategies of the LCF may indeed be generalizable to a much wider class
of settings.
But the primary purpose of this paper is not to demonstrate extensive application of
linkage, leverage and learning, but its intensive usage by the firms that most need to find
a way to become players in the world economy. The paper is based then on two core
convictions. The powerful theoretical apparatus of strategic management is applicable to
more cases than those to which it has been, somewhat narrowly, applied so far. In particular
it helps to make sense of successful catch-up strategies, by latecomer firms, where there are
links to be made and resources to be leveraged in the wider global economy. And the situation
of latecomer firms in the least developed countries, such as parts of the Asia-Pacific, sub-
Saharan Africa, Central America or Central Asia, might not be completely without hope.
Indeed their prospects might be enhanced, rather than further marginalized, in an era of
global interfirm connections, provided they formulate their strategies for engagement with
a clear understanding of the constraints imposed by their status as latecomers, as well
as the potential advantages. This is the strategic value of the category of the latecomer
firm.

Acknowledgments

This paper has been through many revisions since its original exposure at the Academy
of Management meeting in San Diego, 1998. I would like to acknowledge the helpful
comments received from many colleagues, including Michael Best, Dong-Sung Cho, Mark
Dodgson, Michael Hobday, Linsu Kim, Sanjaya Lall, Otto Lin, Rita McGrath, Susan Oliver,
Jon Sigurdson, Charles Snow, and the anonymous referee for this journal.

Notes

1. “The economy as a whole” is the phrase used by Schumpeter in the “lost” final chapter of his 1912 text, The
Theory of Economic Development—first translated and published in English in Schumpeter (1912/2002).
2. There is an implicit reference to a notion of global product life cycles operating here (e.g. as expounded in
Vernon, 1979) or the Japanese variant in the form of the “flying geese” model of successive industry transfer
between countries (Akamatsu, 1962), with the proviso that the latecomer firm has to develop a strategy to take
advantage of the opportunities presented by these cost-driven industrial shifts.
486 MATHEWS

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Dr John A. Mathews is Professor of Strategic Management at the Macquarie Graduate School of Management
at Macquarie University, Sydney, where he has taught courses in global strategic management and international
business since 1998. He obtained his PhD in cybernetics from Imperial College at the University of London in
1980. He has researched latecomer firms in Asia-Pacific for several years, publishing his findings in such journals
as California Management Review, Academy of Management Executive, Journal of World Business, Research
Policy and Int Journal of Technology Management, as well as in two books: Tiger Technology: The Creation of
a Semiconductor Industry in East Asia (2002, Cambridge University Press; co-authored with Dong-Sung Cho)
and Dragon Multinational: A New Model of Global Growth (2002, Oxford University Press, New York). He is
worldwide editor of the journal Industry and Innovation.