Technological Entrepreneurship : Modeling and Forecasting the Diffusion of Innovation in LCD Monitor Industry

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1 0 Inrnaional Confrnc on Economics and Financ Rsarch IPEDR vol.4 (0 (0 IACSIT Prss, Singaor Tchnological Enrrnurshi : Modling and Forcasing h Diffusion of Innovaion in LCD Monior Indusry Li-Ming Chuang, Chun-Chu Liu* Chang Jung Chrisian Univrsiy Profssor, Gradua School of Businss and Oraions Managmn *Profssor, Darmn of Inrnaional Businss Tainan Hsian,, China -mail: liming@mail.cjcu.du.w * -mail: lcc@mail.cjcu.du.w Chin-Min Huang**, Fng-Rong Lin*** Chang Jung Chrisian Univrsiy **Ph.D Sudn,Gradua School of Businss and Oraions Managmn ***Masr, Gradua School of Businss and Oraions Managmn **-mail:jimmy5857@yahoo.com.w Absrac Following h oolcronics indusry is h dvlomn of h smiconducor indusry srongly afr h high-ch indusry, a wo rillion, wo sar on of h focal oins. Rcn yars, h govrnmn uing in a lo of ainsaking ffor in, l us LCD indusry hav brisk rsuls, hrfor, h LCD indusry hav h firs lac in h global mark shar. Th walh of rsarch ino modlling and forcasing h diffusion of innovaions is imrssiv and confirms is coninuing imoranc as a rsarch oic. On of h arlis and mos widly usd modls dscribing h diffusion of innovaion is ha of Bass (969, 004. This sudy will build Bass Modls and modls basd on Bass (969 and Kumar and Krishna (00, alicaion mhods of onlinar las suars (LS for LCD TV mark o sima diffusion aramrs in h mulinaional modls, which by Modls ino a mulinaional aramrs ffc, his sudy xc o find hs aramr bwn mulinaional influnc. Furhr o comar Bass Modls and modls xlaind in h mulinaional mark for consumrs o buy a nw roduc of diffrncs, and h imac on h mulinaional mark basd on h ris of h Inrn o hl nrriss dvlo mor ffciv marking sragis. Kywords- Innovaion Diffusion Modl, Bass Modl, Modl, Mulinaional Diffusion Modl, LCD Indusry. I. ITRODUCTIO Th innovaion diffusion modl roosd by Bass (969 has bn widly usd in h liraur and has found alicaions in svral aras. Th undrsanding of h diffusion rocss of nw roducs is a ky facor in h sragic lanning of a firm and, as such, jusifis h numbr of conribuions from diffrn filds such as Indusrial Economics, Sragic Managmn and Marking. w roduc sals growh in a givn naion or sociy is affcd by many facors (Rogrs 995. Socio-conagion(or word-of-mouhhas bn found o b h mos imoran facor ha characrizs h diffusion rocss(bass 969, Moor 995.On of h arlis and mos widly usd modls dscribing h diffusion of innovaion is ha of Bass (969, 004. Th indusry of LCD indusry in has xrincd a hnomnal growh for h mor han as dcad, hrfor i is rgardd as h ngin of conomic dvlomn., Souh Kora and Jaan ar for h global TFT-LCD major roducing counris. Figur. Larg-siz TFT-LCD mark forcas sourc:dislay Rsarch II. THE BASS MODEL OF DIFFUSIO Th ah h cumulaiv adoion of an innovaion aks bwn inroducion and sauraion is gnrally modlld by an S curv. Examinaion of daa ss suggss ha his y of modl is gnrally aroria.(mad & Islam 006, and of hs, word of mouh has bn found o b h mos imoran facor ha characrizs h diffusion rocss (Bass 969, Moor 995. In a im and h cumulaiv numbr of dimnsions of h discussion, innovaion diffusion modl usd by a rocss of showing S-shad curv. According o Rogrs(96 du o innovaion diffusion bcaus h hrogniy of h oulaion srucur affcd innovaion, Bass ( 969 rovidd furhr modling Bass Modl basd on hazard funcion, h uaion is: P( A B f ( ( ( A B = = P( = = + F( P( B F( f ( = ( + F( ( F( ( This modl of h basic assumions is as follows: ( Dos no ra h urchas of consumr roducs. ( Modl dos no considr any variabls (advrising, 3

2 ric, c. (3 Modl for h dmand modl dos no considr h suly sid. Sal s Tim Figur. Growh of a nw roduc Rfrnc sourc: Bass (969. A nw roduc growh for modl consumr durabls. Managmn Scinc (r- 986; Jan 969; 5, 5; n ( f( ( F( whr, n( is h numbr of nw ador a im. ( is h cumulad numbr of nw ador a im. Thrfor, from E., sals a im can b dscribd as: d ( n ( = f ( ( + F (( F ( (3 d = + m m ( ( ( = ( m ( + ( ( m ( m In his uaion, [ m ( ] mans ha a im, innovaors, who wr no influncd by h adors bfor im, only by h mass mdia xrior influnc ado h nw roduc. ([ m (] mans ha a im, m imiaors, who imia h adors inrior influnc bfor im, ado h nw roduc. Th uaion also imlis ha a im 0, n(0 = m. III..THE MODEL OF DIFFUSIO Th innovaion diffusion modl in svral counris offrs many bnfis. Modling h ffc of diffrn naional culurs on h diffusion rocss givs insigh ino h ffc of naional diffrncs on h ra of adoion of h innovaion. Gansh & Kumar(996, Gansh, Kumar & Subramanian (997, Kumar, Gansh & Echambadi (998, and ohr scholars in h sudy of h inrnaional innovaion diffusion, hy usd Bass Modl o dsign a framwork for analysis diffusion o lad counris, lag counris and simulanous counris. Kumar & Krishnan (00 rovidd building modls, furhr mirical dmonsra mulinaional ffcs in h mulinaional marks. Thy find nw roducs in h lad counris wih im-lag ffcs, lag counris known o b mor ffciv, hrby incras h mark onial, whn h nw roducs o nry nw marks, will b mor raid diffusion. According o Bass (004, o caur h ffc of diffusion in on counry on diffusion in h ohr, w modl h diffusion of ach counry in h lins of h Gnralizd Bass Modl (GBM as follows: f ( = ( i + F i i( ( Fi( xi( i =,, (4 Whr i is h innovaion cofficin or xrnal influnc, ( i F i ( is h word of mouh ffc, and x i ( is h currn marking ffor as dfind in h GBM. Th currn marking ffor rm should includ only hos ffcs ha ar haning a im bcaus h ffc of hos ffors xndd u o h rvious im (i.., - is caurd by F i (. Bcaus our main focus is o modl h imac of diffusion in h ohr counry (say Counry or Rgion on h counry s (say Counry or Rgion diffusion, w modl x ( as follows: b chag a im in (5 x ( = diffusion forc of counry Hr, rrsns h naural im, h diffusion forc is simly h cumulaiv adoion u o, and b masurs h imac of counry s diffusion on counry s diffusion. Thn w hav df ( x( = b (6 d Thus, a similar diffrnial uaion can b drivd for counry s diffusion. Ths uaions can furhr b rducd o yild: ( F ( (7 ( + ( + bf ( ( + ( + b F ( + ( F ( ( + ( + b F( ( + ( + b F( + whr b and b ar h influncs of counry (or rgion on counry (or rgion, and vic vrsa, rscivly. n ( = funcion (F (; m, whr F ( = funcion (F (, ;,, b, whr F ( = funcion (F (, ;,, b, and so on. Thus, w find ha counry s sals growh is a rcursiv funcion and h aramrs involvd ar,,,, b, b, and m. Howvr, i dos no xlicily dnd on any variabl ohr han. Scifically, i is no sad as a funcion of counry s acual sals or cumulaiv sals. IV. EMPIRICAL DEMOSTRATIO A. Daa sourc Th objc of his sudy is h LCD indusry. Shimns of h daabass in Dislay Rsarch and Indusry and Tchnology Inllignc Srvics (ITISusd h sourc of saisical informaion. In h daabass, ha includs saisics on h grounds SAMSUG, SOY, PHILIPS, SHARP, LGE, TOSHIBA, PAASOIC VIZIO, POLAROID, FUAI, SAYO, TCL, HAIER, WEST I GHOUSE, JVC, and ohr brands. In h daabass, ha includs saisics on h grounds U.S.A, Jaan, Kora, and China rgions. (8 3

3 According o daa in Dislay Rsarch and Indusry and Tchnology Inllignc Srvics(ITIS, w found ha h currn LCD is in a riod of raid dvlomn, diffusion ra incrasd gradually, as LCD difficul o obain informaion, w can from 007 riod from January o March 009 h monhly daa o obain informaion. B. Modl simaion This sudy will us h Bass Modl and Modl o mirically dmonsra h imac of counry-o-counry rlaions bwn h significan layrs, and hn o discuss whhr h diffusion will occur a a mor raid ac. This scion will us hr kinds of mulinaional modls for mirical rsarch and rocd o analyz h rsuls of h mulinaional marks. According o Srinivasan & Mason (986, his sudy ados a rogram using a modl of on-linar las suars (LS mhod in saisical analysis sofwar (SAS o coml his iraiv rocdur. Th sudy furhr ados Bass Modls and modls basd on Bass (969 and Kumar & Krishna (00, using h mhods of onlinar las suars (LS for LCD monior mark o sima h ffcs of diffusion aramrs in h mulinaional modls. In h rocss, h Modls layd a ky rol. This sudy xcs o idnify h influncs of hs aramrs on h mulinaional inracion. Cas. LCD monior indusry bgan o dvlo in Jaan, which was also h firs mark of h indusry s roducs. Th roducs lar nrd h Jaan mark. So U.S.A. is a lad counry, whil Jaan is a lag counry. Analysis of h rlaionshi bwn h wo counris framwork is shown in Figur 3: B Jaan P,,m U.S.A P,,m Tim of Inroducion Inroducion of Innovaion: U.S.A firs Jaan lar Diffusion Effcs: U.S.A. affcs Jaan Figur 3. Lad-Lag ffcs for U.S.A.-Jaan Cas. Sinc LCD monior indusry is from Jaan bgan o dvlo, bu also h firs o nry h Jaan mark, and lar nry h Kora mark, so Jaan is a lad counry, Jaan is a lag counry. Analysis of h rlaionshi bwn h wo counris framwork shown in Figur 4: B Kora P,,m Jaan P,,m Tim of Inroducion Figur 4. Lad-Lag ffcs for Jaan-Kora W hav comld h dscriion of h mulinaional framwork, and hav furhr dsignd h wo counris mark formula, rscivly, as follows: F ( ( ( = ( m F ( + ( ( + ( + bf( ( + ( + bf( (0 Cas 3. Jaan is h firs counry of h dvlomn of h LCD monior indusry and also h firs mark for is roducs, which lar nrd h Kora and marks. Th roducs nrd lar han hy did Kora. So Jaan is a lad counry, Kora and ar lag counris. Analysis of h rlaionshi bwn h hr counris framwork is shown in Figur 5: Jaan P,,m b b3 B3 Kora P,,m P3,,m3 Tim of Inroducion Inroducion of Innovaion: Jaan firs Kora lar Diffusion Effcs: Jaan. affcs Kora B3 (9 Inroducionof Innovaion: U.S.A firs Jaan lar Diffusion Effcs: U.S.A. affcs Jaan Figur 5. Lad-Lag and Simulanous Effcs for hr counris W hav comld h dscriion of h mulinaional framwork and furhr dsignd h hr counris mark formula, rscivly, as follows: ( F ( ( ( ( 33

4 ( = ( m F ( = ( m F ( + ( + bf( + b3f3( ( + ( + bf( + b3f3( ( 3+ 3 ( + b3f( + b3f( ( 3+ 3 ( + b3f( + b3f( ( (3 Cas 4. This scion discusss h diffusion of crossrgional modl basd on Kumar & Krishnan (00 -- rgional and rgional discussions as o whhr h imac will also b inraciv. Sinc LCD monior indusry bgan o dvlo in Jaan, nring h Jaan mark firs and lar h and China marks, wih China lar han, Jaan is a lad counry and and China ar lag counris. In h LCD monior indusry, bcaus mos of h craion of brands wr in Jaan and, Jaan and would affc h adoion of brands in China, rahr han China affcing Jaan and. Analysis of h rlaionshi bwn h hr rgions framwork is shown in Figur 6: Jaan P,,m b b3 B3 Figur 6. Lag-Lag and Simulanous Effcs for hr rgions W hav comld h dscriion of h mulinaional framwork, furhr dsigning h hr rgions mark formula, rscivly, as follows: ( F( ( + ( + + (4 F ( ( ( = ( m F P,,m China P3,3,m3 Tim of Inroducion 3 B3 ( + ( + bf( ( + ( + bf( Inroducionof Innovaion: Jaan firs & China lar Diffusion Effcs: Jaan affcs & China. affcs China ( 3+ 3 ( + b3f( + b3f( 3 ( 3+ 3 ( + b3f( + b3f( 3 (5 (6 V. EMPIRICAL RESULTS Rsuls of h mirical dmonsraion of aramrs simaion of h modls ar shown in Tabl : TABLE I. Bass Modl EMPIRICAL RESULTS FOR THE PARAMETERS OF FIISHIG U.S.A Jaan Kora China P= P= P= P= P=0.004 = =0.054 = = = m=.95e8 m=.6559e9 m=.0857e8 m=5.308e8 m=4.5483e8 = = Modl U.S.A. = = Jaan m=.9e8 m=7.3694e8 b =.E-7 = = Modl Jaan = = Kora Modl m=.3765e9 m=.0857e8 b =.E-7 = = = Jaan = = = Kora - Modl m=.3463e9 m=.0857e8 m=5.39e8 b=.e-8 b3=.e-8 b3=.e-8 b3=.e-8 = = = Jaan =0.058 = = China m=3.086e9 m=5.39e8 m=4.3045e8 b=.e-8 b3=.09e-8 b3=.e-8 Rsuls of mirical dmonsra know, whhr i is Bass Modls or modls o imia cofficin(ar mor han innovaion cofficin (, In lin wih xcaions. Bcaus, ha LCD indusry, consumrs wordof-mouh ffcs ar mor han in accordanc wih xrnal informaion and accd h ffcs of innovaion. Four cass of Modls, whn h imor of mulinaional aramrs, alhough mulinaional aramrs showd a vry small, bu i sill maks imiaing cofficin ( mor han innovaion cofficin(, and his sudy found ha h mark onial of h law did no incras or dcras. Th uros of his sudy is dscribd blow in rms of mark counris: ( U.S.A.:LCD roducs wr h firs invnion of h U.S.A., bu h dvlomn of h mark, did no mak good us, so ha h diffusion of innovaion had no bn significan. ( Jaan:Jaan was h scond o nry ino h mark, so cofficin of innovaion lowr han in ohr counris. Howvr, w obaind h daa can b found in h as wo yars in h imia cofficin small han ohr counris, so w can find LCD 34

5 mark in Jaan has bn gradually dvlod. (3 Kora : Sinc LCD indusris brand mosly from Jaan and Kora, and Jaan nry ino h mark arlir han Kora, innovaion cofficin and imia cofficin in Kora mark ar b highr. (4 :Following h oolcronics indusry is h dvlomn of h smiconducor indusry srongly afr h high-ch indusry, a wo rillion, wo sar on of h focal oins. Thrfor LCD indusris raid dvlomn, and now, hav h firs lac in h global mark shar, so ha, mark onial (mis highs. (5 China:Bcaus LCD la nry ino h China mark and China's ris whn h conomic siuaion (i.. GDP, h imia cofficin is highr han ohr counris, so mor asily ado h LCD. VI. COCLUSIOS Modls aramrs ar largr han Bass Modls, alhough his sudy found ha mulinaional aramrs ar significan, and h Modls by ohr counris or rgions affcd, innovaion cofficin, imiaion cofficin and mark onial almos largr han aramrs of Bass Modls. Th aramrs rsuls of Bass Modls and Modls, and innovaion cofficins ( ar lss han imiaing cofficins(. In lin wih xcaions also said h LCD indusry's word-of-mouh ffc among consumrs ffc grar han h imac of xrnal ffc. So if nrriss such as ovrsimaion h ffc of xrnal informaion lik an advrismn, or undrsima h word-of-mouh, h marking sragy will b o dvlo rsourcs on h rror, no only h formaion of was, bu also in urn affc h rolifraion of nw roducs. Sragy in h Enrriss should b acivly majoriy of rsourcs concnrad in ugrading roduc ualiy, funcional divrsificaion and furhr saisfy consumr s fling. Anohr mchanism can b s u afr-sals srvic o nhanc h goodwill of consumr s roducs, and furhr cra a br word-of-mouh ffc. Following ar our rcommndaions for fuur rsarch on his oic: ( Th modl assssmn criria, his sudy us h Adjusd R o mak judgmns. For abiliy o xlain h br on modl, fuur rsarch dircion can incras forcas assssmn criria xaml ado Man Absolu Prcnag Error ( MAPE o srnghn h modl assssmn criria. ( Dynamic comiion in h mark, h firs lac in h global mark shar will chang on im. Wha o do o g h bs modl confirm is worh xloring. (3 Th dualiy of chnology on counris, mayb chang ach ohr. In his sudy, innovaion of chnology on LCD had major brakhrough, in. So h rsuls of innovaion cofficins and imiaing cofficins may hav diffrn. (4 Th daa in usion mus ry o obain from h mos rimiiv o h rcn daa, h rsarch rsuls will br rflc h ru mark siuaion. (5 On mulinaional diffusion modl, in addiion o modl, ar hr br suid wih goodnss of fi? Th roosals will coninu o fuur rsarch sudis. REFERECES [] Bass, F. M. (969. A nw roduc growh modl for consumr durabls. Managmn Scinc, 5, 5-7. [] Bass, F. M. (004. A w Produc Growh Modl for Consumr Durabls. Managmn Scinc, 50(, 85-83(rrind from January 969. [3] Bass, F. M. (004. Th Bass Modl: A Commnary. Managmn Scinc, 50(, (Sulmn. [4] Gansh, J., & Kumar, V. (996. Cauring h cross-naional larning ffcs: An analysis of an indusrial chnology diffusion. Journal of Acadmy of Marking Scinc, 4, [5] Gansh, J., Kumar, V., & Subramanian, V. (997. Larning ffcs in mulinaional diffusion of consumr durabls: An xloraory invsigaion. Journal of Acadmy of Marking Scinc, 5(3, 4 8. [6] Kumar, V., & Krishnan, T. V. (00. Mulinaional diffusion modls: An alrnaiv framwork. Marking Scinc,, [7] Kumar, V., Gansh, R., & Echambadi, R. (998. Crossnaional diffusion rsarch: Wha do w know and how crain ar w? Journal of Produc Innovaion Managmn, 5, [8] Mad,., & Islam, T. (006. Modlling and forcasing h diffusion of innovaion A 5-yar rviw. Inrnaional Journal of Forcasing,, [9] Rogrs, E. M. (96. Diffusion of innovaions. w York7 Th Fr Prss. [0] Rogrs, E. M. (995. Diffusion of innovaions (Fourh Ediion. w York7 Th Fr Prss. [] Srinivasan, V., & Mason, C. H. (986. on-linar las suars simaion of nw roduc diffusion modls. Marking Scinc, 5(,