Knowledge integration and vertical specialization in the semiconductor industry

We use patent data from the worldwide semiconductor industry to examine the effect of knowledge integration capabilities on firms' innovative performance, according to their role in the industry architecture. We argue that the organization of the industry knowledge base is characterized by a structure of distinct clusters of strongly coupled knowledge elements, and of interfaces between clusters considered. We find that the integration of complementary knowledge increases the innovative performance of all firms, whatever their position in the industry architecture. However, our results suggest that systems integrators play a critical role in the knowledge production process by investing more than other firms in the development of interfaces, which provide them with innovative advantage.