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01/31/92

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Computer industry research project links schools, center

STANFORD -- Stanford University researchers have received a major grant from the Sloan Foundation to begin the Computer Industry Project, a multidisciplinary study of firms in the information industry, particularly those that design and produce computers and software.

Faculty members from the Graduate School of Business, the School of Engineering and the Asia/Pacific Research Center at Stanford are working together on research that will take faculty members to the assembly lines and into the boardrooms and laboratories of high-technology firms, including international and Silicon Valley-based companies.

An industrial advisory committee of leaders of important American, Japanese and European companies will help the researchers to focus on issues of concern to industry.

"Active participation by industry leaders will ensure that the project will not consist simply of armchair academics, possessing only a layman's familiarity with technology and business," said Daniel Okimoto, political science professor and director of the Asia/Pacific Research Center.

The project is designed to produce field-based research on the organizational and technological dynamics of the computer industry. Research is divided into four inter- related areas: operations; corporate organization and strategy; the structure and evolution of firms and industry; and global competition. Each area involves a team of research faculty and students. Several research projects have begun, including an ambitious international survey of operational strategies for company success.

Faculty participants and topics covered by the four modules include:

  • Operations - coordinated by Michael Harrison, Gregor G. Peterson Professor of Operations Management at the business school, and Hau Lee, professor of industrial engineering.

The operations module examines manufacturing issues, such as product delivery, marketing, service and customer response. The time required for a supplier to manufacture and deliver goods and services to an end user is a key competitive issue in the information industry. Some researchers have argued that Japanese firms gain a competitive advantage by pruning their organizations, lowering transaction costs and eliminating unnecessary inventories.

Research questions in this area include: How should response-time performance be measured? How do response times vary among companies in the same industry? How can time to meet orders be reduced?

  • Corporate organization and strategy - coordinated by Kathleen Eisenhardt, associate professor of industrial engineering.

Research in this module centers on strategic alliances, leadership and innovation at the level of individual firms. Issues being examined include how corporate leaders devise strategies, adapt and survive in the face of stiff competition and rapid change in the industry; how executive teams interact and make strategic choices; how they deal with and resolve conflicts; and how psychological factors affect their behavior. The group also studies strategic alliances, decisions to integrate vertically and the evolution of firms. Work is under way to probe the evolution of strategies and products in a major semiconductor firm and in a set of new ventures.

  • The structure and evolution of firms and industry - coordinated by Garth Saloner, professor of economics and strategic management in the business school, and Timothy Bresnahan, professor of economics.

This area of study will analyze individual firms and link their actions to the dynamics between the industry and the regional and national systems within which firms develop and compete. Research questions include: How do firms deal with and influence the evolution of formal and de facto industry standards? What is the role of strategic alliances and joint ventures in that process? What is the relationship between investment in information technology and productivity? Why has software production lagged behind hardware? Why have so many software products failed to make significant inroads into the market?

  • Global competition - coordinated by Okimoto.

This module is assessing comparative advantage and competitiveness internationally. Research is under way on the information industries in Japan and Western Europe, as well as on competitiveness in the United States. One area of interest is the effect of government policy and agencies on competitiveness; for example, the impact of Japan's Ministry of International Trade and Industry (MITI). Another is the organization of research and development within Japanese companies and its connection to the larger system of university-based training and government research. Researchers are studying how companies organize for research and development; whether there are differences in the way risks are defined and measured; and how technology is diffused across firms within a given industry.

The Stanford grant is one of four recent grants made by the Sloan Foundation to establish multidisciplinary research programs in specific industries. Other grants have been awarded to the Massachusetts Institute of Technology for the study of pharmaceuticals, the University of California- Berkeley for semiconductors, Harvard University for the study of textiles, and the University of Pittsburgh and Carnegie- Mellon University for the steel industry.

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