Geographic scope, isolating mechanisms, and firm performance: Antecedents and consequences of isolating mechanisms

In this dissertation, I examine the antecedents and consequences of isolating mechanisms or the barriers to imitation, focusing on the role of geographic scope of knowledge acquisition. I address the following four questions concerning the antecedents and consequences of isolating mechanisms with data from the semiconductor industry.;The first two questions address antecedents of isolating mechanisms, focusing on sources of and the relationships among the factors creating isolating mechanisms. The first question asks whether geographic scope of knowledge acquisition or the extent to which a firm acquires knowledge from multiple countries can be an independent source of isolating mechanisms. I posit that geographic scope can be an independent source of isolating mechanisms because embeddedness of knowledge in the multiple layers of nested networks within a country can increase causal ambiguity and uniqueness to those who do not have membership in the networks. On this basis, I maintain that, independently from and jointly with intrinsic characteristics of knowledge, geographic scope of knowledge acquisition can create isolating mechanisms. Empirical analyses using the accelerated failure-time (AFT) technique corroborate the arguments.;The second question addresses the relationship among the causal factors linked to the creation of isolating mechanisms. I posit that the causal factors that create isolating mechanisms can be equifinal and functionally equivalent in nature. Empirical analyses using the fuzzy set qualitative comparative analysis (QCA) method corroborate the arguments that multiple paths can lead to the creation of isolating mechanisms and, in these paths, causal factors from the two different sources of isolating mechanisms, intrinsic characteristics of knowledge and geographic scope of knowledge acquisition, can be functionally equivalent.;The remaining two questions address consequences of isolating mechanisms, focusing on the value appropriation aspects of geographic scope of knowledge acquisition. The third question addresses the implications of isolating mechanisms in knowledge flow. I maintain that the negative association found in extant literature between geographic scope and innovation outputs measured as the number of forward citations a patent receives, is due in part to the fact that isolating mechanisms impede the flow of knowledge and prevent others from accessing the knowledge, thus making it difficult to cite. Results of mediating effects analyses corroborate the argument that isolating mechanisms created by geographic scope partially mediate the relationship between geographic scope and innovation outputs.;The fourth question examines the value appropriation aspect of isolating mechanisms. I maintain that a firm would achieve better financial performance out of the economic returns from innovation when its innovative knowledge is protected by isolating mechanisms. I empirically test the moderating effects of isolating mechanisms on the relationship between innovation output and financial performance. The results corroborate the argument. Questions 3 and 4 together show the process of value appropriation: isolating mechanisms created via geographic scope (1) can help firms prevent competitors from accessing their innovative knowledge, and (2) by doing so can help firms capture a larger proportion of economic returns from innovation, thus allowing them to enjoy better financial performance.;This dissertation contributes to the research literature in at least four ways. First, it highlights that a broader range of factors can create isolating mechanisms via multiple ways. Second, it shows that geographic scope can be a source of both value creation and value appropriation, thus helping firms not only create but also sustain their competitive advantage. Third, it introduces a new motivation of firm internationalization, the creation of isolating mechanisms to sustain competitive advantage. Lastly, it contributes to our methodological understanding by providing possible issues with forward citation-based measurements for innovation.