Centrality and Influence in the Semiconductor Industry Association:

An Exploratory Study

Presented at the International Sunbelt Social Network Conference, New Orleans, LA in February 2002.

Jennifer van Stelle May 22, 2001

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Abstract

The intent of this study is to apply social network methods to historical data at the firm

level for the U.S. semiconductor industry, to address empirically certain issues regarding the

governance of the manufacturers trade association, the SIA. This paper thus offers a

preliminary network analysis of one of the major trade associations in the semiconductor

industry. The main research questions upon which the paper focuses are: Which committees

and firms have the greatest influence over the direction of the association? What might account

for this? Were different committees and firms more or less influential at different time points in

the associations history? What factors might affect their ability to make their influence felt?

Data was gathered from eleven directories of the Semiconductor Industry Association,

spanning the decades 1980-2000. A measure of centrality is used to explore firms and

committees influence within the association over time. Working hypotheses address issues of

associational governance and the changing influence of committees and firms over time, the

correspondence of the associations stated objectives to the centrality of committees, and the

interrelationship of firm centrality, membership type, and firm size.

The committee governance structure is clearly dynamic over time. In addition, it is found

that institutionalist perspectives may further inform organizational research on trade associations.

Steps for future research are outlined, including a board interlock study of semiconductor firms.

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CENTRALITY AND INFLUENCE IN THE SEMICONDUCTOR INDUSTRY ASSOCIATION: AN EXPLORATORY STUDY

Introduction

I undertook this research in order to understand the semiconductor industry more fully. I

began by reviewing historical accounts of the industry (Braun & MacDonald 1978, Gordon

1994, Morris 1990, Riordan & Hoddeson 1997, Langlois & Steinmueller 1999), and was soon

struck by the frequent implication of social networks. There have been studies of the role of

social networks in industries (Saxenian 1994, Uzzi 1997, Granovetter & McGuire 1998), but

none specifically on the semiconductor industry. And almost every historical account of the

semiconductor industry implicitly or explicitly suggests that networks are important to the

emergence and continuing evolution of the semiconductor industry, but none directly studies

them. Saxenian (1994) comes closest in her comparison of the industrial regions of Silicon

Valley and Route 128. She explains that one of the most important factors in Silicon Valleys

regional advantage is the embeddedness of firms in social and technical networks (Saxenian

1994:57). In Saxenians work, however, networks comprise one element, and the semiconductor

industry just a single piece, of the larger puzzle she calls regional advantage.

This indicated to me the value of a more detailed study of the semiconductor industry

using network analysis techniques. This is a rather ambitious goal, however, and beyond my

current resources. Inspired by network studies of the electricity industry trade associations

(Chung 1996, Granovetter & McGuire 1998, Moon unpublished manuscript), and the recent

network representation of the Semiconductor Genealogy Chart (Castilla, Hwang, Granovetter

& Granovetter 2000), I began by concentrating on a preliminary network analysis of the

Semiconductor Industry Association (SIA). The SIA is a trade association composed of

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semiconductor manufacturers. The associations own literature acknowledges a number of

industry leaders as founders: Robert Noyce (co-founder of Intel), Wilfred Corrigan (co-founder

of LSI Logic), Charles Sporck (then-CEO of National Semiconductor Corp.), W.J. Jerry

Sanders, III (founder of Advanced Micro Devices), and John Welty (then-CEO of Motorola).1

These individuals founded the SIA in 1977 to represent the common interests of the

industry in matters of trade and governmental policy, and to bring emphasis inward on common

problems and opportunities such as safety and trade statistics (SIA 1981:3). Saxenian

(1994:189fn16) notes that the preference of the SIA for lobbying in Washington marked an

important departure from the regional activities of Silicon Valleys older business associations.

It was the explicit intention of the SIA to serve as the industrys association, not just to represent

semiconductor firms in Silicon Valley.2

The association also took over the Semiconductor Trade Statistics Program initiated by

the Electronic Industries Association in the early 1970s (SIA 1986:21). Over the course of its

history, the SIA has engaged in activities such as collecting and disseminating industry statistics,

lobbying government regarding laws affecting the industry, setting safety, technical, and quality

standards, and (in its later years) strategizing about the industrys direction, among other things.

But why should we care about semiconductor manufacturers? These firms manufacture products

that not only pervade our daily lives, but are devices that we depend upon to live in modern

societies. Semiconductors are the building blocks for the electronic chips that are integral parts

of almost all the devices technologically advanced societies use: electronic systems in

automobiles and other modes of transportation (aircraft, trains, ships, etc.), computers,

1 All had first been members of the Electronics Industries Association.

2 In fact, the proportion of SIA member firms based in Silicon Valley has always remained below half (see Figures 1

and 2 in Appendix A).

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televisions and other consumer electronics (microwaves, calculators, etc.), radios, telephones and

other forms of communication (satellites, pagers, etc.).

Trade Associations

Why study a trade association? There have been more general studies of trade

associations (Schneiberg & Hollingsworth 1990). Schneiberg & Hollingsworth (1990:322)

define trade associations as

a form of regulation in which firms in an industry join together and delegate to a central body the rights and powers to promote common interests, regulate relations within the industry, and order relations between industry members and those whose strategies and activities can decisively affect the industrys fortunes.

They note that because the American state generally opposes any restriction of competition,

associational governance in the U.S. has been relatively weak. After the passage of the Sherman

Anti-Trust Act of 1890, associations of firms in less-concentrated sectors of business focused on

product standardization, uniform cost accounting and open price schemes which sought to stabilize competitive relations indirectly by eliminating waste, by restricting competition to price, and by providing firms with the data needed to make independently price and output decisions that would reduce overcapacity and the likelihood of price warfare (Schneiberg & Hollingsworth 1990:337).

Galambos (1988:123) calls trade associations an associative or cooperative alternative to

oligopoly. He describes a spectrum of economic/legal environments, from competitive or

antitrust to associative. In the 1930s, during the Depression, the environment tended towards the

associative, as what was important was the ability to stabilize prices and market shares

(Galambos 1988:123). Galambos suggests that American trade associations are now less

adversarial and more cooperative because of international competition. Foth (1930:130), writing

in a time when there was a need for stability and cooperation, states that standardization and

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improvement of practice and of product is a problem which concerns the entire industry, and

therefore, cooperative research through trade associations is the logical solution. This appears

to have been the case for the U.S. semiconductor industry at a crucial period in the mid-1980s,

when it was losing market share to Japan. Galambos (1988:126) predicts that anti-trust policy

on this front will be forced to give way, and indeed, the SIA founded SEMATECH in 1987 as

the first American manufacturing consortium since the passage of the Sherman Anti-Trust Act

over a century before.

Yamaguchi (1988:136) comments on Galambos essay, noting that American trade

associations have a new willingness to engage in cooperative research and development

programs, as opposed to a previous pattern of total autonomy regarding such research. He also

discusses the developing role that trade associations are playing in building technological

momentum (Yamaguchi 1988:136). SEMATECH certainly illustrates his point. But Foth

(1930:132) warns that in order for cooperative research to be successful, trade association

members must be willing to look at the problem from the viewpoint of the industry as a whole.

Scott (1998:130) writes that federal and state regulations directed at individual

organizations (for example, pollution controls) seldom directly impact single organizations but

are typically mediated by field-level structures and processes (for example, trade associations).

The state has power to affect the industry through anti-trust laws, trade agreements, etc., and its

various agencies have the power to create environmental, commercial, and other policies to

which firms must adhere. The SIA is the trade association for the manufacturers of

semiconductors. As the representative of the industry, it acts as a middleman between the

government and its members, as well as advocating and organizing industry action on its agenda

items: maintaining a high-tech workforce, advancing technological progress, encouraging open

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trade, promoting worker safety & environmental safety, and tracking statistical trends (SIA

2000).

Beginning research on the semiconductor industry with a study of one of its trade

association implies the belief that the association has some impact on the industry. Is this true?

More specifically, what does the SIA actually do? The following are examples of the SIAs

actions in its various areas of emphasis.

The SIAs Technology Research and Industrial Strategy

The association publishes the Technology Roadmap, a strategy document intended to

guide the pre-competitive R&D effort and serve as the guide for achieving technological

objectives and semiconductor manufacturing productivity improvements (SIA 1997:9). The

Technology Roadmap was created in 1992 at an industry forum sponsored by SEMATECH, and

responsibility for updates was handed over to the SIA. Based on the Technology Roadmap, the

SIA funds programs to overcome what it sees as barriers to the technological progress of

semiconductors. For example, in 1998, the SIA began

the Focus Center Research Program, which we expect will inject more than $600 million into the nations research universities over a 10-year period.[3] U.S. semiconductor producers and their suppliers, the federal government and 14 premier U.S. universities established this national network to research critical future technologies. Consortiums [sic] led by the University of California at Berkeley and the Georgia Institute of Technology won the first two Focus Center contracts. The UC Berkeley consortium will study design and test issues, and the Georgia Tech group will concentrate on interconnect technology. (SIA 1999:2)

3 The SIA states that industry is funding 75 percent of this program (SIA 1999:20) and indicates that funding for

the Research Centers will come from member companies of the SIA; SEMI/SEMATECH, a consortium of semiconductor suppliers; and the Department of Defense, represented by the Defense Advanced Research Projects Agency (DARPA) (SIA 1999:33).

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The association was also given oversight responsibility on a technician-training program

begun by SEMATECH, which established semiconductor technology curricula at 80

community colleges and vocational schools nationwide and enrolled more than 5,000 students

(SIA 1999:2). The SIA, through the SRC, annually funds over $30 million in semiconductor

research and engineering projects at U.S. universities (SIA 2001a:5). In addition to doling out

its own funding, the SIA supports increased funding for government agencies. In 2000, the SIA

Public Policy Committee participated in the successful efforts to obtain larger budgets for the

NSF and DOD. These budgets increased nearly 40% in topical areas of interest to the

semiconductor industry (SIA 2001a:14).

The SIA is also a partner in various other research efforts. Through the SRC and

International SEMATECH, the SIA allows otherwise competing semiconductor companies to

collaborate on technological advances. From its early years, the SIA has sponsored an

Executive Meeting Program in which senior executives of member companies regularly meet

to formulate and implement industry strategy. The program consists of (1) annual meetings with

legislators and administrative officials in Washington, D.C., (2) annual technological leadership

conferences, and (3) annual long-range planning meetings (SIA 1988).

The Workforce Strategy Committee, working with the Semiconductor Research

Corporation (SRC)4, sponsors programs in education and workforce training to ensure adequate

numbers of high-tech workers in the semiconductor industry.5 And in other efforts to improve

the high-tech workforce, during 2000 the SIA lobbied Congress to pass a bill that significantly

increases the number of H-1B visas issued, streamlines the green card process, and makes H-1Bs

4 The SRC is an industry organization founded by the SIA in 1982 to plan, promote, coordinate, conduct, and

sponsor research in cooperation with universities (SIA 1985:20). 5 The SIA claims the SRC is the largest continuous industry-driven university research program in the U.S. (SIA

2000:35).

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portable, so that visa holders will be able to switch employers (SIA 2001a:3). The SIAs

president, George Scalise, writes that these workforce initiatives are critical to maintaining the

U.S. chipmakers ability to hire the best and brightest people (SIA 2001a:3).

SIA Actions on Environment/Health/Safety Issues

The association has worked to establish an admirable health and safety record, and

globally disseminates knowledge about best practices in health, workplace safety and

environmental protection (SIA 2001a:4). It sponsors international conferences to educate

semiconductor companies worldwide about environmental, safety and health issues (SIA 2001a).

In 1998, the WSC received the Climate Protection Award from the Environmental Protection

Agency (EPA) for reducing global warming gases in semiconductor manufacturing. The

reductions were achieved based on a program already adopted by SIA companies (SIA 1999:2).

In 1989, the Task Force for Worker Health was formed as part of one of the largest

epidemiological studies ever performed by private industry (SIA 2001a:29). Findings led the

industry to voluntarily eliminate uses of certain solvents in its processes (SIA 2001a:29).

The SIA is currently studying the possible cancer risks in semiconductor work environments

(SIA 2001a). In 1999, the association

spearheaded the MACT [Maximum Achievable Control Technology] program, where ESH [environmental, safety, and health] experts from member companies work with the EPA to establish criteria for manufacturing emissions rates, determining the best methods of emissions control and establishing criteria for base-line compliance with emissions standards (SIA 1999:26).

In addition, the SIAs Environmental Committee negotiates on behalf of the industry with

regulatory agencies such as the EPA, and SIA members renewed their commitment to reducing

emissions by signing a new agreement with the EPA in 2000 (SIA 2001a:4).

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Similarly, the Facilities (Fire and Building Safety) Committees regularly work with

regional and national building code agencies. For example, in the late 1980s, the Facilities

Committees worked with

fire and building code authorities to develop uniform specifications for pipes and cuts, alarm systems, wall construction, exit criteria and maximum quantities for stored hazardous substances. Official fire and building code organizations in the western, northeastern, and southeastern sections of the U.S. adopted the committees recommendations for uniform codes (SIA 1990:22).

The SIA and Public Policy

The SIA takes part in lobbying for favorable domestic policy in many areas tax policy,

research funding, education funding, and policies relating to free market competition. In 1984,

the SIA successfully pursued legislation to protect intellectual property [via] the passage of

the Semiconductor Chip Protection Act [through which] semiconductor designs [are]

covered under intellectual property law (SIA 1988:16). In the late 1990s, the Public Policy

and Law Committees also gained an extension of the R&D tax credit and worked to pass the

Internet Tax Freedom Act, which imposes a three-year moratorium on new state and local taxes

on Internet access and online services (SIA 1999:2).

One of the other elements of the SIAs public policy agenda has been international free

trade, which it encourages through its participation in the World Semiconductor Council, an

entity that lobbies for free trade on a global level. The WSC is pushing for all countries to join

the ITA [Information Technology Agreement], which calls for the elimination of duties on

chips, semiconductor manufacturing equipment, computers and telecommunications equipment

(SIA 2001a:22). The SIA also claims it was behind efforts to create the U.S.-Japan High

Technology Working Group in 1983, a bi-lateral government effort to address semiconductor

trade conflicts (SIA 1997:10). Finally, the SIAs most recent annual report states that it has

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made significant efforts to assure Chinas accession to the World Trade Organization on

commercially viable terms (SIA 2001a:21).

Although these examples are based on communications from the SIA to its members, and

thus certainly biased towards crediting the SIA with many more accomplishments than it actually

has achieved, it appears clear that the SIA is an active association, the actions of which affect the

semiconductor industry as a whole. The SIAs own staff say that the association is identified as

a lobbying organization and assert that it is one of the most successful industry organizations

in D.C. (Marr & Haver 2001). Given its activity in the public policy arena, perhaps it is now

understandable that we should be interested in which committees and firms call the shots, as it

were, in the SIA.

Research Questions

Perrow (1986:11) writes that organizations are tools for shaping the world as one wishes

it to be shaped. In less extreme terms, Scott (1998:289) suggests avoiding both reductionism

and reification [in studying organizations] by reformulating the question Do organizations

have goals? [to ask instead] Who sets organizational goals? and How are organizational goals

set? Thus my research questions, though pertinent for a study of the industry, take the

association as their object of inquiry: Which committees and firms have the greatest influence

over the direction of the association? What might account for this? Were different committees

and firms more or less influential at different time points in the associations history? What

factors might affect their ability to make their influence felt?

I do not mean to suggest that the only aspect of interest in the SIA is influence. However,

one of the explicit goals of the association is to shape public policy. Scott (1998: 222-223) states:

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organizations in most industries or sectors are permitted to develop associations of various types that not only attempt to influence state actions but also directly engage in control activities. Trade associations, trade unions, professional associations these and other collective forms exercise substantial control, both formal and informal, over one or another arena of social life.

In this sense, it seems appropriate to focus on which entities (committees and firms) appear

central in the association. I make the (arguable, of course) assumption that central entities may

influence the associations direction; they are at least in a position to do so. I discuss the

centrality/influence issue in more detail in the section on methods and measures.

Although I do not take the view that actors are simply self-interested, self-maximizing

entities, it would be naive to assume that actors have entirely set aside their own interests when

acting within the association. In an earlier version of this paper, I focused on individuals. Those

efforts at understanding the associations committee structure led me to conclude that it is better

captured using firm-committee affiliation data than individual-committee data. Thus I study the

committees and firms with which committee members are affiliated, not the individual

committee members themselves.6

In order to place the results of my study in context, it is necessary to provide a brief

overview of the semiconductor industry, describe the SIAs structure and stated objectives, and

discuss various theories that inform my work.

Background of the Semiconductor Industry7

The semiconductor industry is widely acknowledged to have started with the discovery of

the transistor effect in 1947 by a team at Bell Laboratories.8 Bell Labs was intent on finding a

6 The referenced individual-level analysis is available upon request.

7 The information in this background section is drawn mainly from Morris (1990).

8 Among the individuals on the team was William Shockley, who in 1955 left Bell to found Shockley

Semiconductor, popularly acknowledged as the grandfather of semiconductor firms.

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technology for telephone relays that would be faster and more reliable than the vacuum tube. Its

researchers experimented with semiconductor materials (germanium, silicon, and similar

elements), eventually discovering the transistor effect. A transistor uses electric current to

modulate a materials conductivity; the conducting and insulating properties of semiconductors

are ideal for amplifying this effect.

In the two decades after the transistor discovery, many other types of transistors were

developed. Most importantly from the standpoint of the semiconductor industry, however, was

the creation of the integrated circuit in 1958. Both Jack Kilby of Texas Instruments and Robert

Noyce, who had left Shockley Semiconductor with the rest of the so-called traitorous eight9 to

form Fairchild Semiconductor in 1957, can lay claim to the concept. If a transistor could be

thought of as a tiny switch that controls the flow of electric current, then an integrated circuit

(IC) is a collection of such switches, all on one piece of semiconductor material such as silicon

(SIA 1995:16-17). ICs are etched onto the silicon, thus becoming what is commonly referred to

as a chip (SIA 1995:16-17).

Moore, co-founder with Noyce of the semiconductor manufacturer Intel, is quoted as

saying that it was only after the invention of the integrated circuit and the appreciation that we

could make things smaller and more complex on the silicon chip that the possibility of very low-

cost, complex electronic systems became conceivable (Elliott 1997). Once this possibility was

understood, the semiconductor industry boomed. It has been estimated that no less than 75

semiconductor firms were founded in the 20 years between the creation of the IC and the

formation of the SIA (Elliott 1997). Most of these were in Silicon Valley; Saxenian (1994:8)

9 The traitorous eight are Julius Blank, Victor Grinich, Jean Hoerni, Gene Kleiner, Jay Last, Gordon Moore,

Robert Noyce, and Sheldon Roberts (Braun & MacDonald 1978).

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writes that in the early 1960s Silicon Valley established itself as the nations center of

semiconductor innovation.

Another Semiconductor Trade Association?

An industry is not just the producers; the suppliers and customers (upstream and

downstream factors) also play an important role when we consider what makes up the

semiconductor industry. The scope of this paper prevents a detailed look at the semiconductor

industrys customers and suppliers, but briefly: Customers belong to any industry that needs

chips for its products the computer industry is the main example, but also consumer electronics

(e.g., calculators, radios), the automotive industry, telecommunications, and defense (e.g., guided

missiles). Vendors supply silicon and other materials as well as equipment for processes like

optical lithography, chemical vapor deposition, etc.

When the SIA was not yet a gleam in its founders eyes, the equipment and materials

makers who supplied the semiconductor industry had already banded together. They formed the

Semiconductor Equipment Manufacturers Institute in 1970 originally to organize and manage

the first trade show aimed at attracting Silicon Valley semiconductor manufacturers (SEMI

1985:10). As Saxenian (1994:26) has noted, the emerging infrastructure of suppliers in Silicon

Valley provided an important advantage to start-ups in the region. However, from the start, the

suppliers trade association was international, while the SIA was essentially a U.S.-only

association until the 1990s. Not only were the two associations composed of different types of

firms (equipment makers vs. semiconductor manufacturers), but by the late 1970s, relationships

between vendors and manufacturers had become rather adversarial (Browning & Shetler 2000).10

10 From a preliminary analysis of one year of SEMI data (1984-1985), I find that cross-membership between the two

associations was nearly non-existent (results not reported here, but available upon request).

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Economic Competition

Although independent producers located primarily in Silicon Valley dominated the

semiconductor industry in the 1960s and 1970s (Saxenian 1998:80), American chip consumers

by the late 1970s bought chips from Japanese manufacturers because of the higher quality and

lower price of Japanese products (particularly DRAMs dynamic random access memory

chips). Also, some American semiconductor manufacturers sourced equipment and materials

from Japanese suppliers, for similar reasons more reliable equipment. Finally, U.S. suppliers

preferred dealing with Japanese firms, which were more supportive and easier to deal with as

customers; U.S. semiconductor manufacturers had many different standards and specifications

(Browning & Shetler 2000). Saxenian (1994) suggests that U.S. suppliers were also affected by

the U.S. semiconductor manufacturers shift to mass production in the late 1970s and early

1980s, which she says led to an abandonment of the local culture and local network relationships

(with suppliers, among others).

Browning & Shetler (2000) claim that the quality of Japanese chips was higher in part

because Japanese business groups absorbed the costs of quality testing, while American

manufacturers were busy getting products out the door with few quality checks. Several other

factors came into play in the early 1980s. These included the difference in the cost of capital;

Japanese firms could obtain capital at lower rates than American firms in the early 1980s.

Profitability as a proportion of sales was also a factor; Japanese business groups were diversified,

giving them the ability to withstand lower profits, and therefore the ability to sell below market

value (called dumping) (Browning & Shetler 2000; Langlois & Steinmueller 1999). Saxenian

(1994:88-89) adds that the U.S. semiconductor manufacturers embraced the mass production

strategies that had dominated in the U.S. during the postwar era at the precise moment when their

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Japanese competitors were developing a more flexible model of mass production. Combined,

these circumstances led Japanese semiconductor firms to take the lead in the international

semiconductor market by 1986.

By the time the SIA was founded in 1977, there was already a concern among top U.S.

semiconductor manufacturers that Japanese firms were coming to dominate the industry. In the

late 1970s, the SIA unsuccessfully lobbied the U.S. government for trade sanctions against Japan

(Gordon 1994). In addition, the association saw government-financed advanced semiconductor

research efforts in other countries, but could not get the U.S. government to finance

semiconductor research (SIA 1986). So in 1982, the SIA established the Semiconductor

Research Corporation, an industry-university cooperation in basic semiconductor device

research (SIA 1986:20). This was a good start, but the U.S. share of the semiconductor market

kept slipping (Morris 1990; Langlois & Steinmueller 1999).

In 1985, the SIA, Micron Technology, Advanced Micro Devices, Intel, and National

Semiconductor filed suits against Japan for unfair trade practices. Shortly thereafter, the U.S.

government also filed suit to initiate an anti-dumping investigation (SIA 1988). Following these

suits, the SIA won trade sanctions and the 1986 Semiconductor Trade Agreement (the STA) with

Japan. The STA was intended to provide increased access to the Japanese semiconductor market

and prevent dumping (selling chips at prices below foreign market value) (Gordon 1994). It is

arguable whether the unintended consequences of the STA (mainly, increased memory prices

across the board) actually improved the U.S. semiconductor industrys position (Saxenian 1994).

Regardless, these trade protection measures were still not enough; in the mid- to late-1980s, the

U.S. lost its lead in worldwide marketshare of memory chips11 (Browning & Shetler 2000).

11 While in 1978, the U.S. had 59% of the world semiconductor market (compared to Japans 28%), and 74% of the

world IC market (compared to Japans 20%), in 1989, they held only 43% of the semiconductor market, while Japan

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In 1986, the U.S. Department of Defenses Defense Science Board had created two task

forces one to study the militarys dependence on semiconductors, the other to study the cost

savings of commercial procurement (Browning & Shetler 2000). The main conclusion of the

1987 Department of Defense, Defense Science Board Task Force on Defense Semiconductor

Dependency was that national defense depended on semiconductor components; as the U.S.

semiconductor industry was losing market share, if the United States did not want to depend on

foreign suppliers of semiconductor components for its national defense systems, it must provide

support for domestic semiconductor manufacturers (Department of Defense 1987).

The Task Force suggested the formation of a manufacturing consortium. This was a

radical idea, given the governments normal attitude towards any cartel-like group and given the

highly competitive nature of the semiconductor industry.12 The manufacturing consortium

would be under the auspices of the SIA and would be entirely pre-competitive in other words,

it would sell no product. Gordon (1994:38) describes the consortium thus:

SEMATECH is oriented to the development of advanced manufacturing processes for commercial memory circuits in order to create leading-edge integrated circuits for computer markets and maintain domestic sourcing of military components.

It would cooperate to do basic research and to develop processes, equipment, and materials, and

(in the end) would also establish industry standards. SEMATECHs objective was

held 48%, and the U.S. share of the IC market was 45% compared to Japans 47% (Langlois & Steinmueller 1999:39, table 2.8). 12

The semiconductor industry in the United States has a history of defense involvement, while in Japan, the semiconductor industrys largest market had been consumer electronics (Braun & MacDonald 1978). It is likely that this defense involvement facilitated the industrys ability to obtain government support on the grounds of national security. It is interesting to note, however, that Saxenian (1994:26) asserts that government purchases, which had accounted for half of total semiconductor shipments during the 1960s, dropped to only 12% in 1972 and continued to fall throughout the decade. Thus, as Gordon (1994) writes, it was the rhetoric of national security (and not necessarily the actual critical dependence on semiconductors by the Department of Defense) that brought government funds to bear and brought all the manufacturers together, who were otherwise mutually suspicious. Regarding mutual suspicion, see also Browning & Shetlers (2000:32) study of SEMATECH; in particular, they describe members recurring question [at the beginning of the consortiums establishment]: How are we going to do this and not give our own technology away to our rivals and/or to the Japanese counterparts in their alliances?

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to improve coordination between semiconductor manufacturers and equipment producers, facilitate joint development of advanced CMOS process technologies and to conduct collaborative research and development in semiconductor manufacturing techniques. Gordon (1994:38)

Whether due to trade sanctions and the STA with Japan, or the establishment of

SEMATECH, or other factors, Saxenian (1994:204n11) reports that by 1992, U.S. producers

had eliminated Japans lead in worldwide semiconductor sales, with each nation controlling 43%

of the total, and U.S. firms controlled 53% to Japans 45% of the $10 billion market for

semiconductor manufacturing equipment.

I discuss this industry history in such detail because it is clear from historical accounts

that certain individuals affiliated with certain firms were central in influencing the direction of

the industry at various crucial points. The crisis precipitated by the U.S. semiconductor

industrys loss of its leadership position, I argue, marks one such turning point.

The SIAs Structure and Objectives

The SIA is run by committee. (Descriptions of the committees may be found in

Appendix B.) The association itself says that through its national and international network of

chief executive officers and committees, the SIA shapes public policy and coordinates internal

industry activities (SIA 1999:35). Moreover, in the 1998 annual report, it states that with

limited associated staff, the SIA committee structure is essential for the association to achieve its

public policy goals and objectives. Member company representatives devote a great deal of time

and energy working with their colleagues to accomplish common objectives (SIA 1998:28).

Scott (1998:316) notes, however, that individual participants do not have equal power in

decision making and the preferences and interests of some will receive more attention than

those of others. One of the sources of power in an organization has to do with ownership of

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some form(s) of property (Scott 1998). In the SIA, I view the membership dues contributed by

member organizations as resources owned by members. To assure a means of controlling their

portion of their contributions, those who contribute substantially more than others have positions

of relatively greater power they are regular members.

What does it mean to be a regular member? In the early years of the SIA, all U.S. firms

that manufactured semiconductors (whether for outside sale merchant producers; or for

internal use captive or in-house producers) were allowed to hold regular membership

status. Membership dues for regular members were (and still are) based on the annual

semiconductor sales of the company13 or, if a captive producer, estimated manufacturing sales.

Related business organizations could join as associate members for a flat fee. These related

organizations were varied: firms which provide professional consulting, financial, or technical

services...; manufacturers of material, equipment, or parts...; semiconductor distributors; and

governmental and academic institutions (SIA 1985:2).

By 1988, the membership structure became more layered. Associate membership was

also offered to companies [that] manufacture semiconductors in the U.S., but do not qualify for

regular membership (SIA 1988:35). Although the qualities that might bar a company from

regular status are not clear in the 1988 annual, a later report is more informative on this point,

outlining the various categories of associate members:

Semiconductor Associate Members...[are] fabless companies [that] are U.S.-owned, but do not operate their own manufacturing facilities....Manufacturing Associate Members...are foreign-owned, but have a U.S. fabrication facility....Corporate Associate Members ...are non-semiconductor entities that are interested in and provide products or services for the semiconductor industry. (SIA 1995:51).

13 Dues for regular members are currently set at .025% of a firms revenue. The SIA caps dues for regular members

at $400,000 (Marr & Haver 2001).

19

Semiconductor and manufacturing associate members also pay dues based on annual

semiconductor sales (or estimated manufacturing sales, if captive firms)14, while corporate

associate members pay only a flat fee15.

As expected, this dues structure affects committee membership. It appears that in early

years, only regular members could serve on the board and on committees. In later years, other

classes of members were also allowed to serve, but were restricted to particular committees.

Because the SIA is a manufacturers association, and began as a U.S.-only association, those

organizations that are U.S. manufacturers are granted the broadest category of membership.

Their representatives may serve on any committees, and only their representatives may serve on

the board, thus ensuring control over the associations agenda and direction by the U.S.

manufacturers. A 1998 report further explains the membership categories:

Regular members drive a large portion of the SIAs work and help influence decision-making through an opportunity to sit on the Board of Directors. They participate actively on committees that direct programs and influence policy, such as technology; trade; the Asia-Pacific region; occupational health, safety and the environment; industry statistics; and communications. Semiconductor Associate Members participate actively on committees affecting issues in the Asia-Pacific; occupational health, safety and the environment; and communications.[16] Manufacturing Associate Members participate on the government procurement and occupational health, safety and environment committees. (SIA 1998:40).

The SIAs website (SIA 2001b) indicates that corporate associate members may participate on

the occupational health, safety, and environment committees.

14 Semiconductor and Manufacturing Associate dues are currently set at .015% of firm revenue. The SIA caps these

associate member dues at $161,000 (Marr & Haver 2001). 15

Corporate associate member dues are currently $3,000 (SIA 2001b). 16

As of 2001, fabless firms (Semiconductor Associate Members) will be allowed to participate on the board and all committees on which regular members serve, but will not experience a change to their dues structure. The reason for this, the SIA explains, is the rise in the number of fabless firms in the past several years, and the associations consequent attempt to continue to reflect accurately the composition and concerns of the industry as a whole (Marr & Haver 2001).

20

The same annual report (SIA 1998:28) also notes that SIA committees implement the

programs outlined by the SIA Board of Directors. SIA members interested in particular subject

areas may request appointment to serve on specific committees. Interviews with SIA staff

clarified this statement and provided more details concerning committee membership. When a

semiconductor firm becomes a regular member, the firm appoints representatives to serve on

committees. A company may appoint as many people to as many committees as it likes; this is

true for semiconductor and manufacturing associate members as well, within the committees on

which their membership categories allow them to serve. However, in practice, firms are limited

by the amount of human resources they can dedicate to the SIA (Marr & Haver 2001). Because

serving on a committee entails a not-insignificant amount of time, only the largest firms can

conceivably maintain an individual on every one of the SIAs committees, and few actually do

this. Marr and Haver (2001) note that some companies are hands-off; some are heavily

involved and thereby direct the agenda of the association. Table 1 shows the ten percent of SIA

member firms with the most committee memberships, by period.17

SIA Goals and Objectives

How can we discover the agenda of the SIA? In its (bi)annual reports, the association

summarizes its main goals and objectives. These have been restated occasional, as the SIAs

primary objectives have changed over time. Below, I reproduce the three major restatements that

have occurred over the past two decades.

The 1980-1981 Yearbook and Directory states

SIA was chartered to focus outward to represent the common interests of the industry in matters of trade and governmental policy, and to bring emphasis inward on common problems and

17 A full table of all firms and the numbers of their committee memberships by period is not reproduced here, but is

available upon request.

21

opportunities such as safety and trade statistics. Concurrent with the formation of the SIA, the international trade situation in general and problems of particular concern such as equal access of American semiconductor products to all markets and unfair trade practices became the first major emphasis of the association. Three major areas of focus for SIA in public policy are: international trade, innovation, and capital formation. These policy areas are each covered by a board committee responsible for developing SIA positions. (SIA 1981:3 [emphasis mine]).

Notice that the stated issues are: (1) trade and governmental policy; (2) safety; (3) trade

statistics; (4) international trade; (5) innovation; and (6) capital formation. This statement does

not change substantially until 1994-1995, when the Annual Report and Directory states instead

The SIA was created to respond to increasing economic and political factors threatening American leadership in semiconductors. The organization was chartered to achieve two main objectives: (1) to provide a platform for communicating the U.S.

semiconductor industry position on trade, technology, and economic policies to U.S. and foreign policymakers; and

(2) to coordinate internal industry activities to more effectively resolve common concerns and develop a unified response to challenges facing the semiconductor industry.

Given the global nature of the semiconductor industry and the various obstacles to free trade that have been created by other nations, the SIAs major emphasis has been on international trade. The associations primary focus in this area is to solve problems involving unfair trade practices and unequal access for American semiconductor products in world markets. The SIA is also concerned with fostering a domestic economic climate conducive to the highly competitive and capital intensive semiconductor industry. In addition to more traditional forms of legislative advocacy, the SIA has also worked outside the halls of government in its effort to enhance the American economic environment. SIAs formation of two affiliate organizations, the Semiconductor Research Corporation (SRC) and SEMATECH reflect the semiconductor industrys interest in promoting research and manufacturing excellence. The SIA is also involved in a broad spectrum of industry issues and activities (SIA 1995:3-4 [emphasis mine]).

22

Here, the stated objectives are: (1) communicate policy positions; (2) coordinate industry

activities; (3) solve problems relating to international trade; (4) foster/enhance the domestic

economy; (5) legislative advocacy; and (6) promote research/manufacturing. The last substantial

change in the SIAs agenda appear in 1999 and 2000, when its Annual Reports state that

The SIA advocates and organizes industry action on: (1) Promoting fair and open trade (2) Providing safe working conditions in production facilities (3) Protecting the environment (4) Attracting, educating and increasing a skilled workforce for the

future of the industry (5) Defining strategies to promote and maintain U.S. world leadership

of semiconductor technology barriers (6) Tracking and distributing statistical information of market trends.

(SIA 2000:31[emphasis mine]).

This last restatement appears to need no clarification; the issues are obvious. But why

dwell on such changes in language of the SIAs objectives? In the next section, I consider how

various theories bear on the descriptive research so far discussed, and present my various

working hypotheses, including some regarding the changes in SIA objectives over time.

Theories/Hypotheses

Associational Governance

In general, Scott (1998:222) states that governance systems are arrangements that

support the regularized control of the actions of one set of social actors by another. Trade

associations are considered to be a form of governance that is neither market nor hierarchy

(Schneiberg & Hollingsworth 1990). More specifically, Schneiberg & Hollingsworth (1990)

describe a trade association as an institutional structure by which to organize economic activities

and interorganizational relations. They suggest that firms create these associations for strategic

and distributional purposes, that is, to enhance their market power and shift the risks and burdens

23

of adjustment on to their exchange partners (Schneiberg & Hollingsworth 1990:340). They

criticize the transaction cost economic viewpoint with respect to the emergence of trade

associations; however, they acknowledge that it has relevant explanatory power for the phase in

which trade associations organizational development takes place.

A trade association is generally run by committee. Schneiberg & Hollingsworth

(1990:322) construe associational governance as a more or less voluntary form of collective

self-regulation which is based on members common positions and concerns and which requires

negotiation among members, association officers and important social actors in the external

environment. Given that, particularly in the phase of initial emergence and establishment, the

trade association must focus on its governance, and that its form of governance is self-regulation

by members in committees, I hypothesize:

H1: Committees associated with the governance of the trade association will be more central in earlier years.

Institutional Theory

It has been suggested that the economic challenges faced by the U.S. semiconductor

industry in the 1980s are in the nature of an exogenous shock (McFarland 2001). In institutional

theory, such an externally imposed crisis leads to change of existing institutions and/or

development of new institutions (Fligstein & Mara-Drita 1996). Certainly, a new form of

organization was implemented with the founding of SEMATECH. It is possible that there was a

change in the governance of the SIA as well, in terms of a shift in the importance of various

issues within the association. As Scott (1998:294) points out, which interests are in control

changes as environmental conditions vary. Thus I hypothesize

H2: Committees associated with addressing the U.S. semiconductor industrys economic challenges will be

24

more central in the years closest to SEMATECHs founding.

Scott (1998:295) also writes that when power shifts from one group to another or is

shared with a larger proportion of the participants[,] the difference should be reflected in

the goals pursued by the organization. In general, this implies that the centrality of different

committees is likely to change as the SIAs mission changes over time. Scott (1998) compares

this to the institutionalist perspective, which emphasizes the symbolic, rather than cognitive or

motivational, functions of organizational goals. I posit a working hypothesis regarding the

relation of committee centrality to the organizations goals; if it is not supported, this will

suggest that institutional theory may be more appropriate in the study of the SIA in particular,

and trade associations in general:

H3: Changes in committee centrality will reflect the restatements of the trade associations objectives.

Table 2 outlines the three committee hypotheses above and operationalizes the time

periods and committee representation of organizational goals for Hypothesis 3.

Network Theory

Those who study networks consider trade associations to be a particular form of a

network (Powell & Smith-Doerr 1997). Specifically, Powell and Smith-Doerr (1997:375-376)

indicate that a key network of communication is the professional or trade network. Within

trade associations, it seems reasonable that networks would facilitate the flow of crucial

information about an industry. A wider network would offer more opportunities for information

gathering for individuals18 and, by extension, their firms.

18 From an individuals point of view, more committee memberships would offer a wider network, which is

beneficial for gathering a greater amount of general industry information, and also could contribute to career mobility and/or personal influence. With regard to career mobility, individuals change companies during their

25

More information, from a firms point of view, would lead to a better understanding of

the industry and would improve a firms ability to respond to changes in the environment. As

Padgett (1990:44) notes in his work on Congressional committees, state delegations wish to

achieve

delegation spread that is, representation on as many committees as possible. In this way the dean and his delegation can know what is going on in every committee in the House and also be poised to influence any committees deliberations in the direction of the states collective interests.

Similarly, it is clear that a company with representatives on more committees has the opportunity

to gain more information and has the potential to influence the direction of the committees and,

in that way, the direction of the association. Hence, I hypothesize:

H4: Firms with the most committee memberships in a given period will be the most central in that period.

However, it must be remembered that regular SIA member firms are likely to be more

influential, regardless, because they can put representatives on any SIA committees. Larger

firms are also more likely to be influential because they have more human resources upon which

to draw. Padgett (1990:53) confronts comparable issues in his study; he writes that among

Republicans, strong delegations are large delegations: Every delegation in the above-mean in-

zone replacement category is larger than any state delegation in the below-mean category.

careers. Having standing on many committees in the industrys trade association gives actors the potential for making more contacts, and thus functions as a potential labor market network as well as a network of communication. Granovetters Getting a Job study (1995 [1974]) in which he shows the importance of weak ties to the acquisition of labor market information, indicates that jobs are likely to be heard about from people who are acquaintances, not close friends or relations. Certainly, contacts through trade association membership can be considered to be weak ties. Thus, people who have the most ties or are the most well-connected have a larger weak-tie network. A related issue is, do people who are most central in the association make job changes more often than people who are less central? This is a very problematic question to test with the data at hand; I do not have information on the job paths of people who leave the committee structure, nor such data prior to their joining a committee. Further research would be beneficial for understanding job mobility in the semiconductor industry.

26

Are the most influential companies in the SIA the largest? Larger firms (in terms of sales) pay

higher dues, so (theoretically, anyway) they have greater motivation to influence the

associations direction than small firms that pay lower dues. Moreover, the SIA plainly states

that it chooses the largest firms to serve on its Board: When questioned about nominees for

Board membership, Marr & Haver (2001) said, We generally go by company size. Thus, I put

forth a set of related hypotheses:

H5A: Regular member firms will be more central in the associations committee governance structure than associate member firms.

H5B: Regular member firms will be larger than associate member firms.

H5C: Large firms will be more central in the associations committee governance structure than small firms.

The Congressional comparison, while fruitful, can only be carried so far. Padgett

(1990:55fn4) writes that [Congressional] committee vacancies are generated by retirement

and election defeat, [and] by changes in the sizes of committees. SIA committees do not

have a limited number of seats, except for the Board, which has a defined size of 15 seats (Marr

& Haver 2001). Further, Padgett (1990) describes how state party deans must jockey with the

Committee on Committees to gain access to vacant seats for their delegations members. In

comparison, the SIA Board does not approve or deny committee assignments the way the House

of Representatives Committee on Committees does. The appointment of individuals to

committees in the SIA is entirely up to each firm, within the limits of its membership category.19

19 The exception is the Technology Strategy Committee, which, because of its budgeting responsibilities, receives its

members from Board firms only (Marr & Haver 2001).

27

Padgetts (1990) study focuses on mobility of individuals among Congressional

committees. In the SIA, however, movement from committee to committee is relatively low,

partly due to restrictions on membership20 and partly because appointees are generally selected

by their firms for their expertise in a given area. For example, the head of a firms human

resources department would participate on the Workforce Strategy Committee; the director of a

firms public relations arm would serve on the Communications Committee; and a companys

governmental affairs officer would be placed on the Public Policy Committee. Because of this

specialization, committee appointment in the SIA appears to be less contested a process than is

appointment to Congressional committee seats.21

Castilla, et al. (2000) write that networks are important to the evolution of influence and

power in economies. Whether influence in the association translates into influence in the

industry is something that this project would ultimately like to ascertain. See the conclusion for

future research proposed in that direction.

Data22

My data consist of committee memberships, including the SIA Board of Directors, as set

forth in biannual (sometimes annual) directories published by the SIA from 1980 to 2000.23 In

1985, the manufacturers belonging to the SIA produced over 95% of all semiconductors

20 In my earliest foray into the data, I considered a mobility study. However, it is not feasible with this association,

as various companies have different types of membership in SIA. More than half of the companies in the association have restricted memberships (associate members), which disallow their representatives from serving on the board, the public & trade policy committee, industry statistics committee, technology strategy committee, etc. Corporate associate members have even more restricted roles they may not participate on any committees at all. 21

However, I have no data on who might have wanted to serve on committees but was not appointed, nor committee preferences of individuals prior to serving on committees. With such data to hand, we might indeed uncover a more contested process. 22

This data was collected as a part of the start of a long-term project on Silicon Valley, funded in part by Bechtel. I have also been funded by the National Science Foundation while working on this project. The Economic Sociology Workshop, run by Mark Granovetter, has provided data collection and coding assistance as well as critical comments and inspiration.

28

fabricated in the U.S. (SIA 1986:4). In 2000, the SIAs member companies comprise more than

90% of U.S-based semiconductor production (SIA 2000:31), measured by sales figures (Marr &

Haver 2001). Though it appears that all of the larger companies are represented, many of the

smaller manufacturers seem to be missing from the associations membership. The SIA

publishes an industry directory in its annual reports that it claims lists all U.S.-based

semiconductor designers and manufacturers (Haver 2001). If we take the industry directory as

representing the entire population of U.S. semiconductor firms, then the SIAs members

represent, numerically, at most 18 percent of the industry (see Figure 3, Appendix A). This fact

makes it problematic to generalize from findings about influence in the SIAs governance to the

industry at large. I refrain from doing so, leaving that task to a larger study of the semiconductor

industry planned for the future.

As indicated earlier, the data consist of two-mode affiliation networks representing the

entities involved: firms (the companies that individual committee members represent) affiliated

with committees.24

From the two-mode affiliation matrices of firms by committees, I created dichotomized

firm-by-firm (co-membership) and committee-by-committee (event overlap) matrices for each

period. Thus, the form of the data I use to determine central firms and committees in the SIA

consists of 22 matrices, 11 of each type. The networks across the periods I analyze are dynamic:

Individuals, and hence firms, enter and leave committees in each period; therefore, the number of

firms fluctuates over the course of the periods I analyze. Also, the number and type of

committees in existence changes across the periods. Table 3 provides a list of the committees

and periods of existence. Descriptions of committees are provided in Appendix B.

23 It is acknowledged that it may be problematic to compare longitudinal data when the periods are of differing

lengths. At this time, I do not deal with this issue.

29

Methods and Measures

Breiger (1974) argues that network analysts must consider the dual nature of data. His

concept of duality refers specifically to the two alternative, and equally important, perspectives

represented in affiliation networks in the case of my data, firms linked to each other through

individuals membership on committees, and committees linked to each other through shared

members firms. Therefore, both modes should be analyzed together.

As the data is longitudinal, it is important to analyze the network not only for each

period, but across all periods over time. As my main emphasis in this exploratory stage of data

analysis is centrality, the longitudinal aspect requires measures that can reflect centrality over

time. Moon (unpublished manuscript) studied affiliation networks of the National Electric Light

Association over a 23-year period. She rather neatly handles the longitudinal aspect by summing

each actors (and each committees) normalized centrality scores across all years of her data to

show centrality throughout the period she analyzes. I discuss this further, below.

Faust (1997:166) discusses centrality measures for two-mode networks, noting that

motivations for [using a measure of] degree centrality are that actors are important because of

their level of activity or the number of contacts that they have, and events are important because

of the size of their memberships. This is the most commonly used measure of centrality

(Mizruchi & Bunting 1981, Wasserman & Faust 1994).25

24 Firm attribute data exist, but are not yet properly coded, making tests of most of my hypotheses non-statistical.

25 The equation for the standardized degree centrality index is

CD(ni) = d(ni) g-1

where the numerator is the degree of a node for two-mode networks, this will equal the number of others an individual shares committee memberships with (or, for committees, the number of other committees that share members). The denominator is the number of actors in the network minus the actor itself. This standardizes the measure so that it reflects the proportion of nodes that are adjacent to (ni); being independent of the number of actors, this measure can be compared across different-sized networks (Wasserman & Faust 1994:179). Degree centrality and normalized degree centrality scores were produced by UCINET V (Borgatti, Everett & Freeman).

30

However, Faust (1997:168-169) notes that

some authors have criticized degree centrality because it does not consider the centrality of the actors (or events) to which an actor (or event) is adjacent. According to this argument, two actors may be adjacent to the same number of others, but an actor is more central if it has ties to actors that themselves are quite central. One way to deal with this issue is to incorporate the centrality of the actors to which a given actor is adjacent into the centrality index. This is what eigenvector centrality does.

Borgatti & Everett (1997:257) define eigenvector centrality as a weighted degree

measure in which the centrality of a node is proportional to the sum of centralities of the nodes it

is adjacent to. The equation for eigenvector centrality is

CE (pi) ~ CE (pj) xij

where pis centrality is proportional to the centrality of its adjacent nodes (Mizruchi & Bunting

1981, Faust 1997). This means that an individual will be central when adjacent to others with

high degree centralities, and a committee will be central when linked to other committees with

high degree centralities. There are two points to consider here. The first is that although

centrality does not automatically equal influence, it is an indicator of the potential for influence.

Wasserman & Faust (1994) write that one of the rationales for analyzing two-mode networks is

that one can study the conditions under which there exists the heightened probability for direct

pairwise ties that is, the opportunity for interpersonal influence. Thus, centrality may be used

(though with caution) to ascertain where influence might potentially be located.

The second, related point to be wary of is that the size of ones network does not

necessarily translate directly into how influential one is. Burt (1992) discusses the fact that, all

other things being equal, the size of a network and diversity of network ties are the crucial

factors in considering network benefits. While size is important, there may be too much

31

redundancy in ones network to make it particularly efficient. Again, centrality is an indicator of

the potential for influence; it does not represent actual influence.26

There are other measures of centrality, but Faust (1997:170), following Breigers (1974)

argument regarding duality of affiliation networks, writes that eigenvector centrality explicitly

incorporates the duality between actor and event centralities. She indicates that it is important

to have centrality scores for both actors and events in an affiliation network. the centralities of

actors should be related in specifiable ways to the centralities of the events with which they are

affiliated and vice versa (Faust 1997:188). Faust (1997) contends that these relationships only

hold for degree centralities of one-mode co-membership and event overlap networks, for

closeness centrality using an affiliation networks bipartite graph, and for measures of

eigenvector centralities in the bipartite graph or in the pair of one-mode matrices. Following

Moon (unpublished manuscript), I compared degree and eigenvector centrality scores and found,

as she did, very little difference in rankings using the two types of scores. Therefore, I have

chosen to use eigenvector centrality measures for the one-mode co-membership and event

overlap networks.27 I use the normalized eigenvector scores produced by UCINET V in order to

compare the scores across periods.28

In addition to employing normalized eigenvector indices for measures of centrality in

each period of my data, I have followed Moons (unpublished manuscript) work in summing

26 It is acknowledged that centrality is an imprecise measure of influence. It will be necessary to supplement this

exploratory study with qualitative work interviewing SIA members to gather their perceptions of which committees and firms are influential in the association will be an important piece in understanding influence within the SIA. At the moment, however, we must make do with the available data, always keeping in mind the limitations of the methods and measures being used. 27

Degree centrality scores available upon request. 28

As a technical aside, I found that UCINET V produced a range of entirely negative eigenvector centrality scores for some of the one-mode networks generated from the individual-by-committee affiliation matrices (the results of which are not discussed in this paper). I make this aside in case other network researchers have happened upon this result. The all-negative scores were produced because the networks contained disconnected components. It is valid, in this case, to take the absolute value of these scores instead (Everett, personal communication, March 8, 2001).

32

these normalized eigenvector scores to analyze centrality over the entire period of the data. She

writes that

different types of centrality can lead to relatively high values for the sum measure. For example, an individual may have a high sum value because he stays in the network for a long time despite having a low centrality score each year. Another individual may have a relatively high value for the sum because he has high centrality each year despite a short stay in the network.

Finally, she notes that an actor may have both a high yearly score and a long stay (Moon

unpublished manuscript). It gives us a better understanding of the network when we can look at

scores for each period, summed/longitudinal scores, and the number of periods firms/committees

were present in the network.29

Again, I note that this study is a starting point to understanding which firms and

committees are most influential in the association over time. Centrality is but an indicator of the

potential for influence, and this must be remembered. It is also true that centrality measures are

affected by the size of committees. With eigenvector centrality, one is at least not assuming that

a large committee is central simply because it is large; a large committees centrality hinges on

the ties of its members to others who are also central. However, these limitations must be kept in

mind when reviewing the findings.

With respect to firm attribute data, I have coded firms type of membership as a 0-1

indicator (with 1 as regular membership and 0 as any kind of associate membership). I also have

a measure of firm size, based on sales figures reported in the SIA directories. Unfortunately, the

sales figures in most of the directories are arranged on a scale rather than given as exact

numbers, so the resulting measure is somewhat rough. A better measure of firm size should be

29 I produced centrality scores from the co-membership and event overlap matrices for each year using UCINET V

(Borgatti, Everett & Freeman). The summed scores were produced using a Microsoft Excel spreadsheet that contained these centrality scores by period.

33

obtained in future research. While I use these measures in simple statistical tests of some of my

working hypotheses, more sophisticated p* analyses must wait for a future work.

Results/Discussion

Table 4 provides descriptive statistics of the firms and committees for each of the 11

periods of data. The periods cover 20 years of the associations history, from 1980 to 2000.

There were a total of 22 committees existing at any time during 1980-2000. Approximately 25%

of the committees existed for two periods or less, and another 25% existed for 10 periods or

more (see Table 3). As Wasserman & Faust (1994) note, centrality in a network is related to

visibility; the longevity of certain committees (i.e., their visibility over the length of the

associations existence) may hint at their centrality. Average committee size increases from 2.4

in 1980-1981 to nearly 30 in the year 2000. The maximum committee size also rises over time,

from 7 in 1980-1981 to 72 in the year 2000.

A total of 117 firms appointed individuals to serve on committees during the two decades

under study. The number of memberships that a particular firm maintained on committees in any

one period ranges from 1 to 38, and the number of firms involved in the governance of the

association in any one period ranges from 7 to 56 over the two decades considered. Firms

average number of committee memberships over time grows from a mean of less than 2 in 1980-

1981 up to nearly 9 in the year 2000.

Central Committees

Table 5 lists the committees with the highest eigenvector centrality scores for each

period. In general, the top five committees are shown, in rank order. For earlier years (which

had fewer committees), I indicate only the top three committees.

34

My first hypothesis states that committees associated with the governance of the trade

association will be more central in earlier years. Referring to Table 2, the SIAs Board is

associated with formal governance of the association, and indeed in Table 5 we can see that it is

central in the two earliest periods (through 1984). This suggests that the associational

governance hypothesis holds.

In my second hypothesis, I propose that committees associated with addressing the

industrys economic challenges will be the most central in the years closest to SEMATECHs

1987 founding. Referring again to Table 2, I conceive of these committees to be Law (to handle

the lawsuits against Japan), Public & Trade Policy (to lobby for trade sanctions and the STA),

and Industry Statistics (because it deals with economic/market trends). In 1985-1986, all three of

these committees are the most central (see Table 5). However, in 1988, only Industry Statistics

makes the list. These results offer qualified support for the institutionalist exogenous shock

hypothesis, in that the legal and policy issues would come to a head before the founding of

SEMATECH, in the years when the associations members prepared to file unfair trade practices

suits and lobbied for trade protection.

My third hypothesis focuses on changes in the SIAs interests and corresponding changes

in committee centrality over time. Table 2 sets forth the committees I expect to be central in

each time period. Returning to Table 5, the committees that have the highest centrality scores do

change over the course of the period under study. In the early years of the association, two of the

five committees I associated with the SIAs initial mission are most central Public & Trade

Policy in the first three periods, and Industry Statistics in the third period (1985-1986). The

other three committees are not. In the middle time frame (the three periods starting in 1994-

1995), of the four committees I expect to have the highest eigenvector scores, only the Japan

35

Chapter is consistently most central. The Public & Trade Policy Committee appears most central

in the 1994-1995 period only, and the Communications Committee seems to be most central in

the 1998 period only. The Law Committee does not appear at all in Table 5 during this time

frame. Finally, in the last two periods (1999 and 2000), the Health and Environment Committees

are both very central; however, of the other committees expected to be most central, only Public

& Trade Policy appears, and only in 1999.

My third hypothesis cannot be said to be supported with the data at hand. This could

imply that the institutionalist perspective is valid the statements of the SIAs objectives appear

to be more rhetorical and symbolic than practical. Scott (1998:294), discussing Meyers 1978

work on environmental variation, points out that organizations units have power that is

independent of their contributions to internal operations. So in the SIA, committees could be

influential without regard to their connection with the associations stated goals.

With respect to the summary measures of centrality for the committees of the SIA, Table

6 provides a list of the top ten (of 22) committees with the highest summed scores of eigenvector

centrality. The list is in rank order. The Board has the highest summed eigenvector centrality

score. This suggests that it has the greatest potential for influence in the association over time.

The committee representing public and trade policy, a concern that is mentioned in all of the

SIAs statements of its objectives, is second only to the Board in Table 6.

Part of what accounts for this ordering of the summed scores is, of course, longevity the

Board and the Public & Trade Policy Committee have the longest tenure in the association. But

summed centrality is not entirely due to longevity the Facilities and Communications

Committees have both existed longer than the Japan Chapter, but both are less central than the

Japan Chapter over time. Why is the Japan Chapter more central? Possibly this is due to Japans

36

importance in the international semiconductor industry. The data at hand obviously do not tell

the entire story.

What do these findings imply for my research questions? Recall that this inquiry is based

on two major questions. The first is, were different committees and firms more or less influential

at different time points in the associations history? Different committees were central at

different time points, though not always those that we might expect. Centrality is thus one way

to understand the importance/influence of committees in the SIAs governance, but certainly not

the only way. Without getting an idea of which committees the SIA members actually perceive

as influential, we are left looking at only one facet of the SIAs world. We must gain better

understanding of the issues involved.

The second main research question guiding this paper is, which committees and firms

have the greatest influence over the associations direction (and what factors might account for

this)? The Board and Public & Trade Policy Committee are the most central committees over

the associations history, suggesting that they are the committees that could influence the

associations direction. The factors that might affect these committees ability to make their

influence felt may be found in a study of the associations member firms, to which I now turn.

Central Firms

My remaining hypotheses all relate to firm centrality. Table 7 lists the firms with the

highest eigenvector centrality scores for each period. Comparing this table to Table 1 shows a

close correspondence between the firms identified as central in each period and those with the

highest number of committee memberships in each period. In fact, in every instance, if I had

taken the top 15 percent instead of the top ten percent of firms, all firms in Table 7 would also be

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in Table 1. My fourth hypothesis, that firms with the most memberships in a given period will be

most central in that period, is strongly supported based on the evidence in Tables 1 and 7.

It may be easier, however, to understand how firms are central in the SIAs committee

network by looking at images of the network in each period. I used a computer graphics

program called Pajek (Vlado 2001), which displays dynamic three-dimensional images of

networks, to depict co-membership and event overlap networks. The images generated represent

the network of the trade association as a set of firms and their linkages through committees; and

the set of committees connected via shared firms. As Castilla, et al. (2000:11) note, such images

require much interpretation the authors liken social network analysts to social radiologists,

who use such pictures as heuristic devices to initiate more systematic probes of how structures

arise and change over time, and as preludes to more complex quantitative analyses.

With that caveat, I present Figures 4 and 5, images of the co-membership networks in

two of the eleven periods under study. These periods images were chosen instead of others

simply because they provide the clearest view of the network structure.30

Figure 4 shows the 1985-1986 network. As Table 7 lists, the most central firms in this

period are Advanced Micro Devices, Mostek (later United Technologies), Motorola, and

National Semiconductor. They are all to be found in the center of the network, tied to AT&T

and several small groups of companies, as well as to the main body of firms in that period. As

Burt (1992) explains, non-redundant ties are important to network efficiency. Here one can see

that these most central firms are the few that link the more peripheral groups with the rest of the

network, making their own networks more efficient (and boosting their eigenvector scores).

30 These network images were created with Pajek, then imported to a simple graphics program for printing purposes.

The other periods co-membership network images are available upon request, as well as the images of the event overlap networks depicting the committees sharing firms.

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Figure 5 is an image of the network as it exists in the year 2000. (Yes, it looks

remarkably like a fish, but this is purely accidental.) The most central firms, from Table 7, are

Texas Instruments, National Semiconductor, Analog Devices, Advanced Micro Devices, and LSI

Logic. The first three (TI, NSC, and Analog) are shown near the base of the fishtail,

connecting the defense semiconductor firms that make up the nodes splayed out the right of the

image to the rest of the network. (These firms participate on the Governmental Procurement

Committee.) The other two firms (AMD and LSI Logic) are among the most central firms in the

main part of the network, tying in some of the other peripheral firms to the greater body of

companies in the network. Hopefully, these images give a better idea of how and why certain

firms might be central in certain periods.

Finally, I address the set of hypotheses regarding firm size and type of membership with

some simple statistics. Table 8 gives univariate and bivariate statistics for all firms from every

period (N=441). As mentioned earlier, I have coded firms type of membership as a

dichotomous indicator, with 1 as regular membership and 0 as any type of associate membership.

Notice that member type is missing in 55 cases over the 20 years of study. Occasionally,

individuals on committees are affiliated with firms that have no membership in the SIA. This

happens for a variety of reasons. For example, the individual may have been invited by the

committee to serve because of his or her expertise, regardless of whether his or her firm is an

SIA member. This occurs particularly on the Communications, Environmental and Health

Committees (Marr & Haver 2001). Or a firm may have withdrawn its membership but the

individuals contribution was valued so much that he or she remained on the committee (Marr &

Haver 2001). When a firm is not a member of the SIA, membership is coded as missing.

Finally, firm size (as previously mentioned) is represented by self-reported sales figures, scaled

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from 1 to 51. Again, I acknowledge that this is a rather rough gauge of size, and that it would

have been better to use a more exact measure. Moreover, nearly half (47%) of the firms are

missing this data; clearly this is an issue that will have to be dealt with in future research.

For cases not missing the measure of size, I obtain a correlation coefficient of firm size

and eigenvector centrality score (see Table 8). These attributes have a strong positive correlation

of 0.63 (p < .01, one-tailed test). This suggests that larger firms are more central. Notice,

however, that the firms listed as most central by period are not always the largest (see Table 7).

The cases missing the size measure are overwhelmingly associate members; only 10

percent of associate members reported sales figures (the basis of the size measure) in any period.

Unfortunately, this is too few to test whether there is a statistically significant difference between

the size of associate member firms and regular member firms, though there is anecdotal evidence

to suggest that regular member firms are larger among other things, recall Marr & Havers

(2001) statement that Board membership is based on firm size.

I can, however, test whether associate members centrality scores differ from regular

members. T-test results presented in Table 8 show a significant difference in the mean

eigenvector centrality score between associate members and regular members (t=-16.23, p < .01,

two-tailed test). The 110 associate members have a mean score of 5.98, while the 276 regular

members have a mean score of 23.36. Regular member firms are more central, as I

hypothesized, and larger firms are associated with higher centrality scores, also as predicted.

While I cannot statistically test whether regular member firms are larger than associate member

firms, there is a strong implication that this is so.

Table 9 gives the top 20 firms with the highest summed eigenvector centrality scores over

time. Every firm listed in Table 7 (firms with the top centrality scores in each period) and Table

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1 (firms with the highest numbers of committee memberships in each period) is represented in

Table 9, the top summed centrality scores table. I note that Intel, with the highest summed

eigenvector centrality score, is widely regarded as the largest semiconductor company in the

industry. However, as noted earlier, not all companies that are the most central are the largest.

LSI Logic is almost always in the middle of the pack, so to speak, in terms of firm size in each

period, yet it is in the top five most central firms over time.

I suggest that firms and committees interrelationships might affect the ability of each

(firms and committees) to influence the direction of the association. Table 10 presents a chart of

the firms that held seats on the SIAs Board in each period. Of the top five firms in terms of

summed centrality scores in Table 9 (Intel, Advanced Micro Devices, National Semiconductor,

IBM, and LSI Logic), all but LSI Logic held Board seats in the association in