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Chapter 12 Increasing the Diversification of Technological Knowledge Through R&D Partnerships and Foreign Subsidiaries

Entrepreneurship in the Global Firm

ISBN: 978-1-78052-114-5, eISBN: 978-1-78052-115-2

Publication date: 20 October 2011


Purpose – Recent research suggests that the positive effect of knowledge diversification on the value of corporate knowledge is limited.

Design/methodology/approach – This study uses an information processing perspective to explore the highest value that firms can draw from knowledge diversification and to argue that R&D cooperation and foreign direct investment help develop this value.

Findings: Regressions on a sample of 21.434 patents of German manufacturing firms show that technologically diversified knowledge has an inverted U-shaped influence on the value of technological knowledge. The findings also suggest that R&D cooperation increases the value generated by technologically diversified knowledge. However, foreign direct investment does not seem to have a moderating influence on the relationship between technological diversification and value.

Research limitations – We use patent citations to measure knowledge transfers. However, not all inventions are patented.

Originality/value – The information processing theory, which we apply in this chapter, provides consistent explanations for both the inverted U-shape of diversification and the extension of the optimal diversification of knowledge by R&D cooperation.



Hendrik Fisch, J. and Kertels, K. (2011), "Chapter 12 Increasing the Diversification of Technological Knowledge Through R&D Partnerships and Foreign Subsidiaries", Verbeke, A., Tavares-Lehmann, A.T. and Van Tulder, R. (Ed.) Entrepreneurship in the Global Firm (Progress in International Business Research, Vol. 6), Emerald Group Publishing Limited, Leeds, pp. 275-290.



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