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1 – 10 of over 10000Although investigating the factors influencing technological diversification is essential to understanding research and development (R&D) strategies, studies from the perspective…
Abstract
Purpose
Although investigating the factors influencing technological diversification is essential to understanding research and development (R&D) strategies, studies from the perspective of corporate ownership structure are limited. This study examines the effect of heterogeneous institutional investors on technological diversification strategies.
Design/methodology/approach
The sample consists of 33,124 firm-year observations of USA manufacturing firms from 1981 to 2008. Data were extracted from US Patent Data, Thomson Reuters' 13f and the Compustat database. A panel regression analysis was used to test the hypothesis. Moreover, the two-stage least squares (2SLS) approach using instrumental variables (IVs) and generalized method of moments (GMM) were also applied to address the endogeneity issue.
Findings
The empirical findings indicate that short-term (long-term) institutional investors positively (negatively) affect technological diversification. That is, short-term institutional ownership hampers R&D diversification, suggesting that firms are forced to make myopic investments to meet short-term goals instead of diversifying corporate R&D projects. Meanwhile, long-term institutional ownership enhances technological diversification to achieve long-term value.
Research limitations/implications
By differentiating between institutional investment horizons, the authors produce empirical evidence that institutional investors with short-term and long-term perspectives have different views on technological diversification. This study is based on data between 1981 and 2008, due primarily to patent data availability and data on institutional investors. However, this limitation does not diminish the importance of the empirical findings, as the study's focus is on discovering antecedent evidence of corporate technological diversification rather than addressing recent trends in firm decisions.
Practical implications
In finding that long-term institutional investors are likely to encourage technological diversification at firms, the paper carries an important practical implication that can help inform decision-making by policymakers and investors.
Originality/value
This research contributes to a more comprehensive understanding of institutional investors' role in technological diversification strategies. Additionally, by challenging the assumption that all institutional owners share the same perspective, this study is the first to confirm the existence of heterogeneous effects of institutional investors on technological diversification strategies.
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Xin Pan, Xuanjin Chen and Lutao Ning
Although technological diversification is often understood as an explorative activity, the authors argue that it can also be explained as exploitation. The purpose of this paper…
Abstract
Purpose
Although technological diversification is often understood as an explorative activity, the authors argue that it can also be explained as exploitation. The purpose of this paper is to examine how exploitative technological diversification (ETD) affects firm performance and what factors may moderate this relationship.
Design/methodology/approach
The sample consists of 1,569 Chinese listed firms with 7,555 observations from 2003 to 2014. Patent data were collected from the State Intellectual Property Office, while financial information was collected from the China Stock Market and Accounting Research database. The system generalised method of moments model was used for testing the hypotheses.
Findings
The empirical findings indicate that the relationship between ETD and firm performance is inversely U-shaped. Moreover, this relationship is negatively moderated by environmental munificence, which refers to the availability of resources in the environment where the firm operates, and positively moderated by environmental dynamism, which refers to the extent of volatility and unpredictable change in firms’ external environments.
Originality/value
Overlooking ETD limits applications of diversification logic and the precision of their predictions. This paper tries to fill this gap by empirically testing the relationship between ETD and financial performance.
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Cheng-Yu Lee, Yen-Chih Huang and Chia-Chi Chang
Although scholars have paid considerable attention to the relationship between technological diversification and firm performance, research on this relationship has produced mixed…
Abstract
Purpose
Although scholars have paid considerable attention to the relationship between technological diversification and firm performance, research on this relationship has produced mixed findings. To reconcile these inconsistent findings, this study, thus, aims to revisit the performance effect of technological diversification by considering two organizational characteristics as crucial moderators, namely, firm size and financial slack.
Design/methodology/approach
To test the research hypotheses, the research sample covers manufacturing firms in the 2008 Standard & Poor (S&P) 500 index. Data regarding the characteristics and patent information of the sample firms were obtained from Compustat and the US Patent and Trademark Office. The hypotheses were tested by using hierarchical regression models.
Findings
In a sample of 168 S&P 500 manufacturing firms, this study finds that technological diversification has a positive effect on firm performance. The relationship between technological diversification and firm performance is also found to be positively moderated by firm size, financial slack and their configuration.
Originality/value
The findings of this study further suggest that firms should be aware that the effect of technological diversification on performance can be enhanced or hindered in specific contexts.
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The paper proposes an answer to one of the most important questions in corporate innovation management: what mechanisms of technological diversification exist within multinational…
Abstract
Purpose
The paper proposes an answer to one of the most important questions in corporate innovation management: what mechanisms of technological diversification exist within multinational companies? It is ascertained that research and development (R&D) intra-firm co-invention or co-patenting is one of those mechanisms. Co-invention implies knowledge-sharing, which should lead to unique combinations of knowledge and expertise and hence technological diversification of patent applications.
Design/methodology/approach
This paper offers a novel conceptual framework exploring the relationship between patents’ technological diversification and a detailed classification of different forms of international co-invention. Based on the case of Siemens’ Patent Cooperation Treaty (PCT) applications, the revealed technological advantage (RTA) index is utilized to measure the extent of the technological diversification of patent output.
Findings
The results show that patent applications generated by subsidiaries in advanced economies in cooperation with other subsidiaries feature unique technological areas that deviate from the company's overall technological specializations. These results provide a strong argument in favor of inter-subsidiary or horizontal co-patenting as a mechanism of new knowledge creation.
Research limitations/implications
On the conceptual level, the results accentuate inter-subsidiary patenting being an important mechanism of knowledge meta-integration boosting technological diversification. The obvious limitation of this paper lies in exploring a single company case, which restricts the generalizability of our findings. Due to the dynamic nature of technological change, the author’s dataset also suffers from a lack of temporal external validity. Future research can expand the scope in both regards in applying our co-invention mode typology.
Practical implications
Based on the results, to diversify knowledge portfolio, companies should strengthen the co-patenting effort and reinforce horizontal (inter-subsidiary) R&D collaborations.
Originality/value
To the author’s knowledge, this is the first time when such a nuanced typology of co-invention modes is being utilized to understand the effect of different co-invention categories on knowledge diversification.
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Jan Hendrik Fisch and Katharina Kertels
Purpose – Recent research suggests that the positive effect of knowledge diversification on the value of corporate knowledge is limited.Design/methodology/approach – This study…
Abstract
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.
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Alan Rugman was one of the first to examine in a systematic way the connection between the internationalization of the firm and the diversification of assets within the…
Abstract
Alan Rugman was one of the first to examine in a systematic way the connection between the internationalization of the firm and the diversification of assets within the multinational enterprises (MNE). He has since moved on to deal with many other issues surrounding the MNE, but his major contribution to the subject of international diversification (Rugman, 1979) was for many years essential reading for anyone with serious pretensions to be or to become an international business scholar. Rugman (2005) himself sees the key idea in his early book as being an appreciation of the role of risk in foreign direct investment (FDI). MNEs in the place of individual investors, diversified their portfolio of assets, and thereby served as a vehicle for risk reduction. This argument can be applied especially before 1970, before advances in financial markets and international asset instruments enabled individual investors (or funds acting on their behalf) to directly conduct for themselves such strategies of international diversification to reduce risk.
Christopher Palmberg and Olli Martikainen
While the ICT industry as a whole is undergoing a potentially disruptive phase of development due to the convergence between information and telecom technologies and the rapid…
Abstract
Purpose
While the ICT industry as a whole is undergoing a potentially disruptive phase of development due to the convergence between information and telecom technologies and the rapid diffusion of internet‐related applications. Against this background the purpose of the paper is to analyse recent patterns of internal/indigenous and external diversification of prominent Finnish telecom firms using data on patents and strategic R&D alliances.
Design/methodology/approach
The methodology comprises of statistical analyses of patterns of patenting of Finnish telecom firms to capture the internal/indigenous nature of diversification, compared with patterns of external diversification based on a new database of alliances of Finnish firms.
Findings
The results indicate that the Finnish telecom industry has diversified its technological base in recent years. The industry appears internally/indigenously weak in internet‐related “new” telecom technologies and related applications. However, telecom firms have also extensively engaged themselves in complementary R&D alliances in these fields.
Research limitations/implications
The paper carries important implications for policymakers and managers alike related to the sustainability of previous success of Finnish telecom. Limitation related to the use of Finnish patent data that might to capture software technologies sufficiently, and does not aim to/cannot capture the diversified technological competencies of Nokia on a global level.
Originality/value
The originality of the paper lies in the combination of patent and R&D alliances data, as well as the development of a concordance table to link technology classes to broader developments in the industry, for a novel and systematic analysis of the responsiveness of the Finnish telecom industry to ICT convergence
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Aim of the present monograph is the economic analysis of the role of MNEs regarding globalisation and digital economy and in parallel there is a reference and examination of some…
Abstract
Aim of the present monograph is the economic analysis of the role of MNEs regarding globalisation and digital economy and in parallel there is a reference and examination of some legal aspects concerning MNEs, cyberspace and e‐commerce as the means of expression of the digital economy. The whole effort of the author is focused on the examination of various aspects of MNEs and their impact upon globalisation and vice versa and how and if we are moving towards a global digital economy.
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Mohammad Pakneiat, Monireh Panahi and Javad Noori
The literature on large firms in developing countries proposes a link between types of capabilities and diversification pattern. It is argued that technological/organizational…
Abstract
Purpose
The literature on large firms in developing countries proposes a link between types of capabilities and diversification pattern. It is argued that technological/organizational capabilities lead to related diversification, and by using contact/general capabilities firms (mostly in developing countries) are able to diversify into unrelated fields. However, in our case, despite the presence of contact/general capabilities, only related diversification is observed. Limitation of the scope of diversification does not allow them to invest in different lucrative businesses. Most successful firms in developing countries have diversified vastly.
Design/methodology/approach
To determine out the reason for this behavior in this case, in‐depth interviews based on open‐ended semi‐structured questionnaire with key 12 decision‐makers were carried out. Each interview took about 90 minutes.
Findings
The case study showed that firms' approach to mission development is connected to firm diversification and capabilities. A mission developed based on a strategic approach leads to the development of technological/organizational capabilities, which make related diversification more likely. However, a mission developed based on a philosophical approach when added to firm contact/general capabilities encourages unrelated diversification.
Research limitations/implications
The research takes for granted the role of national conditions (e.g. macroeconomic indexes) when it is argueed that the behavior of Khodro is expected to be similar to firms in other developing countries (or formerly developing countries, e.g. South Korea). The work presented here could be tested again in two or more firms in a similar environment.
Practical implications
The paper's findings should help firms in developing countries to develop their mission statement in a way that allows them to grow faster via unrelated diversification. It also informs them about the limitations of a strategic approach to their mission that hinders them from leveraging their contact and general capabilities.
Originality/value
Previous research has not paid enough attention to managerial issues in firms in developing countries. Firms in developing countries need more context‐specific instructions to succeed.
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To investigate the relationship between technological diversification and firm performance as a function of varying levels of technological coupling and internal technological…
Abstract
Purpose
To investigate the relationship between technological diversification and firm performance as a function of varying levels of technological coupling and internal technological change.
Design/methodology/approach
A longitudinal study of US-based bio-pharmaceutical companies.
Findings
Technological diversification improves invention performance. However, high levels of technological coupling reduce this effect.
Practical implications
Firms with highly diversified technological portfolios should strive to keep their technologies at low levels of technological coupling.
Originality/value
This is the first study to show that technological coupling reduces the positive effect of technological diversification on firms' invention performance.
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