technological diversification

 Tarih: 14-08-2023 16:49:00
Dr. Mehmet Naci Karaörs

The role of knowledge-relatedness in affecting firms  "technological diversification"

Most of the times in their innovative activities firms span over more than one technology, i.e. they are ‘technologically diversified’. The literature on innovation and technical change has evidenced some robust stylised facts about firms’ technological diversification. First, technological diversification is usually greater than product diversification. Firms have to manage a wide number of technologies in order to develop and produce products and services. Thus, most firms could be labelled multi-technology corporations, even if they are specialised in just one line of business . Second, most of the times technological diversification anticipates product and market diversification . This is so because technological exploration in a wide range of technologies is a prerequisite for production. Third, the profile of technological diversification of firms is rather stable. It changes slowly over time as a consequence of the inertia of specialisation, incremental changes in knowledge production and modifications in firms’ competencies . Fourth, the profile of technological diversification differs across large firms, as a consequence of the history of the corporations, initial conditions, the specialisation of the companies, the market incentives and the specific institutional setting in which companies are embedded. Fifth, the profile of technological diversification is very similar among large firms producing similar products, particularly in high technology and technology-based industries .

Based upon such evidence, a question that has recently gained the attention of several scholars in the field of industrial organisation and technical change concerns the nature and the determinants of firms’ productive and technological diversification. There is emerging evidence that the range of firms’ technological and productive activities, far from being driven by short-term quest for profits, follows some ‘purposiveness’. Relatedly, it has been shown that firms exhibit some coherence in the technological and productive activities they are engaged in. However, the notion, determinants and measurement of the coherence of firms are still to be fully developed. In this respect, much work has still to be done at both the conceptual and the empirical levels.

This paper goes in this direction, by exploring the extent and the nature of firms’ technological diversification and by linking it to a key factor: knowledge-relatedness. In order to do that, the paper first tests whether firms’ technological activities are not distributed randomly across technological fields (random hypothesis) and confirms Teece’s et al. seminal findings.

In addition, the paper tests (more directly than ever before) the knowledge-relatedness hypothesis, claiming that firms follow a coherent pattern of technological diversification, which clusters around groups of technologies that share a common or complementary knowledge base, rely upon common scientific principles or have similar heuristics of search.

The concept of knowledge-relatedness is very broad and encompasses several dimensions of knowledge. They can be grouped into three categories: proximity, commonality and complementarity.

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