Technological diversification, coherence and performance of firms.

Technological diversification at the level of the firm, i.e. the expansion of a firm’s technology base into a wide range of technology fields, is found to be a prevailing phenomenon in all three major industrialized regions: US, Europe and Japan, prompting the term multi-technology corporation. Whereas previous studies have provided insights into the composition of technology portfolios of multi-technology firms, little is known about the link between technological diversification and firms’ technological performance. Against a backdrop of the technology and innovation management literature, this article investigates the relationship between technological diversification and technological performance, taking into account the moderating role of technological coherence in firms’ technology portfolios. Hereby, technological coherence is defined as the degree to which technologies in a technology portfolio are technologically related. In order to measure the technological coherence of portfolios, a measure of technological relatedness of technology fields is constructed based on patent citation patterns found in 450,000 EPO patent grants. Two hypotheses are presented in this article: (1) Technological diversification has an inverted U-shaped relationship with technological performance; and (2) Technological coherence moderates the relationship between technological diversification and technological performance positively. These hypotheses are tested empirically using a panel dataset (1995-2003) on patent portfolios pertaining to 184 US, European, and Japanese firms. The firms selected are the largest R&D actors in five industries: Pharmaceuticals & Biotechnology, Chemicals, Engineering & General Machinery, IT Hardware (computers and communication equipment), and Electronics & Electrical Machinery. Empirical results, obtained by fixed-effects negative binomial regressions, support both hypotheses in this article. Technological diversification has an inverted U-shaped relationship with technological performance. While technological diversification offers opportunities for cross-fertilization and technology fusion, high levels of diversification may yield few marginal benefits as firms risk lacking sufficient levels of scale to benefit from wide-ranging technological capabilities, and firms may encounter high levels of coordination and integration costs. Further, the results show that the net benefits of technological diversification are higher in technologically coherent technology portfolios. If firms build up a technologically coherent diversified portfolio, the presence of sufficient levels of scale is ensured and coordination costs are limited. This article clearly identifies the important role of technological coherence and points out in the discussion session the relevance of future research on interface management practices directed to the realization of the benefits of technological diversification.technology diversification; technology relatedness; innovation; firm performance;

Developing technology in the vicinity of science: Do firms really benefit? An empirical assessment on the level of Italian provinces.

The article examines whether firms benefit from the presence of universities when developing technology. By estimating regional knowledge production functions for 101 Italian regions, we observe a strong positive relation between industrial technological performance – measured by patents – and the local presence of universities. In addition, 'academic' regions witness higher levels of industrial technological output, the more pronounced the scientific eminence of the regional universities. Finally, our analysis indicates that the observed spillover effects are field-specific, with domains situated in the vicinity of science benefiting most. Together, these findings suggest complementary roles for scientific and industrial actors within regional innovation systems.Regional Innovation Systems; Technology transfer; University-Firm Knowledge Spillovers; Technology; Science; Firms; Research;

Do Firms Benefit from Being Present in Multiple Technology Clusters? An Assessment of the Technological Performance of Biopharmaceutical Firms

Firms active in knowledge-intensive fields are increasingly organizing their R&D activities on an international scale. This paper investigates whether firms active in biotechnology can improve their technological performance by developing R&D activities in multiple technology clusters. Regions in the US, Japan and Europe, that host a concentration of biotechnology activity are identified as clusters. Fixed-effect panel data analyses with 59 biopharmaceutical firms (period 1995-2002) provides evidence for a positive, albeit diminishing (inverted-U shape) relationship between the number of technology clusters in which a firm is present and its overall technological performance. This effect is distinct from a mere multi-location effect.region, clusters, biotechnology, technology clusters

Technological activities and their impact on the financial performance of the firm: Exploitation and exploration within and between firms

This paper analyzes the consequences for financial performance of technology strategies categorized along two dimensions: (1) explorative versus exploitative and (2) solitary versus collaborative. The financial performance implications of firms’ positioning along these two dimensions has important managerial implications, but has received only limited attention in prior studies. Drawing on organizational learning theory and technology alliances literature, a set of hypotheses on the performance implications of firms’ technology strategies are derived. These hypotheses are tested empirically on a panel dataset (1996-2003) of 168 R&D-intensive firms based in Japan, the US and Europe and situated in five different industries (chemicals, pharmaceuticals, ICT, electronics, non-electrical machinery). Patent data are used to construct indicators of explorative versus exploitative technological activities (activities in new or existing technology domains) and collaborative versus solitary technological activities (joint versus single patent ownership). The financial performance of firms is measured via a market value indicator: Tobin’s Q index.Innovation, Tobin’s q, R&D collaboration, exploration & exploitation

Technological activities and their impact on the financial performance of the firm: Exploitation and exploration within and between firms.

This article analyzes the financial performance consequences of technology strategies categorized along two dimensions: (1) explorative versus exploitative and (2) solitary versus collaborative. The financial performance implications of firms’ positioning along these two dimensions has important managerial implications, but has received only limited attention in prior studies. Drawing on organizational learning theory and technology alliances literature, a set of hypotheses on the performance implications of firms’ technology strategies are derived. These hypotheses are tested empirically on a panel dataset (1996-2003) of 168 R&D-intensive firms based in Japan, the US and Europe and situated in five different industries (chemicals, pharmaceuticals, ICT, electronics, non-electrical machinery). Patent data are used to construct indicators of explorative versus exploitative technological activities (activities in new or existing technology domains) and collaborative versus solitary technological activities (joint versus single patent ownership). The financial performance of firms is measured via a market value indicator: Tobin’s Q index. The analyses confirm the existence of an inverted U-shape relationship between the share of explorative technological activities and financial performance. In addition, it is observed that most sample firms do not reach the optimal level of explorative technological activities. These findings point to the relevance of creating a balance between exploitation and exploration in the context of technological activities. Moreover, they suggest that, for the majority of R&D intensive firms, reaching such a balance between exploration and exploitation implies investing additional efforts and resources in exploring new knowledge domains. The analyses also show that firms, engaging more intensively in collaboration, perform relatively stronger in explorative activities. At the same time, a negative relationship between the share of collaborative technological activities and a firm’s market value is observed. Contrary to our expectations, it is collaboration in explorative technological activities, rather than collaboration in exploitative technological activities, that leads to a reduction in firm value. These findings question the relevance of open business models for technological activities. In particular, they suggest that the potential advantages of collaboration for (explorative) technological activities (i.e. access to complementary knowledge from other partners, sharing of technological costs and risks) might not compensate for the potential disadvantages, such as the incurred increase in coordination costs and the need to share innovation rewards across innovation partners.

Do firms benefit from being present in technology clusters? Evidence from a panel of biopharmaceutical firms.

This paper investigates whether firms active in biotechnology can improve their technological performance by developing R&D activities in technology clusters. Regions that host a concentration of biotechnology activity are identified as technology clusters (level of US states, Japanese prefectures and European NUTS2 regions). A fixed effect panel data analysis on a set of 59 biopharmaceutical firms (period 1995-2002) provides evidence for a positive, albeit diminishing (inverted-U shape) relationship between the number of technology clusters in which a firm is present and its total technological performance. This effect is distinct from a mere multi-location effect.Cluster; Innovation; Biotechnology;

The role of inter-organizational collaboration within innovation strategies: towards a portfolio approach.

Within the innovation literature, inter-organizational collaboration is being advanced as instrumental for improving the innovative performance of firms. In addition inter-organizational collaboration can be instrumental for addressing the multiple requirements innovation strategies entail. At the same time - large scale - empirical evidence for such a relation is scarce. Within this paper we examine whether evidence can be found for the idea that inter-organizational collaboration supports the effectiveness of innovation strategies. Multivariate and Tobit analyses of data on Belgian manufacturing firms, collected by means of the CIS survey (n=221), reveals a positive relationship between inter-organizational collaboration and innovative performance. Moreover the findings reported here suggest the relevancy of adopting a portfolio approach towards inter-organizational collaboration.Data; Effectiveness; Firms; Innovation; Innovation strategy; Manufacturing; Performance; Portfolio; Requirements; Strategy; Time;

A process view on managing quality during the creation of technical innovations : lessons from field research.

Quality Management (QM) principles have left their marks on business practice for more than a decade. Amongst the many business functions that have faced the widespread introduction of QM standards and methodologies, the R&D function has been amongst the last to undergo their pervasive influence. The uncertain and ambiguous nature of the technical innovation not to introduce 'traditional' QM approaches in R&D settings. These arguments are often based on a rather rigid and mechanistic view on QM. As recent insights show, this need not to be the case. QM can offer an avenue to fundamentally scrutinise and re-think-functional interaction strategies in innovative contexts. Therefore, the process of introducing QM principles is an R&D environment deserves close attention. This paper offers a field-based insight into these fundamental organisational and managerial issues.Innovations; Knowledge;

Measuring industry-science links through inventor-author relations: A profiling method

In this pilot study we examine the performance of text-based profiling in recovering a set of validated inventor-author links. In a first step we match patents and publications solely based on their similarity in content. Next, we compare inventor and author names on the highest ranked matches for the occurrence of name matches. Finally, we compare these candidate matches with the names listed in a validated set of inventor-author names. Our text-based profile methodology performs significantly better than a random matching of patents and publications, suggesting that text-based profiling is a valuable complementary tool to the name searches used in previous studies.innovation; industry-science links; text-based profiling;

Publication and patent behaviour of academic researchers: conflicting, reinforcing or merely co-existing?.

Increasing entrepreneurial activity within academia has raised concerns that the amount of publications added to the scientific commons might become reduced or that academic research would become directed exclusively towards the application-oriented needs of industry. In the case of academic inventions, the potential conflict between public and private oriented considerations seems most salient. With this contribution, we examine whether the publication behaviour of academic inventors (at K.U.Leuven) differs from their colleagues (non-inventors) working within similar fields of research. Our analysis reveals that inventors publish significantly more. Moreover, no empirical evidence was found for the 'skewing problem'. These findings not only suggest the co-existence of both activities; they may actually reinforce one another.Academic investors; Field; Industry; Knowledge; Knowlegde interactions; Research; University-industry relations; Working;