View More View Less
  • 1 Department of Business Administration, National Taipei University, 151, University Road, San Shia, New Taipei City 237, Taiwan
  • 2 Department of Business Administration, National Yunlin University of Science and Technology, Yunlin, Taiwan
Restricted access

Abstract

This study applies the entropy-based patent measure to explore the influences of related technological diversification (RTD) and unrelated technological diversification (UTD) upon technological competences and firm performance. The results show that RTD has a monotonically positive effect on technological competences and UTD has an inverse U-shaped effect on technological competences. Besides, the results demonstrate that the extent of the positive influence of RTD upon technological competences is better than that of UTD upon technological competences. If American pharmaceutical companies would like to adopt technological diversification, this study suggests that they should undertake RTD, rather than UTD. In addition, this study finds out that technological competences mediate the relationship between firm performance and both of RTD and UTD. Although RTD and UTD cannot significantly influence firm performance directly, they can positively affect firm performance indirectly through technological competences.

  • Barney, JB 1991 Firm resources and sustained competitive advantage. Journal of Management 17:99120 .

  • Barney, JB, Zajac, EJ 1994 Competitive organizational behavior: Toward an organizationally-based theory of competitive advantage. Strategic Management Journal 15:59 .

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Blundell, R, Griffith, R, Reenen, JV 1999 Market share, market value and innovation in a panel of British manufacturing firms. Review of Economic Studies 66:529554 .

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Breschi, S, Lissoni, F, Malerba, F 2003 Knowledge-relatedness in firm technological diversification. Research Policy 32:6987 .

  • Cameron, AC, Trivedi, PK 1998 Regression analysis of count data Cambridge University Press Cambridge.

  • Cantwell, J, Piscitello, L 2000 Accumulating technological competence: Its changing impact on corporate diversification and internationalization. Industrial and Corporate Change 9:2151 .

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Chandler, AD 1990 Scale and scope. The dynamics of industrial capitalism Harvard University Press Cambridge, MA.

  • Chatterjee, S, Blocher, JD 1992 Measurement of firm diversification: is it robust?. Academy of Management Journal 35 4 874888 .

  • Chen, Y-S, Chang, K-C 2009 Using neural network to analyze the influence of the patent performance upon the market value of the US pharmaceutical companies. Scientometrics 80 3 637655 .

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Chen, Y-S, Chang, K-C 2010 Analyzing the nonlinear effects of firm size, profitability, and employee productivity on patent citations of the US pharmaceutical companies by using artificial neural network. Scientometrics 82 1 7582 .

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Chen, Y-S, Chang, K-C 2010 Exploring the nonlinear effects of patent citations, patent share, and relative patent position on market value in the US pharmaceutical industry. Technology Analysis & Strategic Management 22 2 153169 .

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Chen, Y-S, Chang, K-C 2010 The nonlinear nature of the relationships between the patent traits and corporate performance. Scientometrics 82 1 201210 .

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Chen, Y-S, Chang, K-C 2010 The relationship between a firm's patent quality and its market value—The case of US pharmaceutical industry. Technological Forecasting and Social Change 77 1 2033 .

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Chen, Y-S, Lin, M-JJ, Chang, C-H 2006 The influence of intellectual capital on new product development performance-the manufacturing companies of Taiwan as an example. Total Quality Management and Business Excellence 17 10 13231339 .

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Chen, Y-S, Lin, M-JJ, Chang, C-H 2009 The positive effects of relationship learning and absorptive capacity on innovation performance and competitive advantage in industrial markets. Industrial Marketing Management 38 2 152158 .

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Christensen, HK, Montgomery, CA 1981 Corporate economics performance: Diversification strategy versus market structure. Strategic Management Journal 2 4 327343 .

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Cohen, WM, Levinthal, DA 1990 Absorptive capacity: A new perspective on learning and innovation. Administrative Science Quarterly 35:128152 .

  • García-Morales, VJ, Ruiz-Moreno, A, Llorens-Montes, FJ 2007 Effects of technology absorptive capacity and technology proactivity on organizational learning, innovation and performance: An empirical examination. Technology Analysis & Strategic Management 19 4 527558 .

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Garcia-Vega, M 2006 Does technological diversification promote innovation?: An empirical analysis for European firms. Research Policy 35:230246 .

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Granstrand, O 1998 Towards a theory of the technology-based firm. Research Policy 27:465489 .

  • Granstrand, O, Oskarsson, C 1994 Technology diversification in ‘MUL-TECH’ corporations. IEEE Transactions on Engineering Management 41:355364 .

  • Granstrand, O, Patel, P, Pavitt, K 1997 Multitechnology corporations: Why they have distributed rather than distinctive core competencies. California Management Review 39:825.

    • Search Google Scholar
    • Export Citation
  • Griliches, Z 1984 R&D patents and productivity University of Chicago Press Chicago.

  • Hall, BH 2002 A note on the bias in the herfindahl based on count data A Jaffe M Trajtenberg eds. Patents, citations, and innovations MIT Press Cambridge, MA.

    • Search Google Scholar
    • Export Citation
  • Hausman, J, Hall, BH, Griliches, Z 1984 Econometric models for count data with an application to the patents-R&D relationship. Econometrica 52:909938 .

  • Huang, YF, Chen, CJ 2010 The impact of technological diversity and organizational slack on innovation. Technovation 30 7/8 420428 .

  • Jacquemin, AP, Berry, CH 1979 Entropy measure of diversification and corporate growth. Journal of Industrial Economics 27:359369 .

  • Katila, R, Ahuja, G 2002 Something old, something new: A longitudinal study of search behavior and new product introduction. Academy of Management Journal 45:11831194 .

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Kermani, F, Bonacossa, P 2003 Patent issues and future trends in drug development. Journal of Commercial Biotechnology 9:332338 .

  • Kodama, F 1986 Technological diversification of Japanese industry. Science 233 4761 291296 .

  • Lavie, D 2006 The competitive advantage of interconnected firms: An extension of the resource-based view. Academy of Management Review 31 3 638658 .

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Lee, YG, Lee, JD, Song, YI, Lee, SJ 2007 An in-depth empirical analysis of patent citation counts using zero-inflated count data model: The case of KIST. Scientometrics 70 1 2739 .

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Leonard-Barton, D 1992 Core capabilities and core rigidities: A paradox in managing new product development. Strategic Management Journal 13:111125 .

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Leten, B, Belderbos, R B Van Looy 2007 Technological diversification, coherence, and performance of firms. Journal of Product Innovation Management 24:567579 .

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Levitt, B, March, JG 1988 Organizational learning. Annual Review of Sociology 14:319340 .

  • Lin, BW, Chen, CJ, Wu, HL 2006 Patent portfolio diversity, technology strategy, and firm value. IEEE Transactions on Engineering Management 53 1 1726 .

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Markides, CC, Williamson, PJ 1994 Related diversification, core competencies and corporate performance. Strategic Management Journal 15:149165 .

  • Miller, DJ 2006 Technological diversity, related diversification, and firm performance. Strategic Management Journal 27:601619 .

  • Patel, P, Pavitt, K 1997 The technological competency of the world's largest firms: complex path-dependent, but not much variety. Research Policy 6:141156 .

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Pavitt, K 1998 Technologies, products and organization in the innovating firm: What Adam Smith tells us and Joseph Schumpeter doesn't. Industrial and Corporate Change 7 3 433451.

    • Search Google Scholar
    • Export Citation
  • Pavitt, K, Robson, M, Townsend, J 1989 Technological accumulation, diversification and organisation in UK companies, 1945–1983. Management Science 35:8199 .

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Penrose, ET 1959 The theory of the growth of the firm Basil Blackwell Oxford.

  • Prahalad, CK, Hamel, G 1990 The core competence of the corporation. Harvard Business Review 68:7991.

  • Prajogo, DI, Ahmed, PK 2006 Relationships between innovation stimulus, innovation capacity, and innovation performance. R&D Management 36 5 499515 .

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Quintana-Garica, C, Benavides-Velasco, CA 2008 Innovative competence, exploration and exploitation: The influence of technological diversification. Research Policy 37:492507 .

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Reed, R, Luffman, GA 1986 Diversification: The growing confusion. Strategic Management Journal 7:2935 .

  • Rijamampianina, R, Abratt, R, February, Y 2003 A framework for concentric diversification through sustainable competitive advantage. Management Decision 41 4 362371 .

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Rumelt, RP 1974 Strategy, structure and economic performance Harvard University Press Cambridge, MA.

  • Rumelt, RP 1982 Diversification strategy and profitability. Strategic Management Journal 3:359369 .

  • Soete, L, Wyatt, S 1983 The use of foreign patenting as an internationally comparable science and technology output indicator. Scientometrics 5 1 3154 .

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Suzuki, J, Kodama, F 2004 Technological diversity of persistent innovators in Japan: Two case studies of large Japanese firms. Research Policy 33:531549 .

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Teece, DJ 2007 Explicating dynamic capabilities: The nature and microfoundations of (sustainable) enterprise performance. Strategic Management Journal 28 13 13191350 .

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Teece, DJ, Rumelt, R, Dosi, G, Winter, SG 1994 Understanding corporate coherence: theory and evidence. Journal of Economic Behaviour and Organization 23:130 .

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Trajtenberg, M 1990 A penny for your quotes: Patent citations and the value of innovations. Journal of Economics 21:172187.

  • Utterback, JM 1994 Innovation and industrial evolution mastering the dynamics of innovation Harvard Business School Press Boston.

  • Valvano, S, Vannoni, D 2003 Diversification strategies and corporate coherence evidence from Italian leading firms. Review of Industrial Organization 23:2541 .

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Walsh, S, Linton, JD 2002 The measurement of technical competencies. Journal of High Technology Management Research 13:6386 .

  • Wang, Q GN von Tunzelmann 2000 Complexity and the functions of the firm: breadth and depth. Research Policy 29:805818 .

  • Zahra, SA, George, G 2002 Absorptive capacity: A review, reconceptualization, and extension. Academy of Management Review 27:185203.