(A) study on the effect of technological regimes on technological diversification

Abstract

Technological diversification is the strategy for a firm to broaden its knowledge base by exploring new technologies. These days, firms are in favor of adopting technological diversification strategy in spite of the tendency of refocusing to fewer businesses, and increasing the degree of technological diversification contributes to the improvement of firm performance. Technological diversification is not only served as a stepping stone for future business opportunities, but also strengthening firms’ capability in core business and the productivity of R&D. In this paper, I investigate the determinants of technological diversification, particularly focusing on technological regime which a firm belongs to and is characterized by technological opportunities and appropriability. I find that firms diversify more as technological opportunities increase. Also, the degree of technological diversification is the highest in case of high technological opportunities and low appropriability, while it is the lowest in case of low technological opportunities and high appropriability. These phenomena are associated with patterns of innovation activities, the widening pattern and the deepening pattern, respectively. In addition to direct effects of technological regime, the moderating role of it in relation of firm specific variables and the degree of technological diversification is supported.