Technological diversification and R&D productivity: the moderating roles of technological relatedness, R&D consistency, and technology portfolio centrality

Abstract

This study mainly aims to test the relationship between technological diversification and R&D productivity. We employed three different potential moderating factors in order to control for the heterogeneous features of firm-specific technology portfolios along with technological diversification (i.e., the direction of technological diversification). By using a U.S. patent database from 1980 to 2010, we found the following results: First, technological relatedness has a positive moderating effect which is more pronounced at high levels of technological diversification. Second, R&D consistency has a positive moderating effect which is more pronounced at low levels of technological diversification. Third, technology portfolio centrality has a differentiated moderating effect on the relationship, which is negative at low levels of technological diversification but becomes positive after a certain threshold level of technological diversification. Fourth, after controlling for the potential moderating factors representing the direction of technological diversification (i.e., with what technologies and how exploratively the diversification should be made), the stand-alone effect of technological diversification itself is U-shaped. Based on the findings, a strategic implication can be drawn that innovative firms need to consider both the current status of technological diversification and the characteristics of their technology portfolios to better enjoy the R&D-productivity-enhancing effect of technological diversification.