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How should firms carry out technological diversification to improve their performance? An analysis of patenting of Korean firms

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  • Hyukjoon Kim
  • Hyojeong Lim
  • Yongtae Park

Abstract

This research aims to analyze how a firm's technological diversification strategies influence its financial performances, in terms of 'technological diversification' in broad technology sectors and 'technological concentration' on its own core technology, especially in the case of Korean large firms. The data used in the analysis were panel data encompassing the years between 1990 and 2006, which linked Korean firms' patent information registered in the United States Patent and Trademark Office to the financial data of those firms collected from Korea Investors Service, Inc. (Kis-Value). For the estimation of the panel data, a fixed effect model, which considers the individual firms' own effect on the financial performance, was used. Tobin's q was used as a dependent variable representing firm performance, while 'broad technology diversity' and 'core technology diversity' were used as the focal explanatory variables. The results show that a firm seeking to have more technological assets should invest in a broad technological diversification strategy in its search for new business opportunities; it should likewise concentrate on the core technology in order to maintain its financial performance.

Suggested Citation

  • Hyukjoon Kim & Hyojeong Lim & Yongtae Park, 2009. "How should firms carry out technological diversification to improve their performance? An analysis of patenting of Korean firms," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 18(8), pages 757-770.
    • Handle: RePEc:taf:ecinnt:v:18:y:2009:i:8:p:757-770
    DOI: 10.1080/10438590902793315
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    References listed on IDEAS

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    1. Michael Gort, 1962. "Diversification and Integration in American Industry," NBER Books, National Bureau of Economic Research, Inc, number gort62-1, March.
    2. Michael Gort, 1962. "Introduction to "Diversification and Integration in American Industry"," NBER Chapters, in: Diversification and Integration in American Industry, pages 3-7, National Bureau of Economic Research, Inc.
    3. Yi Deng, 2005. "The value of knowledge spillovers," Working Paper Series 2005-14, Federal Reserve Bank of San Francisco.
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    Cited by:

    1. Akçomak S. & Akdeve E. & Fındık D., 2013. "How do ICT firms in Turkey manage innovation? : diversity in expertise versus diversity in markets," MERIT Working Papers 2013-024, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    2. Thomas Bolli & Martin Woerter, 2013. "Technological Diversification and Innovation Performance," KOF Working papers 13-336, KOF Swiss Economic Institute, ETH Zurich.
    3. Sang Ho Kook & Ki Hong Kim & Chulung Lee, 2017. "Dynamic Technological Diversification and Its Impact on Firms’ Performance: An Empirical Analysis of Korean IT Firms," Sustainability, MDPI, vol. 9(7), pages 1-16, July.
    4. Cristiano Antonelli & Alessandra Colombelli, 2011. "The generation and exploitation of technological change: market value and total factor productivity," The Journal of Technology Transfer, Springer, vol. 36(4), pages 353-382, August.
    5. Wang, Yuandi & Ning, Lutao & Chen, Jin, 2014. "Product diversification through licensing: Empirical evidence from Chinese firms," European Management Journal, Elsevier, vol. 32(4), pages 577-586.
    6. Lutao Ning & Martha Prevezer & Yuandi Wang, 2014. "Technological diversification in China: Based on Chinese patent analysis during 1986-2011," Working Papers 55, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
    7. Yun, Sunyoung & Lee, Joosung & Lee, Sungjoo, 2019. "Technology development strategies and policy support for the solar energy industry under technological turbulence," Energy Policy, Elsevier, vol. 124(C), pages 206-214.
    8. Kim, Jungho & Lee, Chang-Yang & Cho, Yunok, 2016. "Technological diversification, core-technology competence, and firm growth," Research Policy, Elsevier, vol. 45(1), pages 113-124.
    9. Grazia Cecere & Muge Ozman, 2014. "Technological diversity and inventor networks," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 23(2), pages 161-178, March.
    10. Elisabeth Albertini & Fabienne Berger-Remy, 2019. "Intellectual Capital and Financial Performance: A Meta-Analysis and Research Agenda," Post-Print hal-02139763, HAL.
    11. Choi, Mincheol & Lee, Chang-Yang, 2021. "Technological diversification and R&D productivity: The moderating effects of knowledge spillovers and core-technology competence," Technovation, Elsevier, vol. 104(C).
    12. Lopatta, Kerstin & Kaspereit, Thomas, 2014. "The cross-section of returns, benchmark model parameters, and idiosyncratic volatility of nuclear energy firms after Fukushima Daiichi," Energy Economics, Elsevier, vol. 41(C), pages 125-136.
    13. Annapoornima M. Subramanian & Young Rok Choi & Soo-Hoon Lee & Chang-Chieh Hang, 2016. "Linking technological and educational level diversities to innovation performance," The Journal of Technology Transfer, Springer, vol. 41(2), pages 182-204, April.

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