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Search behavior of the diversified firm: The impact of fit on innovation

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  • Sang Kyun Kim
  • Jonathan D. Arthurs
  • Arvin Sahaym
  • John B. Cullen

Abstract

This paper provides a new approach to account for the relationship between diversification and innovation by integrating insights concerning strategic fit. We argue that the type of diversification strategy leads to greater innovation output when the appropriate technological search strategy is employed. Using a longitudinal study of the patenting activity of 258 manufacturing firms, we find that strategic fit is important for innovation output. More specifically, a related diversification strategy leads to greater innovation when firms use a narrow technological search strategy. In contrast, an unrelated diversification strategy leads to greater innovation when a broader technological search strategy is used. Implications for future research are discussed. Copyright © 2013 John Wiley & Sons, Ltd.

Suggested Citation

  • Sang Kyun Kim & Jonathan D. Arthurs & Arvin Sahaym & John B. Cullen, 2013. "Search behavior of the diversified firm: The impact of fit on innovation," Strategic Management Journal, Wiley Blackwell, vol. 34(8), pages 999-1009, August.
    • Handle: RePEc:bla:stratm:v:34:y:2013:i:8:p:999-1009
    DOI: 10.1002/smj.2038
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