To be similar or unique? Exploring firms' pursuit of optimal technological relatedness to enhance technological impact: The role of firm size and competitor density

As technology becomes complex, firms face the critical dilemma of whether to differentiate increasingly themselves from or incorporate prevalent technologies in their sectors. Although prior research has primarily examined the role of technological relatedness in driving short-term performance, its role in sustaining long-term technological impact remains largely understudied. Technological impact is crucial because it serves as the foundation for future technological trajectories, facilitates the establishment of industry standards, strengthens market power, and ensures long-term success. Drawing upon optimal distinctiveness theory, we explore how firms can balance technological relatedness and distinctiveness to maximize their technological impact. Additionally, we investigate how both internal and external factors moderate this relationship. Using co-cited patent data from the new energy vehicle industry from 1998 to 2021, our study reveals the inverted U-shaped relationship between technological relatedness and technological impact, enriching the literature on the determinants of technological impact. Furthermore, we find that firm size amplifies this curvature by steepening the relationship, whereas competitor density attenuates it by flattening the curve. This deepens our understanding of the boundary conditions of optimal technological relatedness. Our findings have important implications for firms seeking to strategically balance technological relatedness and distinctiveness to maximize technological impact within their industries.