The Role of Technology in Small Firm Diversification

Sophisticated technologies are finding applications in an ever-growing number of products, from medical devices to children's toys. As high-technology applications proliferate, their use and development is no longer associated only with large companies, universities, and national laboratories. Many small companies compete on the basis of high technology products, processes and materials. While small companies have long been recognized as fertile ground for developing new technologies, little recognition has been given to the important role they play in transferring technologies between industries. This article therefore describes the central role that technology played in the diversification efforts of nine New England defense contractors. One of the study's key findings is that successful firms relied upon their existing technical and management capabilities to obtain a sustainable competitive advantage in their new civilian markets. The article also describes a number of other factors that contributed to the success of their diversification efforts. Copyright 2000 by Kluwer Academic Publishers