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Technology Portfolio and Market Value

Author

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  • Jens Schmidt-Ehmcke
  • Petra Zloczysti

Abstract

This paper discusses the impact of a firm's technology portfolio on its market value. Two concepts are used to characterize a firm's portfolio: the number of technological fields and the degree of relatedness within the portfolio characterized by the amount of joint occurrences of patents in technological fields. Based on a theoretical framework using an expanded Tobin's q approach, it presents evidence for a negative influence of portfolio size on the market value caused by a diminishing potential to make use of economies of scale. This discount can be counterbalanced when the relevant fields share a common technological base which is measured by the degree of technological relatedness.

Suggested Citation

  • Jens Schmidt-Ehmcke & Petra Zloczysti, 2008. "Technology Portfolio and Market Value," Discussion Papers of DIW Berlin 780, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp780
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    File URL: https://www.diw.de/documents/publikationen/73/diw_01.c.82017.de/dp780.pdf
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    Cited by:

    1. Breandan O Huallachain & Der-Shiuan Lee, 2011. "Technological Specialization and Variety in Urban Invention," Regional Studies, Taylor & Francis Journals, vol. 45(1), pages 67-88.

    More about this item

    Keywords

    technological portfolio; relatedness; patent statistics; tobin's q; economies of scope;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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