Dynamic technological diversification and its impact on firms' performance An empirical analysis of Korean IT firms

Sang Ho Kook, Ki Hong Kim, Chulung Lee

    Research output: Contribution to journalArticlepeer-review

    19 Citations (Scopus)

    Abstract

    This paper aims to analyze the influence of the technological diversification on a firm's innovation capabilities and investigates the effect of various strategies on the firm's financial performance in a technology-oriented environment. We employ the entropy measurement to calculate technological diversification with 2095 patents, which are applied from years 2009 to 2011 by 507 firms that have participated in Korean government Information Technology (IT) Research and Development (R&D) supporting programs. In our framework, a firm should not diversify among the related technology fields, but should concentrate on a specific technology to reinforce the competitive advantage. However, in the case of the firms with sufficient resources, increasing technological diversification among the unrelated technology fields plays a key role on the firms' performance. Furthermore, the degree of the technological diversification should be adjusted dynamically in compliance with the change of a firm's innovation capabilities. Therefore, these results suggest that a firm should develop differentiated competitiveness through specialization by prioritizing its capabilities, and then exploit unrelated technological diversification to search for new opportunities.

    Original languageEnglish
    Article number1239
    JournalSustainability (Switzerland)
    Volume9
    Issue number7
    DOIs
    Publication statusPublished - 2017 Jul 15

    Bibliographical note

    Funding Information:
    This work was supported under the framework of international cooperation program managed by National Research Foundation of Korea (NRF-2016K2A9A2A11938449).

    Publisher Copyright:
    © 2017 by the authors.

    Keywords

    • Capabilities
    • Entropy measurement
    • Resources
    • Technological diversification
    • Time lag

    ASJC Scopus subject areas

    • Geography, Planning and Development
    • Renewable Energy, Sustainability and the Environment
    • Environmental Science (miscellaneous)
    • Energy Engineering and Power Technology
    • Management, Monitoring, Policy and Law

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