(), Torben Schubert
(), Rainer Frietsch
() and Knut Blind
Peter Neuhäusler: Fraunhofer Institute for Systems and Innovation Research ISI, Karlsruhe; Berlin University of Technology
Torben Schubert: Fraunhofer Institute for Systems and Innovation Research ISI, Karlsruhe; CIRCLE, Lund University
Rainer Frietsch: Fraunhofer Institute for Systems and Innovation Research ISI, Karlsruhe
Knut Blind: Berlin University of Technology; Fraunhofer Institute for Open Communication Systems FOKUS, Berlin; Erasmus University Rotterdam, Rotterdam School of Management
Abstract: In this article we analyze the impact of firms’ technology bases on their financial performance. By taking a strategic perspective of technology, we argue that it is not sufficient to analyze only the size or novelty/quality of the technology base as technology bases can best be understood as portfolios of individual technologies. In such a framework, risk consideration should be taken into account. More specifically, we argue that increasing technological breadth can serve as a hedge against the inherent uncertainties of developing and commercializing technology, in particular when the technology base is very large or novel. We also propose that technology has higher impacts on financial performance for firms with broader technology portfolios. A similar argument proposes that technological breadth can offset the increased risks of addressing foreign markets. We test our hypotheses using an international panel dataset of large R&D-performing firms. Our results suggest that broad technology portfolios can indeed serve as a hedge against technological and commercialization risks.
33 pages, October 23, 2015
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