This study investigates the relationship between technological diversification and the productivity of firms’ R&D. Using a panel dataset of U.S. manufacturing firms during the period of 1983-2002, we find the following: First, the firm-specific pool of knowledge spillovers has a non-linear moderating effect on the relationship, which is positive at low levels of technological diversification but becomes positive beyond a certain level of technological diversification. Second, firm-specific core-technology competence has a positive moderating effect on the relationship. Third, the moderating role of core-technology competence in the relationship is more pronounced for firms operating in high-tech industries or competitive industries. Finally, after controlling for the moderating effects, the stand-alone (or direct) effect of technological diversification on R&D productivity is U-shaped. Our findings imply that firms should consider their pools of knowledge spillovers and technological competence in the field of their core technology in order to better utilize technological diversification.

Technological Diversification and R&D Productivity: The Moderating Effects of Knowledge Spillovers and Core-technology Competence

Technological diversification and R&D productivity: The moderating effects of knowledge spillovers and core-technology competence

While patents are a valuable resource ensuring the competitive advantage of firms, there is limited evidence on the role of patents in the survival and exit strategies of new firms To fill the gap in the literature, we examine whether the effects of patenting on new firm survival vary according to exit routes (bankruptcy, merger, and voluntary liquidation), while considering the endogeneity of patenting We use a large-scale sample of new firms in the Japanese manufacturing and information services sectors for the period 2003–2013 The findings indicate that new firms with a higher stock of patents are less likely to go bankrupt Conversely, new firms with a higher stock of patents are more likely to exit via merger These findings are consistent, regardless of whether patent stock is measured based on the patent applications or granted patents Furthermore, we provide evidence that new firms with a higher stock of granted patents are more likely to voluntarily liquidate their businesses Can new firms enjoy a “patent premium” in terms of survival and exit outcomes? The findings of this study indicate that (1) patenting reduces the risk of bankruptcy, and (2) it increases the odds of exit via merger and voluntary liquidation On the one hand, patenting ensures that new firms obtain competitive advantages, and thus, survive in the product market On the other hand, it enables new firms to pursue successful exit strategies in the markets for ideas This study concludes that new firms can enjoy a patent premium in terms of survival and exit outcomes In promoting sustainable economic growth via entrepreneurship, policymakers need to shift their focus from creating more firms to creating innovative firms

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Does patenting always help new firm survival? Understanding heterogeneity among exit routes

This paper analyses the effects on patent quality of a type of spillovers arising from the disclosure of patent information by firms engaged in competition in a global duopoly. Both firms are involved in producing new technologies and they do not cooperate on joint patents. In this context, we explored whether the disclosure of crucial knowledge in the patents of one of the firms affects the patent quality of its respective competitor. The empirical methodology relies on forward citations as an indicator of quality, and backward citations to the competitor as a measure of spillovers. We estimated several count models with a sample of 7750 patent families (divided into subsamples) owned by two large companies, Airbus and Boeing. Our econometric findings show that, for technologies in which the two firms account for the majority of the global patents, neither of the firms in the duopoly was able to harness spillovers from the rival to improve the quality of its patents. However, knowledge from the competitor becomes relevant, at least for one of the focal firms, in explaining patent quality of other technologies in which the two firms do not exert a dominant position.

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Effects of knowledge spillovers between competitors on patent quality: what patent citations reveal about a global duopoly

The existing literature has documented significant levels of technological similarity among firms in the same industry. However, there is no theory of how technological similarity affects firm perf...

Technological footprint similarity and firm performance

We study the determinants of patent quality for a panel of U.S. manufacturing firms, focusing mainly on the effects of firm-level technological diversity and appropriability conditions. Technological diversity increases the quality-adjusted patent count on most of the diversity distribution, but its relationship with average patent quality is an inverted-U. We find that appropriability conditions (proxied by the rate of self-citations at the firm level) have similar, non-linear effects on both the average quality of patents, and quality-adjusted patents per R&D, which is consistent with an inverted-U pattern. Firm size has no effect on the average quality of patented innovation at the firm level. Finally, as R&D intensity increases, the rate of corporate innovation falls, but its average quality increases, indicating a quality–quantity trade-off in R&D.

Determinants of patent quality in U.S. manufacturing: technological diversity, appropriability, and firm size

We consider a model of monopolistic competition where producers can manipulate an elasticity parameter at an early stage. We interpret this as a choice of product specialization. Lower marginal costs of production lead to more generic products in all equilibria, which lead to fewer varieties under free-entry. Entry of a new firm increases overall specialization and increases prices, that is, the environment exhibits price-increasing competition. The loss of consumer surplus due to higher prices and lower consumption is compensated by the value of additional variety, hence entry also increases consumer surplus. Therefore, price-increasing competition need not be anticompetitive under endogenous specialization. 

Burak Dindaroğlu

Papers

Determinants of patent quality in U.S. manufacturing: technological diversity, appropriability, and firm size

Product design in monopolistic competition