Technology Conglomeration, Strategic Alliances, and Corporate Innovation
73 Pages Posted: 16 Aug 2014 Last revised: 6 Mar 2018
Date Written: March 5, 2018
We examine the organizational choice and innovative activity of technology conglomerates—firms that explore different technology fields with heated inventive activity. We develop a measure of firm-to-economy technological proximity to capture the extent of a firm’s technology conglomeration. We show that technology conglomerates are more likely to form alliances and that these alliances lead to higher patent output. In terms of underlying mechanisms, we show that after alliance formation, there are significant knowledge pooling and cross-fertilization between technology conglomerates and their alliance partners. Moreover, technology conglomerates produce more patents that are novel and/or with greater impact. Our findings suggest that both synergy and tolerance for failure are important motives for technology conglomerates to use alliances to accelerate corporate innovation.
Keywords: firm-to-economy technological proximity, technology conglomeration, innovation, synergy, strategic alliances, knowledge pooling, cross-fertilization, tolerance for failure
JEL Classification: G34, O32
Suggested Citation: Suggested Citation