Technological diversity, related diversification, and firm performance

by Douglas J. Miller
Strategic Management Journal ()
Get full text at journal


Previous findings that related diversification creates value have been called into question over concerns about methodology and measures. Reviewing existing theory to consider how a firm's knowledge base interacts with its product market activity, I address several of these concerns by creating a measure of technological diversity based on citation-weighted patents. The measure indicates a firm's opportunity for corporate diversification based on economies of scope in valuable knowledge assets, is defined for both single- and multibusiness firms, and is not correlated with more fundamental aspects of diversification, such as the number of businesses in the corporate portfolio. Evidence from a large sample of firms shows the positive relationship between diversification based on technological diversity and market-based measures of performance, controlling for R&D intensity and capital intensity as further indicators of the type of assets underlying diversification. Results hold when controlling for the endogeneity of diversification and performance in a cross-sectional sample or when controlling for unobserved factors using panel data.

Cite this document (BETA)

Authors on Mendeley

Readership Statistics

201 Readers on Mendeley
by Discipline
78% Business, Management and Accounting
9% Social Sciences
8% Economics, Econometrics and Finance
by Academic Status
32% Student > Ph. D. Student
18% Professor > Associate Professor
14% Student > Master
by Country
3% Germany
2% United States
1% Brazil

Sign up today - FREE

Mendeley saves you time finding and organizing research. Learn more

  • All your research in one place
  • Add and import papers easily
  • Access it anywhere, anytime

Start using Mendeley in seconds!

Sign up & Download

Already have an account? Sign in