Concentration and Diversification of R&D in a Conglomerate World.

This paper shows that U.K. industry is highly concentrated in its R&D expenditure. At the same time, firms are fairly diversified in their R&D--and this diversification can be observed across broad industry categories. The paper considers the argument that this diversification may be explained in terms of technological relatedness of different industry groups. There is some evidence that technological relatedness is stronger in more R&D intensive industries. The paper presents two measures of technological distance. These measures highlight the potential for spillover from R&D in different product groups within the firm, and the high level of interconnections between industries in terms of R&D. Copyright 1988 by Blackwell Publishing Ltd