Technological diversification and economic performance: A within industry perspective

This study aims at a better understanding of how firms arrange and profit from their technological competencies. In particular, it presents a contribution to the diversification-performance literature by dealing with a still poorly researched aspect of diversification, namely technological diversification, while controlling for market diversification. Results suggest that firms that concentrate their technology assets in coherent groups outperform those that distribute their technology endowments across less related areas. The research also contributes to the literature on firm heterogeneity by focusing and exploring a single industry, automotive suppliers in the U.S. By working in one sector, it avoids the complications inherent in inter-industry cross-sectional analysis, while recognizing that firms make their strategy decisions within a single-industry, where most of their resources are concentrated.