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

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