Varying effects of enhanced and new corporate technological knowledge in responding to technological change

Purpose – The purpose of this paper is to explore how enhanced and new technological knowledge of firms affects their performance under varying rates of technological change. Design/methodology/approach – A large‐sample empirical study of US manufacturing firms is used. The main independent variables are measured using firms' patent data. Three hypotheses were developed based on theory and were tested using multivariate regressions. To increase reliability, alternative industry and firm explanators of performance were controlled for. Findings – It was found that performance effects of enhanced technological knowledge increase with increasing rate of technological change. Effects of each knowledge dimension are found to be non‐linear. New technological knowledge has no independent effect on performance but acts jointly with enhanced knowledge in improving performance under moderate to rapid rates of technological change. Research limitations/implications – The study is narrow in scope being a fine‐grained analysis of a firm's technological competence. It does not take into account the role of marketing and administrative competence. Originality/value – This is one of the few studies to disaggregate a firm's total stock of technological knowledge into its enhanced and new components.