Technological Activities and Their Impact on the Financial Performance of the Firm: Exploitation and Exploration within and between Firms

The present study analyzes the impact of firms' technological strategies on their financial performance. Technology strategies are defined by making a distinction between explorative and exploitative as well as collaborative and solitary technological activities. Several hypotheses are tested o...

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Bibliographic Details
Published in:The Journal of product innovation management 2010-11, Vol.27 (6), p.869-882
Main Authors: Belderbos, Rene, Faems, Dries, Leten, Bart, Looy, Bart Van
Format: Article
Language:English
Subjects:
Appropriations
Collaboration
Correlation analysis
Electronics
Exploration
Financial performance
Impact analysis
Management
Market value
Product innovation
R&D
Research & development
Research and development
Strategy
Studies
Technological change
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Summary:The present study analyzes the impact of firms' technological strategies on their financial performance. Technology strategies are defined by making a distinction between explorative and exploitative as well as collaborative and solitary technological activities. Several hypotheses are tested on a panel data set (1996–2003) of 168 research and development (R&D)‐intensive firms based in Japan, the United States, and Europe and situated in five different industries (i.e., chemicals, pharmaceuticals, information and communication technologies [ICT], electronics, and nonelectrical machinery). This study's analyses confirm the existence of an inverted U‐shape relationship between the share of explorative technological activities and financial performance. In addition, firms engaging more intensively in collaboration perform relatively stronger in explorative activities. At the same time, a negative relationship is observed between the share of collaborative technological activities and a firm's market value. This negative relationship is most pronounced in collaborative activities of an exploratory nature. Overall, these findings suggest that the value appropriation complexities of collaborative technological activities may offset their value‐enhancing potential.
ISSN:0737-6782
1540-5885
DOI:10.1111/j.1540-5885.2010.00757.x