Technology Portfolio and Market Value

This paper discusses the impact of a firm's technology portfolio on its market value. Two concepts are used to characterize a firm's portfolio: the number of technological fields and the degree of relatedness within the portfolio characterized by the amount of joint occurrences of patents...

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Bibliographic Details
Published in:Policy File 2008
Main Authors: Schmidt-Ehmcke, Jens, Zloczysti, Petra
Format: Report
Language:English
Subjects:
Economic policy
German Institute for Economic Research
Online Access:Request full text
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Summary:This paper discusses the impact of a firm's technology portfolio on its market value. Two concepts are used to characterize a firm's portfolio: the number of technological fields and the degree of relatedness within the portfolio characterized by the amount of joint occurrences of patents in technological fields. Based on a theoretical framework using an expanded Tobin's q approach, it presents evidence for a negative influence of portfolio size on the market value caused by a diminishing potential to make use of economies of scale. This discount can be counterbalanced when the relevant fields share a common technological base which is measured by the degree of technological relatedness.