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Journal article

Technology Conglomeration, Strategic Alliances, and Corporate Innovation

Abstract

We examine the organizational choice and innovative activity of technology conglomerates—firms that explore different technology fields with heated inventive activity. We develop a measure of firm-to-economy technological proximity to capture the extent of a firm’s technology conglomeration. We show that technology conglomerates are more likely to form alliances and that these alliances lead to higher patent output. In terms of underlying mechanisms, we show that after alliance formation, there are significant knowledge pooling and cross-fertilization between technology conglomerates and their alliance partners. Moreover, technology conglomerates produce more patents that are novel and/or with greater impact. Our findings suggest that both synergy and tolerance for failure are important motives for technology conglomerates to use alliances to accelerate corporate innovation. This paper was accepted by Gustavo Manso, finance.

Authors

Li K; Qiu J; Wang J

Journal

Management Science, Vol. 65, No. 11, pp. 5065–5090

Publisher

Institute for Operations Research and the Management Sciences (INFORMS)

Publication Date

November 1, 2019

DOI

10.1287/mnsc.2018.3085

ISSN

0025-1909

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