A Study On The Influences Of Technological Diversification Upon Firm Performance And Value

As an important type of technological innovation development model, corporatetechnological diversification has been focused in recent years. Regrettably, there is noagreed conclusion about the relationship between technological diversification and firmperformance and value. This paper is just the reflection of the western previous researchand view on the Chinese firms’ technological diversification in particular marketenvironment and institutional background.In this paper, technological diversification has been spited into related technologicaldiversification and unrelated technological diversification, learned from the research aboutbusiness diversification. This study integrate resource-based theory and dynamiccapabilities theory, and builds up the theoretical model on related technologicaldiversification; unrelated technological diversification; firm value and firm performance,then implies the hypotheses. This study is conducted in the Chinese high-tech industry.The panel data of this study contains patent data and financial data, in order to test thehypotheses. The results demonstrate that, the more related technological diversificationand unrelated technological diversification, the better is firm performance. Besides, theresults show that the extent of the positive influence of related technologicaldiversification upon firm performance is higher than that of unrelated technologicaldiversification upon firm performance. There is an inverse U-shaped relationship betweenunrelated technological diversification and firm value, and a U-shaped relationshipbetween related technological diversification and firm value. According to the results,some advices have been given. Companies should adopt related technologicaldiversification within the capability of companies, and should not undertake excessunrelated technological diversification. They should master the technological ability tocover several areas, so that technological development strategy could consistent with business product strategy. In addition, when companies have broader range oftechnologies, they can develop more diverse new products in the market. Finally, it canhelp them to have more chance to take advantage of new technological and marketopportunities, and thereby the risk of missing new technological opportunities is less. Ingeneral, it can significantly enhance the firm performance and value.