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What do firms know? What do they produce? A new look at the relationship between patenting profiles and patterns of product diversification

Author

Listed:
  • Giovanni Dosi

    (Scuola Superiore Sant’Anna)

  • Marco Grazzi

    (University of Bologna)

  • Daniele Moschella

    (Scuola Superiore Sant’Anna)

Abstract

In this work, we analyze the relationship between the patterns of firm diversification, if any, across product lines and across bodies of innovative knowledge, proxied by the patent classes where the firm is present. Putting it more emphatically, we investigate the relationship between “what a firm does” and “what a firm knows.” Using a newly developed dataset matching information on patents and products at the firm level, we provide evidence concerning firms’ technological and product scope, their relationships, the size-scaling and coherence properties of diversification itself. Our analysis shows that typically firms are much more diversified in terms of products than in terms of technologies, with their main products more related to the exploitation of their innovative knowledge. The scaling properties show that the number of products and technologies increases log-linearly with firm size. And the directions of diversification themselves display coherence between neighboring activities also at relatively high degrees of diversification. These findings are well in tune with a capability-based theory of the firm.

Suggested Citation

  • Giovanni Dosi & Marco Grazzi & Daniele Moschella, 2017. "What do firms know? What do they produce? A new look at the relationship between patenting profiles and patterns of product diversification," Small Business Economics, Springer, vol. 48(2), pages 413-429, February.
    • Handle: RePEc:kap:sbusec:v:48:y:2017:i:2:d:10.1007_s11187-016-9783-0
    DOI: 10.1007/s11187-016-9783-0
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    Cited by:

    1. de Rassenfosse, Gaétan & Grazzi, Marco & Moschella, Daniele & Pellegrino, Gabriele, 2022. "International patent protection and trade: Transaction-level evidence," European Economic Review, Elsevier, vol. 147(C).
    2. Filippo Bontadini & Francesco Vona, 2023. "Anatomy of Green Specialisation: Evidence from EU Production Data, 1995–2015," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 85(3), pages 707-740, August.
    3. Fabio Pieri, 2018. "Vertical organization of production and firm growth," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 27(1), pages 83-106.
    4. Francesco Lamperti & Mariana Mazzucato & Andrea Roventini & Gregor Semieniuk, 2019. "The Green Transition: Public Policy, Finance, and the Role of the State," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 88(2), pages 73-88.
    5. Montobbio, Fabio & Staccioli, Jacopo & Virgillito, Maria Enrica & Vivarelli, Marco, 2022. "Robots and the origin of their labour-saving impact," Technological Forecasting and Social Change, Elsevier, vol. 174(C).
    6. Tullio Buccellato & Giancarlo Corò, 2018. "Structural change and convergence across European regions," Working Papers 2018:16, Department of Economics, University of Venice "Ca' Foscari".
    7. Lee, Hyunmin, 2023. "Converging technology to improve firm innovation competencies and business performance: Evidence from smart manufacturing technologies," Technovation, Elsevier, vol. 123(C).
    8. Arianna Martinelli & Julia Mazzei & Daniele Moschella, 2022. "Patent disputes as emerging barriers to technology entry? Empirical evidence from patent opposition," LEM Papers Series 2022/12, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    9. Emanuele Pugliese & Lorenzo Napolitano & Andrea Zaccaria & Luciano Pietronero, 2019. "Coherent diversification in corporate technological portfolios," PLOS ONE, Public Library of Science, vol. 14(10), pages 1-22, October.
    10. Filippo Bontadini & Mercedes Campi & Marco Due~nas, 2023. "Being at the core: firm product specialisation," Papers 2302.02767, arXiv.org, revised Mar 2023.
    11. Filippo Bontadini & Mercedes Campi & Marco Due~nas, 2023. "Being at the core: firm product specialisation," Papers 2302.02767, arXiv.org, revised Mar 2023.
    12. Dosi, Giovanni & Mathew, Nanditha & Pugliese, Emanuele, 2019. "What a firm produces matters: diversi cation, coherence and performance of Indian manufacturing," MERIT Working Papers 2019-013, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    13. Eum, Wonsub & Lee, Jeong-Dong, 2022. "The co-evolution of production and technological capabilities during industrial development," Structural Change and Economic Dynamics, Elsevier, vol. 63(C), pages 454-469.
    14. Giovanni Dosi & Nanditha Mathew & Emanuele Pugliese, 2019. "What a firm produces matters: diversification, coherence and performance of Indian manufacturing firms," LEM Papers Series 2019/10, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    15. Filippo Bontadini & Francesco Vona, 2020. "Anatomy of Green Specialization: Evidence from EU Production Data, 1995-2015," SciencePo Working papers Main hal-03403070, HAL.
    16. Henry Okwo & Charity Ezenwakwelu & Anthony Igwe & Benedict Imhanrenialena, 2019. "Firm Size and Age mediating the Firm Survival-Hedging Effect: Hayes’ 3-Way Parallel Approach," Sustainability, MDPI, vol. 11(3), pages 1-17, February.
    17. Tullio Buccellato & Giancarlo Corò, 2020. "Path dependence in regional structural change: implications for the EU cohesion and innovation policy," Working Papers 2020:14, Department of Economics, University of Venice "Ca' Foscari".
    18. Wonsub Eum & Jeong‐Dong Lee, 2022. "Alternative paths of diversification for developing countries," Review of Development Economics, Wiley Blackwell, vol. 26(4), pages 2336-2355, November.
    19. Dosi, Giovanni & Mathew, Nanditha & Pugliese, Emanuele, 2022. "What a firm produces matters: Processes of diversification, coherence and performances of Indian manufacturing firms," Research Policy, Elsevier, vol. 51(8).
    20. repec:spo:wpmain:info:hdl:2441/6m5kss847r91no96hiublu6anu is not listed on IDEAS
    21. Julia Mazzei & Tommaso Rughi & Maria Enrica Virgillito, 2023. "Knowing brown and inventing green? Incremental and radical innovative activities in the automotive sector," Industry and Innovation, Taylor & Francis Journals, vol. 30(7), pages 824-863, August.
    22. Lee, Hyunmin, 2023. "Strategic similarity in the co-evolution of technological and business diversification for firm growth: Evidence from smart-manufacturing related firms," Technological Forecasting and Social Change, Elsevier, vol. 189(C).
    23. repec:hal:spmain:info:hdl:2441/6m5kss847r91no96hiublu6anu is not listed on IDEAS
    24. Kang, Taewon & Baek, Chulwoo & Lee, Jeong-Dong, 2019. "Effects of knowledge accumulation strategies through experience and experimentation on firm growth," Technological Forecasting and Social Change, Elsevier, vol. 144(C), pages 169-181.

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    More about this item

    Keywords

    Diversification; Coherence; Patents; Products; Capabilities;
    All these keywords.

    JEL classification:

    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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