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Managing portfolio risk in strategic technology management: evidence from a panel data-set of the world's largest R&D performers

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  • Peter Neuhäusler
  • Torben Schubert
  • Rainer Frietsch
  • Knut Blind

Abstract

In this article, we analyze the impact of firms’ technology bases on their financial performance. By taking a strategic perspective of technology, we argue that it is not sufficient to analyze only the size or novelty/quality of the technology base as technology bases can best be understood as portfolios of individual technologies. In such a framework, risk consideration should be taken into account. More specifically, we argue that increasing technological breadth can serve as a hedge against the inherent uncertainties of developing and commercializing technology, in particular when the technology base is very large or novel. We also propose that technology has higher impacts on financial performance for firms with broader technology portfolios. A similar argument proposes that technological breadth can offset the increased risks of addressing foreign markets. We test our hypotheses using an international panel data-set of large R&D-performing firms. Our results suggest that broad technology portfolios can indeed serve as a hedge against technological and commercialization risks.

Suggested Citation

  • Peter Neuhäusler & Torben Schubert & Rainer Frietsch & Knut Blind, 2016. "Managing portfolio risk in strategic technology management: evidence from a panel data-set of the world's largest R&D performers," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 25(7), pages 651-667, October.
    • Handle: RePEc:taf:ecinnt:v:25:y:2016:i:7:p:651-667
    DOI: 10.1080/10438599.2015.1109780
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    2. Petros Gkotsis & Antonio Vezzani, 2019. "Heterogeneity of technology-specific R&D investments. Evidence from top R&D investors worldwide," JRC Working Papers on Corporate R&D and Innovation 2018-04, Joint Research Centre.
    3. Wayne Fu & Che‐Ping (Jack) Su, 2021. "The implications of efficiency differences in sustainable development: An empirical study in the consumer product industry," Business Strategy and the Environment, Wiley Blackwell, vol. 30(5), pages 2489-2504, July.
    4. Grillitsch, Markus & Schubert, Torben & Srholec, Martin, 2019. "Knowledge base combinations and firm growth," Research Policy, Elsevier, vol. 48(1), pages 234-247.
    5. Blind, Knut & Krieger, Bastian & Pellens, Maikel, 2022. "The interplay between product innovation, publishing, patenting and developing standards," Research Policy, Elsevier, vol. 51(7).

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