Technology Portfolio and Market Value

Jens Schmidt-Ehmcke and Petra Zloczysti

No 780, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: 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.

Keywords: technological portfolio; relatedness; patent statistics; tobin's q; economies of scope (search for similar items in EconPapers)
JEL-codes: L25 O31 O32 (search for similar items in EconPapers)
Pages: 26 p.
Date: 2008
New Economics Papers: this item is included in nep-ipr and nep-pr~
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