Technological Expansion: the Interaction Between Diversification Strategy and Organizational Capability

Rongxin Chen

Journal of Management Studies, 1996, vol. 33, issue 5, 649-666

Abstract: This study analyses technological expansion by examining the interaction between firms' diversification strategy and internal capabilities. We argue that when new technologies emerge, firms that were actively pursuing diversification do not have equal intention to adopt the technologies. For firms that possess internal capabilities similar or relevant to the new technologies, their diversification strategy facilitates technological expansion, otherwise diversification strategy negatively affects technological adoption. This study improves our understanding on technological expansion. Existing studies try to identify organizational characteristics that facilitate or impede firm entry into new technological fields. This research reveals that the same organizational characteristic (e.g. diversification strategy) can exhibit different effects on technological adoption. It facilitates technological expansion if firms' existing capabilities can be applied to new technologies, otherwise it impedes new technological adoption.

Date: 1996
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