Multiplicative-innovation synergies: tests in technological acquisitions
Kathryn Rudie Harrigan (),
Maria Chiara Guardo () and
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Kathryn Rudie Harrigan: Columbia University
Maria Chiara Guardo: University of Cagliari
The Journal of Technology Transfer, 2017, vol. 42, issue 5, No 11, 1212-1233
Abstract Technological innovations enjoy synergies that vary in their speed and magnitude of impact, depending upon whether they are additive or multiplicative in nature. Additive-innovation synergies build incrementally on familiar technologies (as is reflected in the technologies built upon within their patents’ respective antecedents) and the duration of their effect is shorter-lived. Multiplicative-innovation synergies arise from combining greater proportions of diverse technologies and their effects have longer duration. The most-effective organizational-learning processes accompanying exposure to exotic technology streams via technological acquisition will occur if firms have properly invested in adaptive capacity to synthesize inventions using the unfamiliar knowledge. In the first tests of innovation synergies on firm performance, we find that technological novelty in patent content improves return on assets for firms that consistently invested in R&D. Using patent-content scores to characterize whether inventors have integrated greater proportions of exotic technological antecedents into their inventions (or not), we test the impact of innovation synergies on firms’ performance after technological acquisitions. Diversification posture (which could be an alternative explanation for performance differences) is negatively-correlated with innovation synergies in our results.
Keywords: Innovation synergy; Radical innovation; Technological synthesis; Acquisition integration; Patent reports (search for similar items in EconPapers)
JEL-codes: L25 L63 O31 O32 O33 O34 (search for similar items in EconPapers)
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