Unpacking the role of relatedness in technological diversification in the US metropolitan statistical areas

Yibo Qiao and Yingcheng Li

Industry and Innovation, 2025, vol. 32, issue 9, 979-1001

Abstract: This paper aims to unpack the role of relatedness in regional technological diversification by decomposing relatedness from the perspectives of mechanisms, strength, and complexity. In terms of mechanisms, relatedness is divided into geography, complementarity, and similarity relatedness. Furthermore, relatedness is differentiated into four categories based on relatedness strength and knowledge complexity. The effects of different types of relatedness are tested on a dataset containing 2,922,473 patents distributed across 347 US metropolitan statistical areas and 544 technology classes from 1976 to 2015. Our results, which area robust under different circumstances, show that the effect of geography relatedness outweighs complementarity relatedness and similarity relatedness, and higher strength and lower complexity relatedness have the largest impact on technology entry. We contribute to the literature by proposing a new method to calculate similarity relatedness and responding to the call of unpacking relatedness by taking relatedness strength and knowledge complexity dimensions into account.

Date: 2025
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DOI: 10.1080/13662716.2025.2458270

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