When Do Relational Resources Matter? Leveraging Portfolio Technological Resources for Breakthrough Innovation

We examine the paradox of capabilities: although portfolio resources contribute to innovation success, and technologically capable firms have the ability to gain more such resources, firms' “competency traps” and the tension between value creation and value protection reduce benefits from portfolio resources for such firms. Results show that the quality and diversity of portfolio technological resources contribute to breakthrough innovation. The benefits are greater for firms with low internal strength and low internal diversity, thus suggesting positive synergy between portfolio and internal resources for such firms. Technologically strong firms, however, benefit from the quality of their portfolio resources when they overcome some of their competency traps.