Technological diversification and R&D productivity: The moderating effects of knowledge spillovers and core-technology competence

Abstract Though technological diversification has been regarded as an important strategy in managing the productivity of firms’ R&D, there have been few studies that empirically examined the relationship between technological diversification and R&D productivity. This study aims to fill this lacuna in the existing literature by empirically investigating the relationship between technological diversification and R&D productivity, primarily focusing on the moderating effects of knowledge spillovers and core-technology competence in the relationship. Using a panel dataset of U.S. manufacturing firms during the period of 1983–2002, we find the following: First, the firm-specific pool of knowledge spillovers has a positive moderating effect on the relationship. Second, firm-specific core-technology competence has a positive moderating effect on the relationship. Third, the moderating role of core-technology competence in the relationship is more pronounced for firms operating in high-tech industries or competitive industries. Finally, after considering the moderating effects, the stand-alone (or direct) effect of technological diversification on R&D productivity is U-shaped. Our findings indicate that firms should consider their pools of knowledge spillovers and technological competence in the field of their core technology in order to better utilize technological diversification.