Path dependence and path breaking in the fourth industrial revolution: digital technological diversification in Chinese firms

Abstract A constellation of digital technologies is triggering the Fourth Industrial Revolution (4IR), yet how firms in catching-up economies build mature inventive capabilities in this new paradigm remains underexplored. This study examines this capability-building process through the lens of firm-level digital technological diversification. Using a comprehensive patent dataset of Chinese listed companies (2000–2020), we investigate the interplay between path-dependent capability accumulation and path-breaking learning. Our findings reveal a profound degree of path dependence in 4IR technological diversification within firms, particularly in the creation of enabling technologies that power data-driven value creation. Furthermore, while internal innovation efforts and ownership types have limited impact on altering this path dependence, we identify a critical exception: in application domains, simultaneous engagement with research alliances and public science bases can effectively facilitate path-breaking learning. These findings illuminate the heterogeneous learning regimes that govern firm-level capability accumulation in the 4IR era.