Technological diversity, uncertainty and innovation performance

We analyse the impact of technological diversity on innovation performance in the discovery stage, measured by R&D intensity and patent applications, and in the commercialization stage, measured by the sales share generated by innovations, using Swiss firm-level data. While we do not find any impact of diversity on R&D intensity, we confirm a positive impact of diversity on patent applications as suggested by literature. Extending the analysis to the commercialization stage reveals that technological diversity decreases the share of sales generated by innovative products. We argue that this pattern emerges because knowledge spillovers matter relatively more in the discovery stage while coordination costs matter relatively more in the commercialization stage. Technological uncertainty further increases coordination costs (in both stages) and thus negatively moderates the effect of diversity on innovation performance.