A bag of beads or a necklace? Combinative capability and value in technological scope expansions

Jeongsik Jay Lee, Natarajan Balasubramanian

Research output: Chapter in Book/Report/Conference proceedingChapter

Abstract

The authors study the relation between a firm’s combinative capability and value creation in the context of technological scope expansion. On a sample of Compustat firms that applied for US patents between 1980 and 2001, the authors find that firm value, measured using Tobin’s q, decreases with increases in technological scope (measured as the number of unique patent classes). However, when firms expand by combining different classes into a single patent, the authors find that this negative effect is significantly diminished. These findings indicate that increasing technological scope likely creates value only when the firm is able to integrate the components into a single technology; simply maintaining different technological components within the firm boundary without integration appears to subject the firm to a discount.

Original languageEnglish (US)
Title of host publicationInternational Finance Review
PublisherEmerald Group Publishing Ltd.
Pages45-64
Number of pages20
DOIs
StatePublished - Oct 21 2019

Publication series

NameInternational Finance Review
Volume20
ISSN (Print)1569-3767

Fingerprint

Patents
Firm value
Discount
Firm boundaries
Firm capabilities
Tobin's Q
Value creation

Keywords

  • Combinative capability
  • Knowledge-based view
  • Patents
  • Resource-based view
  • Technological scope
  • Tobin’s q
  • Value creation

ASJC Scopus subject areas

  • Finance

Cite this

Lee, J. J., & Balasubramanian, N. (2019). A bag of beads or a necklace? Combinative capability and value in technological scope expansions. In International Finance Review (pp. 45-64). (International Finance Review; Vol. 20). Emerald Group Publishing Ltd.. https://doi.org/10.1108/S1569-376720190000020007

A bag of beads or a necklace? Combinative capability and value in technological scope expansions. / Lee, Jeongsik Jay; Balasubramanian, Natarajan.

International Finance Review. Emerald Group Publishing Ltd., 2019. p. 45-64 (International Finance Review; Vol. 20).

Research output: Chapter in Book/Report/Conference proceedingChapter

Lee, JJ & Balasubramanian, N 2019, A bag of beads or a necklace? Combinative capability and value in technological scope expansions. in International Finance Review. International Finance Review, vol. 20, Emerald Group Publishing Ltd., pp. 45-64. https://doi.org/10.1108/S1569-376720190000020007
Lee JJ, Balasubramanian N. A bag of beads or a necklace? Combinative capability and value in technological scope expansions. In International Finance Review. Emerald Group Publishing Ltd. 2019. p. 45-64. (International Finance Review). https://doi.org/10.1108/S1569-376720190000020007
Lee, Jeongsik Jay ; Balasubramanian, Natarajan. / A bag of beads or a necklace? Combinative capability and value in technological scope expansions. International Finance Review. Emerald Group Publishing Ltd., 2019. pp. 45-64 (International Finance Review).
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