Back to Search
Start Over
How does firm diversification impact innovation?
- Source :
- Technology Analysis & Strategic Management; Apr2018, Vol. 30 Issue 4, p391-404, 14p
- Publication Year :
- 2018
-
Abstract
- This study sheds light on the relationship between business diversification and innovation. A diversification strategy is both a driver of sunk costs and strategic slack. Strategic slack is a valuable reserve of knowledge, usable to foster innovation. Using linear models, we explore the interplay between research and development (R&D) and organisational slack in large and diversified companies listed on the Euronext 100 Index. We consider the diversification pattern over time, and its interactions with the following three categories: sunk costs, slack resources, and R&D. The results show an antithetic effect of diversification and slack on R&D expenditures. In contrast to unabsorbed and potential slack, diversification and sunk costs hinder innovation. However, diversification is a huge source of strategic slack and, thus, has a positive effect on innovation, indirectly. [ABSTRACT FROM AUTHOR]
Details
- Language :
- English
- ISSN :
- 09537325
- Volume :
- 30
- Issue :
- 4
- Database :
- Complementary Index
- Journal :
- Technology Analysis & Strategic Management
- Publication Type :
- Academic Journal
- Accession number :
- 128003559
- Full Text :
- https://doi.org/10.1080/09537325.2017.1313405