The effect of technological diversification on organizational performance: An empirical study of S&P 500 manufacturing firms

Despite the increasing number of studies investigating technological portfolios of firms, the effects of technological diversification on performance remain unclear. This study is an attempt to revisit this topic, with a particular focus on large firms, which tend to have more capabilities to undertake diversified technological projects. In a sample of 165 S&P manufacturing firms with data taken into use in 2008, the results show that large firms can benefit from a diversified technological portfolio with regard to both financial and innovation performances. In addition, the relationship between technological diversity and firm performance is found to be strengthened by firms' internal and external contextual factors, namely absorptive capacity and environmental dynamism. Overall, this study not only proves the importance of technological diversity in large firms, but also provides evidence for the moderating effects of absorptive capacity and environmental dynamism.

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