The differential effects of basic research on firm R&D productivity: The conditioning role of technological diversification. (December 2022) - Choi, Jin-Uk
Abstract: This study examines the relationship between basic research and firm R&D productivity. In particular, this study focuses on the conditioning role of firm-level technological diversification in the relationship based on the idea that firms with a broad technological knowledge base are better positioned to fully harness the wide and unpredictable applicability of scientific knowledge. Using a unique panel dataset of Korean manufacturing firms during the period of 2003–2012, we find the following. First, firm-level technological diversification positively conditions the relationship between basic research and firm R&D productivity. In particular, unrelated technological diversification, rather than related technological diversification, has a positive conditioning effect on the relationship. Second, the positive conditioning effect of technological diversification is more pronounced for firms operating in high-tech industries or in less competitive industries. These results suggest that a broad technological knowledge base across unrelated technological fields is helpful or necessary for firms to better utilize basic research for enhancing their R&D productivity. Highlights: Investigates the conditioning effect of technological diversification on the relationship between basic research and firm R&D productivity. Based on the idea that technologically diversified firms are better positioned to harness the diverse and unpredictable applicability of scientific knowledge. Technological diversification positively conditions the relationship between basic research and firm R&D productivity. The positive conditioning effect of technological diversification is more pronounced for firms in high-tech or less competitive industries.