International Journal of Business and Management Study
Author(s) : DONG-HYUN OH, JUNSEOK HWANG, SUNGDO JUNG
This paper investigates the effects of technological diversification on R&D activity and innovation by using Korean firm-level data over the period between 2001 and 2009. We improved the conventional CDM model so that we can consider the relationship among R&D activities, innovation activities, and technological diversification. In order to examine this relationship we use of a large sample by merging different data sets including firms’ financial statements, Korean Innovation Survey data, and patent application information, consisting of 5,861 firms. The empirical results imply a proportional relationship between various activities, as follows: i) technological diversification and R&D activities, ii) innovation output, measured by the number of patent applications, and R&D intensitiy. However, the relationship between innovation output and its technological diversification, measured as entropy, is found to be negative. Based on our empirical results we proposed policy implications especially considering differentiated innovation strategies across industrial sectors, firm’s size and age.