Organisational form and the economic impacts of innovation: the case of patent grant announcements

Li Yu Chen, Jung Ho Lai, Shao Chi Chang, Yu Shun Hung

Research output: Contribution to journalArticle

Abstract

This study investigates the impact of corporate diversification on the value creation of patent grants. We find that focussed firms experience significantly greater market reactions to patent announcements than diversified firms. Diversification into related industries has little effect on the wealth gains of granted patents, while diversification into unrelated industries significantly reduces the wealth gains. We further find that post-announcement operating performance is significantly associated with the degree of diversification. Overall, our findings suggest that the selection of diversification as a firm's organisational structure has a negative influence on the value creation of innovation, and this influence is exacerbated when this diversification involves unrelated industries.

Original languageEnglish
Pages (from-to)1070-1083
Number of pages14
JournalTechnology Analysis and Strategic Management
Volume30
Issue number9
DOIs
Publication statusPublished - 2018 Sep 2

All Science Journal Classification (ASJC) codes

  • Strategy and Management
  • Management Science and Operations Research

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