Session Summary

Session Number:235
Session ID:S311
Session Title:Corporate Performance, Diversification, and Innovation
Short Title:Change and Performance
Session Type:Division Joint Symposium
Hotel:Hyatt East
Floor:LL2
Room:GndBall E
Time:Tuesday, August 10, 1999 8:30 AM - 10:10 AM

Sponsors

BPS  (Ming-Jer Chen)BPS99@wharton.upenn.edu (215) 898-0018 
TIM  (Deborah Dougherty)doughert@business.rutgers.edu (973) 353-1664 

General People

Chair McGahan, Anita M.  Harvard U. amcgahan@hbs.edu (617)-495-6896 
Discussant Mowery, David C. U. of California, Berkeley mowery@haas.berkeley.edu (510) 643-9992 

Submissions

Product Sequencing: Vertical Integration, Diversification, and Innovation 
Presenter Helfat, Constance E. Dartmouth College constance.helfat@dartmouth.edu (603) 646-3423 
Presenter Raubitschek, Ruth S. U.S. Department of Justice ruthraubitschek@usdoj.gov (202) 687-0518 
Balancing Incentives: The Tension Between Basic and Applied Research 
Presenter Stern, Scott  Massachusetts Institute of Technology sstern@mit.edu (617) 253-5219 
Goliath vs. Goliath: The Emergence of Digital Imaging 
Presenter Tripsas, Mary  U. of Pennsylvania tripsas@wharton.upenn.edu (215) 898-1228 
Corporate Diversification, Patent Activity, and Market Value: Scale, Scope and Spillovers in Appropriating Returns to Innovation 
Presenter Silverman, Brian S. Harvard U. bsilverman@hbs.edu (617) 495-6729 
Presenter McGahan, Anita M.  Harvard U. amcgahan@hbs.edu (617)-495-6896 

Abstract

This symposium focuses on strategic and technological implications of relationships between corporate performance, diversification, and innovation. The first study addresses whether vertical links can provide incumbents with access to critical resources in the development and commercialization of new products. The analysis raises new issues in the identification of scope economies in high-technology settings. The second study addresses the relationship between a firm's patenting activities and its scope. The authors find that pharmaceutical firms balance workers' incentives to pursue basic and applied research; that is, the scope of the firm's activities affects its technological productivity. This result suggests that innovation may be a function of scope decisions. The third study explores incumbents' reactions when technological change radically redefines industry boundaries. The analysis shows how a firm's inclination to adapt depends on the history of its prior entry decisions and successes. By integrating a social construction lens into economic models, the paper explains patterns of diversifying entry into new markets in digital imaging. The fourth study revisits classic questions concerning financial markets' valuation of innovation. In this large-scale statistical study, using newly compiled measures of patenting and financial-market premiums by firm and industry, the authors show connections between technological capabilities, scope, industry structure, and rewards to innovation. The discussant is familiar with the literatures on which these papers draw and the empirical techniques they employ. We hope that this symposium will generate a stimulating discussion among colleagues on questions about diversification, innovation, and performance.