The differential effects of basic research on firm R&D productivity: The conditioning role of technological diversification

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.

Automated summary

This study examines the relationship between basic research and firm R&D productivity, focusing on the conditioning role of firm-level technological diversification. The findings suggest that technological diversification positively conditions the relationship, particularly unrelated technological diversification. This conditioning effect is more pronounced for firms in high-tech or less competitive industries, indicating that a broad technological knowledge base across unrelated fields is helpful for firms to utilize basic research effectively and enhance their R&D productivity.