Technological relatedness, boundary-spanning combination of knowledge and the impact of innovation: Evidence of an inverted-U relationship

Our paper proposes that corporate technological relatedness, or the degree to which business units within a corporation utilize similar technological knowledge, has both positive and negative effects on corporate R&D activities. On the one hand, business units that employ similar technological knowledge have better absorptive capacity to source knowledge from each other. On the other hand, a higher level of technological relatedness means that each business unit possesses fewer opportunities to gain new knowledge not known to other units, thus promoting path dependence to each other. Using a patent data analysis of 201 firms in R&D-intensive industries, we examine the effects of corporate technological relatedness on within-firm knowledge flow, boundary-spanning combinations of prior knowledge, and innovation impacts.