WHY ORGANIZATIONS PATENT IN DIFFERENT TECHNOLOGICAL AREAS THAN THE COMPETITORS? A LONGITUDINAL ANALYSIS OF ENVIRONMENTAL PATENTS

Abstract

Nowadays, there is still a long debate about the advantages and disadvantages of allocating the firm's resources over a limited number of technological areas (exploitation) versus diversifying them over a greater variety of areas (exploration). Whereas this analysis is mostly based on the firm's internal resources and capacities, our work analyses the approach taken by an organization when it considers the strategic choices made by the competitors. In this regard, our work employs Transaction Cost Economics (TCE) to explain why an organization follows an strategy that differentiates it from the competitors, whether this approach is exploitative or explorative. Through a longitudinal analysis, our results show that the firm will invest in technological areas that are different from its competitors when its assets are highly specific, when the organization poses a greater knowledge about environmental issues, and even when it enjoys a greater bargaining power over competitors. In addition to this, our results show that such as strategy will lead to a greater economic performance. Our methodology is based on an analysis of 6,438 environmental patents issued from the period 2005-2009 by 53 multinational companies that belong to the Electrical Components & Equipment industry.