Survival of high tech firms: The effects of diversity of product-market portfolios, patents, and trademarks

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Abstract

High tech firms can mitigate potential risks by diversifying their product-market portfolios. A key research question is how such diversification influences firm survival. A firm exits the market in two ways, specifically, dissolution and acquisition. Here, we model how the diversity of a new firm's product-market portfolio influences the times to both types of exits. Specifically, we allow for interaction effects of the competitive intensity of a firm's environment and the diversity of a firm's product-market portfolio with its patents and trademarks. Using a competing risk hazard model, we estimate the effects of various covariates on the time to exit for 1435 US high tech firms. We observed that a more diverse product-market portfolio, in conjunction with a larger number of patents, hastens the time to a firm's exit by dissolution (9% decrease in survival duration), while in conjunction with a larger number of trademarks, portfolio diversity delays the time to exit by dissolution (12% increase). A more competitive firm environment results in a greater effect on the portfolio's diversity in delaying its exit by dissolution (7% increase). On the other hand, a diverse product-market portfolio, combined with either a larger number of patents or trademarks, hastens the firm's exit by acquisition (19% and 11% decrease respectively).

Original languageEnglish (US)
Pages (from-to)119-128
Number of pages10
JournalInternational Journal of Research in Marketing
Volume25
Issue number2
DOIs
StatePublished - Jun 1 2008

All Science Journal Classification (ASJC) codes

  • Marketing

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