STANDING GROUND? THE INFLUENCES OF KNOWLEDGE DIVERSITY AND TECHNOLOGY OPPORTUNITY ON GENERATIVE APPROPRIATION

This study examines the determinants of a firm’s generative appropriation, defined as a firms’ effectiveness in capturing a larger share of cumulative inventions spawned from its prior inventions. Building on learning theory and the resource-based view, we investigate how a firm’s knowledge diversity across technological and geographic space influences generative appropriation. We also investigate how technology opportunities moderate the effect of knowledge diversity on generative appropriation. Using a longitudinal study of US manufacturing firms and using patents as a proxy for inventions, we find that technological knowledge diversity has a negative effect on generative appropriation and that technology opportunity weakens that effect. We also find that the effect of geographic diversity is contingent on the availability of technological opportunities. When technology opportunity is low, moderate geographic diversity leads to higher generative appropriation than high or low geographic diversity does. However, when technology opportunity is high, geographic diversity appears to have a monotonically negative effect on generative appropriation. These results highlight the way the cumulative and preclusive learning of prior knowledge depend on a firm’s knowledge diversity and technology opportunities.