Diversification of the Technological Knowledge Base of Aerospace Companies - Analysing the influence of competitive and technological context conditions

Abstract

The aerospace industry is one of the hardest to innovate. New product development is costly and lengthy, there is low space for new entrants and products are ‘multitechnological’, requiring a large technological knowledge base. In this scenario, the diversification of the knowledge base becomes a requirement for aerospace companies (ACs) to strive, leading to more competitive advantage and opportunities for growth. When choosing to diversify, managers have to consider internal capabilities, resources availability, external environment, among other context conditions. The current research focus on two of them that are not fully understood in literature: in the competitive context, the occurrence of coopetition to develop new technological knowledge and, in the technological context, the technological strength of ACs. Coopetition is the concomitant competition and cooperation with competitors and the technological strength refers to the ability of firms to use various technologies, applying them in new product development and generating technological innovation. Hence, the following research question is posed: To what extent do coopetition and technological strength influence the diversification of the technological knowledge base of aerospace companies? Patent data of 60 ACs and subsidiaries are analysed for the period between 1995 and 2013. Technological knowledge diversification is measured through IPC classes, coopetition, through patents deposited with competitors and patents deposited by joint-ventures, while the technological strength is measured by the number of citations received by each company’s patents. OLS regression model is applied to find statistically significant relations. Results show that the more an AC forms coopetitive alliances, the more specialized its technological knowledge base becomes, however patents deposited in coopetition have a higher technological strength, leading to a greater portfolio leverage and competitive advantage. ACs with a high degree of technological strength are more diversified in their technological knowledge base, the opposite observed in other non-high-tech industries. For ACs with low or moderate degrees of technological strength other factors might be in place to determine the diversification of their bases, as no statistically significant relation was found for them. In general, Asian and larger ACs have the most diversified technological knowledge base. And, in the industry-level, interest moved from peripheral components to core technologies in the period, indicating that ACs are focusing more on improving the efficiency and safety of their products.