Why do inconsistencies occur? Detangling the relationship between technological diversification and performance in Chinese firms

This paper proposes and investigates three potential reasons(dimensions, capability order and contingency of technologicaldiversification) which may explain why there are inconsistencies inthe findings of studies on the relationship between technologicaldiversification and firm performance. The results indicate that: (1)a more comprehensive definition is necessary, which combinesthe two dimensions of technological diversification (breadth anddepth), which are positively linked to firm performance; (2) in lowtechfirms, technological diversification serves as a higher-levelcapability resulting in higher performance; however, in high-techfirms, technological diversification serves as a zero-level capabilitythat does not contribute to firm performance and (3) intangiblecomplementary assets negatively moderate the relationshipbetween technological diversification and performance. Furtherresearch should consider the two dimensions to reach a morecomprehensive understanding of technological diversification. Firms should increase both the depth and breadth of theirtechnological diversification to enhance performance.