From depth and breadth of knowledge to technological capability: a journey inside a firm's intellectual capital

Abstract

In the current knowledge‐intensive economy, a firm's intellectual capital refers to its idiosyncratic internal and external knowledge‐related assets. While technological knowledge is a major constituent of intellectual capital, past research has often equated it with technological capability. However, technological capability includes not only codified knowledge, but also tacit know‐how that is not captured by formal intellectual property. We argue that while a firm's patents might serve as a proxy for measuring its base of technological knowledge, they are not a good proxy for a firm's technological capabilities. Therefore, we offer a novel approach based on a machine learning technique to capture a biopharmaceutical firm's technological capabilities using the clinical trials that it carries out. Picturing a hypothetical journey where firms transform and exploit technological knowledge to move towards building technological capabilities, we address a research gap on the link between a firm's depth and breadth of technological knowledge on the one hand, and its technology diversity on the other. Analyzing a sample of 204 biopharma firms from 2006 to 2018, we find a positive relationship between the breadth of technological knowledge and technology diversity in a firm. In contrast, the relationship between the depth of technological knowledge and technology diversity is negative. We also find that in the presence of product/market diversification, the positive relationship between the breadth of technological knowledge and technology diversity is stronger. Implications for research and practice are also discussed.

Intellectual Capital in R&D Management: elucidating the connection

“…Continuing along the lines of going deeper into the IC and also raising other insights regarding how IC can be understood in the R&D context, the study "From depth and breadth of knowledge to technological capability: A journey inside a firm's intellectual capital" (Esfandyarpour et al, 2024) explores the nuanced relationship between a firm's technological knowledge and its capabilities, differentiating between "technological knowledge" and "technology." While previous literature has often treated a firm's technologies and knowledge base interchangeably, relying on patent-based measures, recent research underscores the limitations of this approach.…”