Does technological convergence imply convergence in markets? Evidence from the electronics industry

Abstract

This paper uses data on new subsidiaries, acquisitions, collaborative agreements, and patents of the largest 32 US and European electronics firms during 1984-1992 to examine the relationships between technological and business diversification. We find that during the 1980s many firms focused on fewer businesses, but we find no evidence of greater technological focus. We argue that this is related to the fact that, in spite of technological convergence, electronics sectors still command highly industry- or even product-specific downstream assets. In addition, we find that business focus improved performance, but that better performance is also associated with greater technological diversification. We discuss some interpretation of this finding