High Innovation Output demands Strategic Fit

Recent research shows diversified companies need to link their innovation strategy to their diversification strategy.

High Innovation Output Demands Strategic Fit
High Innovation Output Demands Strategic Fit

In general a company’s innovation strategy ranges between having a local (i.e. related) focus and a narrow scope and having a distant focus and a broad scope. It turns out the innovation output in terms of number of patents registered is highest when there is a strategic fit between diversification and innovation scope and focus (see figure).

  • Companies with a related diversification strategy reach highest innovation output when pursuing a local and narrow search scope;
  • Companies with an unrelated diversification strategy reach highest innovation output when pursuing a distant and broad scope.

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