Technological diversification: a matter of related or unrelated varieties?

This paper contributes to the 50th-anniversary special issue of Technological Forecasting and Social Change, by discussing the extent to which firms, sectors and territories follow related and/or unrelated diversification strategies in periods of economic expansion and economic crises. The paper addresses this critical question by examining the evolution of the technological diversification of firms located in the Basque Country. We analyze all the WIPO patents granted to Basque companies in the period 1991-2011 (n = 1102) and their technology classes (m = 1177). We measure technological diversification over time, both at the territorial and sectoral levels, using the concept of entropy. Our results evidence that technological diversification adopts both related and unrelated variety logics at both levels of analysis. We also show that, at the sectoral level, technological diversification follows different evolutionary paths. As a result, we introduce a taxonomy that distinguishes between 8 types of technological diversification. We contend that for innovation policies to contribute to societal transformation, they cannot rest on a one-size-fits-all type of logic, and need instead to consider the extent to which environmental shocks may affect the dynamics observed at sectoral and territorial levels.