TOWARDS A THEORY OF THE TECHNOLOGY-BASED FIRM

The modern firm is a very viable economic institution, drawing strengt h from a competitive market economy, with embedded 'super-markets' for corporate control and 'sub-markets' for internal organization. The te chnology-based firm in addition draws strength from its co-evolution w ith modem science and technology (and vice versa), and thereby becomes increasingly important. However, received theories of the firm, of wh ich there are many, have not particularly taken account of technology and technology-based firms, nor their management. This paper takes an empirical point of departure from recent findings regarding the positi ve relationship between technology diversification on the one hand and corporate growth and business diversification on the other. These fin dings are not readily explainable by received theories of the firm, wh ich the paper reviews, and the findings are thus taken as an explanand um for a proposed approach to formulate a theory of the technology-bas ed firm. The approach is compatible with various other theoretical app roaches such as the resource-based, the transaction-cost and the evolu tionary approach, but specifically takes the idiosyncrasies of technol ogy (i.e., technical competence) as well as management into account. T hrough notably strong economies of scale, scope, speed and space assoc iated with the combination of different technologies and resources, th e technology-based firm is subjected to specific dynamics in its growt h and diversification and shifts of businesses and resources. In parti cular, a technology-based firm tends to engage in technology diversifi cation, thereby becoming multitechnological. As such the technology-ba sed firm has incentives to economize on increasingly expensive new tec hnologies by pursuing strategies of internationalization on both input and output markets, technology-related business diversification, exte rnal technology marketing and sourcing, R&D rationalization and techno logy-related partnering. (C) 1998 Elsevier Science B.V. All rights res erved.