Converging technology to improve firm innovation competencies and business performance: Evidence from smart manufacturing technologies

Converging technology is the technology created by integrating at least two disparate fields of technologies with innovation potential, and its commercial applications open multiple business paths. Despite this, the manage-ment literature has paid little attention to the converging technology as firm-specific resources and its re-lationships with firm business diversification and performance. In the context of convergence in smart manufacturing, this study investigates the impact of firms' converging technologies on the relationship between business diversification and financial performance. Hence, the study empirically analyzes a firm-level panel dataset combining financial and patent data of applicant firms in the field of smart manufacturing technologies for the period 2010-2015. The results show a U-shaped relationship between business diversification and financial performance at the early stage of the convergence paradigm. The joint effect of firms' converging technologies and technological competencies reinforces this relationship by increasing benefits and mitigating costs at higher levels of business diversification. This result indicates that firms' converging technologies create beneficial joint impacts with technological competencies on realizing value-added business diversification. The empirical findings present managerial implications for innovation management in the convergence paradigm.