Exploring the determinants of technological follow-on in new technological areas

A creative idea or an invention per se is not associated with a real advantage, while follow-on patenting or product development activities are. Drawing on the real options reasoning, this paper aims to explore the nature of R&D investment decisions that drive a firm to deepen its foothold in a new technological area. Using Cox regression model upon the patent data of top bearing companies worldwide over the period 1990-2004, we identified the influences of technology-, firm- and market-related constructs, namely, age of knowledge searched, accumulated knowledge stock, and competitive effects, on the focal firm´s follow-on patenting behavior. Our results highlight the critical role of organizational learning patterns in determining the incidence of innovation persistence, and suggest the context-dependent nature of such technological deepening behaviors. The empirical findings shed light on R&D investment strategies when firms are subject to the uncertainty of technological environments.