Growing Technological Relatedness to the ICT Industry and Its Impacts

Abstract

In today’s rapidly evolving technological landscape, industries across various sectors are increasingly leveraging information and communication technologies (ICT) to drive innovation and gain a competitive edge. Our study reveals that, as industries become more closely connected to the ICT sector, they experience a significant shift in their innovation processes and outcomes. By analyzing 1.3 million U.S. patents granted between 1981 and 2010, we demonstrate that industries with stronger ties to the ICT sector (i.e., higher “ICT-closeness”) exhibit a greater proportion of ICT technologies in their patent portfolios and enhanced complementarity between ICT and non-ICT patents. Furthermore, ICT-Closeness results in greater innovation efficiency (the number of patents per R&D capital), recombinant creation (the creation of new technological combinations), recombinant reuse (the refinement and reuse of known technological combinations), and the creation of new business models. These findings have important implications for practitioners. Specifically, our research highlights the importance of strategically integrating ICT into their technological innovations. Managers should actively seek opportunities to collaborate with and learn from the ICT sector to enhance their innovative capabilities, create new products, services, and business methods, and ultimately gain a competitive advantage. However, they must also be prepared for the heightened competition that comes with increased ICT-closeness, as it can lead to winner-take-all dynamics and market turbulence.