Research Summary Going back to Bain (1956), strategy scholars have long recognized the importance of deterring entry for sustaining incumbents' profits in an industry. We introduce a new mechanism, entry diversion, to better understand the empirical phenomenon of persistent firm entry in spite of investments in entry deterrence by incumbents in some industries. Entry diversion happens when preemptive strategic investments by incumbents decrease the expected future profits from a target submarket such that entrants choose to enter another submarket within the same industry. Empirical evidence from the global semiconductor manufacturing industry suggests that incumbents expand their capacities beyond demand growth, and that these investments effectively divert entry into other submarkets. Greenfield entrants are more responsive to entry diversion than incumbents. Managerial Summary Managers have long understood that deterring entry of new players into their industry could sustain their firms' profits. In this article, we introduce a new mechanism, entry diversion, where the incumbent diverts potential entrants from its submarket toward other submarkets in the same industry. Entry diversion happens when preemptive strategic investments by incumbents decrease the expected future profits of the entrant in a submarket of the industry such that the entrant chooses not to enter the incumbent's submarket. Contrary to entry deterrence, new players will still enter the industry but settle in different submarkets. Empirical evidence from the global semiconductor manufacturing industry suggests that incumbents expand their capacities beyond demand growth, and that these investments effectively divert entry into other submarkets.

Although the rate of invention by firms and the effect on firm performance have been central themes in economics and strategy, the position and differentiation of invention by firms have received less attention. We develop a method to characterize a firm's technology portfolio based on the semantic content of patents that allows us to map a firm's unique spatial position relative to every other firm in technology space and to measure the overall differentiation of a firm's technology portfolio. Using a large panel of U.S. public firms from 1980 to 2015, we illustrate that technology differentiation has a strong positive correlation with firm performance, particularly in research and developmentintensive industries and industries with strong product market rivalry. We also show that technology differentiation is associated with subsequent differentiation from competitors in the product market and a reduction in outgoing technology spillovers to other firms. We provide open access to code and data to characterize the technology portfolio of firms and to measure the technological position and differentiation of U.S. public firms.

Las filiales de empresas multinacionales extranjeras son generalmente consideradas como canales de difusión tecnológica en el país en que se establecen. En el presente artículo comparamos el comportamiento de estas empresas con filiales de empresas españolas, en términos de probabilidad de introducir innovaciones, realizar 1+ D interna, adquirir 1+ D de fuentes nacionales y cooperar con empresas y universidades autóctonas. Los resultados obtenidos indican que las filiales de empresas extranjeras se abastecen menos de fuentes locales de conocimiento. Este resultado sugiere la adopción de políticas cuyo objetivo sea hacer más atractivas a las fuentes locales de conocimiento.

This paper discusses the diversity of mechanisms which firms can deploy to link to science and how science links are associated with their innovation performance. Using a sample of Flemish firms, we show that there exists considerable heterogeneity in the type of links to science at the firm level. Overall, firms with a science link enjoy superior innovation performance, in particular with respect to innovations that are new to the market. At the invention level, our findings confirm that patents from firms engaged in science are more frequently cited and have a broader technological and geographical impact. We show that it is crucial to distinguish between direct science links at the invention level and indirect science links at the firm level to encounter distinct positive effects

We argue that the positive association found between firm productivity and exports in the literature relates to the firm's innovation decisions. Using a panel of Spanish manufacturing firms we find strong evidence that product innovation--and not process innovation--affects productivity and induces small non-exporting firms to enter the export market

Links with science have been argued to improve the (innovation) performance of firms. Yet we still know comparatively little about the project-level characteristics affecting the organization of such links. Our study, based on a sample of 52 projects carried out by a multinational company in the semiconductor industry, reveals that the knowledge attributes of a project help in predicting how the R&D activities will be organized. In particular, basic projects are likely to be developed through formal cooperative agreements with universities. Such projects also tend to be strategically less important. For strategically more important projects, in contrast, and for those where the knowledge to be developed is particularly novel to the firm, the firm is more likely to resort to formal contracting with a university for a specific component of the R&D project, usually early on in the project