Technological entry, redeployability and firm value

We provide a framework that enriches our understanding of resource redeployability, i.e. the value-generating option to withdraw resources from one use and reallocate them to another use. Existing works largely assume that the new uses of a resource are known ex ante and easily identifiable by managers. However, several cases from different industries suggest that new uses often emerge while a firm’s technology base radiates into new domains. We analyze how a firm’s technology base, by radiating into new domains that potentially reveal new uses and resource redeployment options, can spur firm value. We develop five hypotheses on the relationship between technological entry in new domains and firm value, and test them using a novel patent-based measure in a panel of US firms.