Technological Similarity Research Articles

Active Technological Similarity and Mutual Fund Performance

AbstractWe examine whether superior understanding of technological innovation is a source of mutual fund managers’ ability to garner positive abnormal returns. Consistent with our hypothesis, the inter-quintile annual net Carhart alpha spread for mutual funds sorted on changes in the technological similarity (TS) of their portfolio holdings is 282 basis points. Moreover, because changes in TS are largely orthogonal to other predictors of mutual fund success (e.g., industry concentration, active share, fund R2, and lag fund alpha), changes in TS can be combined with other measures to help identify the best performing funds.

The Role of Technology Complementarity and Technology Similarity in Corporate Venture Capital

Drawing on the learning perspective, we examine the role of technology complementarity (TC) and technology similarity (TS) in corporate venture capital (CVC). We conceptualize a twofold strategy for portfolio companies: On the one hand, they can attract the interest of corporate investors by offering TC and TS, leading to the formation of CVC relationships; on the other hand, they can benefit from the learning associated with TC and TS, thus leading to their choice of different exit modes. We found that TC and TS have different impacts on the formation of CVC relationships. We also found that TC and TS influence the likelihood of IPO and acquisition differently.