Rare is Beautiful? Rare Technological Resources and Value Implications

We examine firms' choice of rare R&D topics and the development of technological resources by substantiating how the development of a rare technological resource leads to the creation of valuable resources. In particular, we conceptualize and empirically operationalize economic value and its sustainability at the resource level, highlighting the sequential link between technological resource development and value creation, a critical source of competitive advantage. We build our theory exploiting the fundamental tension in the technology factor market, where firms obtain others' technological resources to develop their own ones while simultaneously striving to isolate their resources from those of competitors. We argue that the degree of the rareness of a technological resource has an inverted U-shape relationship with the economic value of the resource and the sustainability of that value, as reflected by temporal duration and breadth of adoption. We apply the text analysis method to over 6,000 U.S. nanotechnology patents to capture the rareness at the time of resource development. Our results provide robust support for our hypotheses. Our study contributes to R&D project management and more broadly, operations strategy literature by addressing the conceptual and empirical conflation between resource characteristics and resource-generated values.