Technological diversification and firm's techno-economic structure: An assessment of Canon's sustainable growth trajectory

Contrary to the decrease in operating income to sales (OIS) in Japan's electrical machinery firms, Canon has demonstrated its increasing trend with increase of its technological diversification. These contrasts and Canon's conspicuous functionality development suggest that a virtuous cycle between its technological diversification strategy and increase in OIS can be the source of its sustainable growth.Prompted by this hypothetical view, this paper attempts to assess Canon's sustainable growth trajectory by elucidating a mechanism of its technological diversification system through an effective utilization of potential resources in innovation. By means of an epidemic function, the new approach for assessing marginal productivity of technology as well as functionality development is developed. Utilizing this approach, comparative empirical analyses are conducted focusing on the consequence of technological diversification and development trajectory in Japan's leading electrical machinery firms over the last two decades.