Final answer:
Complementary assets are resources and capabilities that enhance the value and effectiveness of a technology investment. Investment in complementary assets can impact returns on technology investments by improving compatibility, enhancing distribution and marketing capabilities, and protecting and exploiting intellectual property.
Step-by-step explanation:
- Complementary assets are resources and capabilities that enhance the value and effectiveness of a technology investment. They include things like infrastructure, intellectual property rights, human capital, distribution channels, and customer relationships.
- Investment in complementary assets can impact returns on technology investments in several ways:
- Improved compatibility: When a firm invests in complementary assets that are compatible with the technology, it can enhance the utility and value of the technology, leading to higher returns. For example, if a company develops a new software application and also invests in training its employees to use the software effectively, the investment in human capital enhances the returns on the technology investment.
- Enhanced distribution and marketing capabilities: Investing in complementary assets like distribution channels and customer relationships can help a firm reach a larger customer base and generate more revenue from its technology investment. For instance, if a company develops a new medical device and also invests in building relationships with hospitals and healthcare providers, it can increase the adoption and usage of the device, resulting in higher returns.
- Protection and exploitation of intellectual property: Investing in complementary assets like patents and copyrights can provide legal protection for a technology investment. This protection can deter potential competitors from copying or imitating the technology, allowing the firm to maintain a competitive advantage and earn higher returns.