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The role of ownership as R&D incentive in business groups

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  • Enrico Guzzini

    () (Università degli Studi e-Campus, Italy)

  • Donato Iacobucci

    () (Dept. of Information Engineering Università Politecnica delle Marche, Italy)

Abstract

Several empirical papers have shown that firms belonging to business groups have a higher propensity to engage in R&D. The purpose of the paper is to demonstrate that this higher propensity depends on the ownership share of controlled companies, besides the presence of co-ordination mechanisms. We develop an analytical model and we empirically test the predictions of the model using a dataset of Italian manufacturing firms. From the development of this model we derive three main implications: a) that there is no difference in R&D propensity between stand-alone firms and firms at the bottom of business groups; b) that head and intermediate firms have a higher R&D propensity compared to stand-alone and firms at the bottom of the group; c) that the intensity of R&D depends on the ownership shares in controlled companies. Overall the results of the empirical analysis are in accordance with the implications of the model.

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File URL: http://193.205.129.80/repec/cme/wpaper/cmetwp_05_2012.pdf
File Function: First version, 2012
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Bibliographic Info

Paper provided by c.MET-05 - Centro interuniversitario di Economia Applicata alle Politiche per L'industria, lo Sviluppo locale e l'Internazionalizzazione in its series Working Papers with number 1205.

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Length: 22 pages
Date of creation: Oct 2012
Date of revision:
Handle: RePEc:cme:wpaper:1205

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Web page: http://www.cmet.it
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Keywords: business groups; R&D investment; knowledge spillovers.;

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  1. Elena Cefis & Stephanie Rosenkranz & Utz Weitzel, 2009. "Effects of coordinated strategies on product and process R&D," Journal of Economics, Springer, vol. 96(3), pages 193-222, April.
  2. Pierre Blanchard & Jean-Pierre Huiban & Patrick Sevestre, 2010. "R&D and Productivity in Corporate Groups: An Empirical Investigation Using a Panel of French Firms," NBER Chapters, in: Contributions in Memory of Zvi Griliches, pages 461-485 National Bureau of Economic Research, Inc.
  3. Sharon Belenzon & Tomer Berkovitz, 2007. "Innovation in Business Groups," Economics Series Working Papers 368, University of Oxford, Department of Economics.
  4. Wolfgang Becker & Juergen Peters, 2000. "Technological Opportunities, Absorptive Capacities, and Innovation," Discussion Paper Series 195, Universitaet Augsburg, Institute for Economics.
  5. Elena Huergo & Jordi Jaumandreu, 2004. "How Does Probability of Innovation Change with Firm Age?," Small Business Economics, Springer, vol. 22(3_4), pages 193-207, 04.
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