The role of ownership as R&D incentive in business groups
AbstractSeveral 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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Bibliographic InfoPaper 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.
Length: 22 pages
Date of creation: Oct 2012
Date of revision:
business groups; R&D investment; knowledge spillovers.;
Find related papers by JEL classification:
- L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
- O32 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Management of Technological Innovation and R&D
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-11-03 (All new papers)
- NEP-CSE-2012-11-03 (Economics of Strategic Management)
- NEP-IND-2012-11-03 (Industrial Organization)
- NEP-INO-2012-11-03 (Innovation)
- NEP-IPR-2012-11-03 (Intellectual Property Rights)
- NEP-KNM-2012-11-03 (Knowledge Management & Knowledge Economy)
- NEP-SBM-2012-11-03 (Small Business Management)
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