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Standing on the shoulders of giants: The innovation capability acquisition of group affiliates

Author

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  • Shao, Jun
  • Wang, Junjie
  • Zhang, Junzi

Abstract

This paper explores the influence of business group on its listed affiliates(LAFs)’ innovation capability. Based on the data of Chinese A-share business groups and their LAFs, we find that, compared to stand-alone firms, group affiliation attributes significantly enhance LAFs’ innovation capabilities. Mechanism tests show that mitigating financial constraints, technical and industry supporting improve LAFs’ innovation capabilities. Heterogeneity analysis further reveals that the group's control capability, the advanced degree of management system, the absorptive capacity, and pyramids structure exert differentiated effects on LAFs’ innovation capability.

Suggested Citation

  • Shao, Jun & Wang, Junjie & Zhang, Junzi, 2025. "Standing on the shoulders of giants: The innovation capability acquisition of group affiliates," Finance Research Letters, Elsevier, vol. 78(C).
    • Handle: RePEc:eee:finlet:v:78:y:2025:i:c:s1544612325003782
    DOI: 10.1016/j.frl.2025.107115
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    Keywords

    Affiliates; Innovation capability; Financing channel; Technical support; Industrial support;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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