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Does shareholder overlap alleviate patent holdup?

Author

Listed:
  • Geng, Heng
  • Hau, Harald
  • Lai, Sandy
  • Liu, Pengfei

Abstract

Patent protection can generate holdup problems for follow-on innovators when technologies protected in early patents complement their inventions. This study investigates whether institutional shareholder overlap between firms with precursory patents and follow-on innovators can reduce such patent holdup problems. Using patent citation links to track complementary patents, we find empirical support for such a holdup attenuation hypothesis of institutional shareholder overlap. Follow-on innovators with greater institutional shareholder overlap to precursory patent owners enjoy greater success with their patent portfolio, face less patent conflict as measured by patent litigation, and feature higher levels of R&D investments. The holdup attenuation effect is stronger if product complexity makes securing ex ante patent licenses more difficult.

Suggested Citation

  • Geng, Heng & Hau, Harald & Lai, Sandy & Liu, Pengfei, 2025. "Does shareholder overlap alleviate patent holdup?," Research Policy, Elsevier, vol. 54(2).
    • Handle: RePEc:eee:respol:v:54:y:2025:i:2:s0048733324002166
    DOI: 10.1016/j.respol.2024.105167
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    Keywords

    Patents; Holdup problems; Innovation; Institutional ownership;
    All these keywords.

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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