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Ownership structure and innovation: An emerging market perspective

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  • Victor Chen

    ()

  • Jing Li

    ()

  • Daniel Shapiro

    ()

  • Xiaoxiang Zhang

    ()

Abstract

Considerable attention has been focused on the ways in which emerging market firms can obtain and mobilize the knowledge and resources required for innovation. Innovation is a particular challenge in emerging markets because of inadequate external institutions. In this study, we focus on the importance of ownership structure, and in particular on ownership type diversity and ownership concentration. Using transaction cost and agency theories embedded in an emerging market context, we argue that ownership structure provides an important mechanism by which firms can assemble and direct the resources necessary for innovation in the context of inadequate external institutions. Specifically, we hypothesize that ownership type diversity improves innovation performance and that increasing ownership concentration has the same effect, but only up to a point. Using a panel dataset of 487 and 475 Chinese listed companies during 2004–2005 and 2005–2006 respectively, we find supportive empirical evidence for our hypotheses. Our findings also suggest that ownership type diversity is a more important factor in explaining innovation performance than ownership concentration, although most of the extant literature focuses on the latter. Copyright Springer Science+Business Media New York (outside the USA) 2014

Suggested Citation

  • Victor Chen & Jing Li & Daniel Shapiro & Xiaoxiang Zhang, 2014. "Ownership structure and innovation: An emerging market perspective," Asia Pacific Journal of Management, Springer, vol. 31(1), pages 1-24, March.
  • Handle: RePEc:kap:asiapa:v:31:y:2014:i:1:p:1-24 DOI: 10.1007/s10490-013-9357-5
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    References listed on IDEAS

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    1. repec:kap:asiapa:v:34:y:2017:i:2:d:10.1007_s10490-016-9481-0 is not listed on IDEAS
    2. Chen, Chung-Jen & Lin, Bou-Wen & Lin, Ya-Hui & Hsiao, Yung-Chang, 2016. "Ownership structure, independent board members and innovation performance: A contingency perspective," Journal of Business Research, Elsevier, vol. 69(9), pages 3371-3379.
    3. Mamatzakis, Emmanuel & Zhang, Xiaoxiang & Wang, Chaoke, 2017. "Ownership structure and bank performance: An emerging market perspective," MPRA Paper 80653, University Library of Munich, Germany.
    4. Lebedev, Sergey & Peng, Mike W. & Xie, En & Stevens, Charles E., 2015. "Mergers and acquisitions in and out of emerging economies," Journal of World Business, Elsevier, vol. 50(4), pages 651-662.
    5. Li, Jian & Strange, Roger & Ning, Lutao & Sutherland, Dylan, 2016. "Outward foreign direct investment and domestic innovation performance: Evidence from China," International Business Review, Elsevier, vol. 25(5), pages 1010-1019.
    6. repec:kap:asiapa:v:34:y:2017:i:2:d:10.1007_s10490-016-9489-5 is not listed on IDEAS
    7. repec:kap:asiapa:v:34:y:2017:i:2:d:10.1007_s10490-016-9475-y is not listed on IDEAS
    8. Ying-Yu Chen & Yi-Long Jaw, 2014. "How do business groups’ small world networks effect diversification, innovation, and internationalization?," Asia Pacific Journal of Management, Springer, pages 1019-1044.

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