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Are large business groups conducive to industry innovation? The moderating role of technological appropriability

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  • Chang-Yang Lee

    (Korea Advanced Institute of Science and Technology)

  • Ji-Hwan Lee

    (Korea Advanced Institute of Science and Technology)

  • Ajai S. Gaur

    (Rutgers Business School, Newark and New Brunswick)

Abstract

This paper examines the impact of the share of business groups in an industry on the industry’s R&D intensity. First, we derive a simple theoretical model of industry R&D intensity in the presence of big business groups. Our model predicts that the effect of business-group share on industry R&D intensity differs across industries depending on the technological appropriability: A positive relationship for industries with low R&D appropriability, while a negative relationship for industries with high R&D appropriability. Based on these predictions, we develop and test our hypothesis using unique data on Korean manufacturing industries. Our results confirm the moderating role of technological appropriability, implying that the inverted-U shape between business-group share and industry R&D intensity frequently observed at the aggregate-sample level reflects the combination of those two opposite relationships.

Suggested Citation

  • Chang-Yang Lee & Ji-Hwan Lee & Ajai S. Gaur, 2017. "Are large business groups conducive to industry innovation? The moderating role of technological appropriability," Asia Pacific Journal of Management, Springer, vol. 34(2), pages 313-337, June.
  • Handle: RePEc:kap:asiapa:v:34:y:2017:i:2:d:10.1007_s10490-016-9481-0
    DOI: 10.1007/s10490-016-9481-0
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