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Innovation at State Owned Enterprises

Author

Listed:
  • Bernardo Bortolotti
  • Veljko Fotak
  • Brian Wolfe

Abstract

We investigate the impact of state ownership on the innovativeness of firms, as measured by the number, quality, and value of the patents produced. In a sample of listed European firms, we find that minority government ownership increases investment in research and development, especially for financially constrained firms and during “normal” macroeconomic conditions. Yet, government control leads to the opposite effect, by imposing myopic goals and complicating access to private equity markets. Overall, state owned enterprises (SOEs) produce fewer patents per dollar invested and about 10% fewer patents in absolute terms. When comparing SOE patents to private-sector patents, we find no difference in patent quality as measured by the number of citations received per patent or by the market reaction at patent publication. Furthermore, we find no increase in the number of patents focused on sustainable technologies, suggesting that SOEs do not emphasize innovation that produces public goods or social spillovers.

Suggested Citation

  • Bernardo Bortolotti & Veljko Fotak & Brian Wolfe, 2018. "Innovation at State Owned Enterprises," BAFFI CAREFIN Working Papers 1872, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
  • Handle: RePEc:baf:cbafwp:cbafwp1872
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    Keywords

    Innovation; state ownership;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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