Business group affiliation and R&D propensity
In this paper we analyse whether belonging to a business group enhances firms’ R&D propensity and intensity as a result of the greater opportunities to co-ordinate R&D strategies and internalize the positive spillovers. We analyse the organization of R&D management within a business group and how the positioning of firms within the group influences their propensity for and intensity of R&D. We find a strong association between the degree of diversification of business groups and the way in which R&D is organized. Monosector groups are more likely to centralize R&D while diversified groups tend to give more autonomy to affiliated firms. We find also that R&D autonomy is significantly associated with both a higher R&D propensity and intensity in controlled firms. For the firm heading the group, we find that R&D autonomy (centralization) is associated with reduced (increased) R&D intensity, but that this association is less significant for R&D propensity.
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