The role of ownership as R&D incentive in business groups
Several empirical papers have shown that firms belonging to business groups have a higher propensity to engage in R&D. The purpose of the paper is to demonstrate that this higher propensity depends on the ownership share of controlled companies, besides the presence of co-ordination mechanisms. We develop an analytical model and we empirically test the predictions of the model using a dataset of Italian manufacturing firms. From the development of this model we derive three main implications: a) that there is no difference in R&D propensity between stand-alone firms and firms at the bottom of business groups; b) that head and intermediate firms have a higher R&D propensity compared to stand-alone and firms at the bottom of the group; c) that the intensity of R&D depends on the ownership shares in controlled companies. Overall the results of the empirical analysis are in accordance with the implications of the model.
|Date of creation:||Oct 2012|
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- Brusco, Sandro & Panunzi, Fausto, 2005.
"Reallocation of corporate resources and managerial incentives in internal capital markets,"
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- Pierre Blanchard & Jean-Pierre Huiban & Patrick Sevestre, 2005. "R&D and productivity in corporate groups: an empirical investigation using a panel of French firms," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00279983, HAL.
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- Wolfgang Becker & Juergen Peters, 2000. "Technological Opportunities, Absorptive Capacities, and Innovation," Discussion Paper Series 195, Universitaet Augsburg, Institute for Economics. Full references (including those not matched with items on IDEAS)
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