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The role of ownership as R&D incentive in business groups

  • Enrico Guzzini

    ()

    (Università degli Studi e-Campus, Italy)

  • Donato Iacobucci

    ()

    (Dept. of Information Engineering Università Politecnica delle Marche, Italy)

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.

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File URL: http://193.205.129.80/repec/cme/wpaper/cmetwp_05_2012.pdf
File Function: First version, 2012
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Paper provided by c.MET-05 - Centro Interuniversitario di Economia Applicata alle Politiche per L'industria, lo Sviluppo locale e l'Internazionalizzazione in its series Working Papers with number 1205.

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Length: 22 pages
Date of creation: Oct 2012
Date of revision:
Handle: RePEc:cme:wpaper:1205
Contact details of provider: Web page: http://www.cmet05.it

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  1. Sharon Belenzon & Tomer Berkovitz, 2007. "Innovation in Business Groups," Economics Series Working Papers 368, University of Oxford, Department of Economics.
  2. Brusco, Sandro & Panunzi, Fausto, 2000. "Reallocation of Corporate Resources and Managerial Incentives in Internal Capital Markets," CEPR Discussion Papers 2532, C.E.P.R. Discussion Papers.
  3. Elena Huergo & Jordi Jaumandreu, 2004. "How Does Probability of Innovation Change with Firm Age?," Small Business Economics, Springer, vol. 22(3_4), pages 193-207, 04.
  4. Elena Cefis & Stephanie Rosenkranz & Utz Weitzel, 2009. "Effects of coordinated strategies on product and process R&D," Journal of Economics, Springer, vol. 96(3), pages 193-222, April.
  5. Wolfgang Becker & Juergen Peters, 2000. "Technological Opportunities, Absorptive Capacities, and Innovation," Discussion Paper Series 195, Universitaet Augsburg, Institute for Economics.
  6. Pierre BLANCHARD & Jean Pierre HUIBAN & Patrick SEVESTRE, 2005. "R&D and Productivity in Corporate Groups: An Empirical Investigation Using a Panel of French Firms," Annales d'Economie et de Statistique, ENSAE, issue 79-80, pages 461-485.
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