When and How Does Business Group Affiliation Promote Firm Innovation? A Tale of Two Emerging Economies

Abstract

Using a comparative institutional perspective, we explore whether business groups’ roles in facilitating affiliate firms’ innovation varies by country and time period. We compare the innovativeness of firms affiliated with business groups to that of independent firms in two emerging economies: South Korea and Taiwan. On average, business group affiliates outperform independent firms in South Korea, but not in Taiwan, and in the early 1990s, but not in the late 1990s. The existence of alternative institutional infrastructures for innovation might explain these differences. Groups’ abilities to share technological knowledge and financial resources among affiliates enables them to create value by promoting innovation in emerging economies, but groups’ diversification might inhibit individual affiliates’ innovativeness.

The impact of corporate governance practices on R&D efforts: a look at shareholders' rights, cross-listing, and control pyramid

“…Our article also provides evidence that the influence of governance practices on R&D decisions goes beyond the firm level to encompass all the bodies belonging to the same business group. This result supports some recent efforts carried out on the role of business groups on R&D and innovation activities and performances (Chang et al, 2006;Belenzon and Berkovitz, 2010;Vissa et al, 2010).…”

Exploring the Impact of Complementary Assets on the Environmental Performance in Manufacturing SMEs

“…Christmann [13] mentioned that complementary assets could moderate the relationship between environmental activities and competitive advantage. This study considers the complementary assets as business-group affiliation and listing on the financial market, because these activities are feasible for SMEs to increase their environmental performance by overcoming their shortcomings [14,15].…”

Innovation in Business Groups

“…Business groups, organizations that include several legally independent firms, are a common ownership structure in many countries outside the United States. While the empirical literature has focused mostly on the role of business groups in replacing imperfect or missing markets in developing countries (e.g., Khanna and Rivkin 2001, Mahmood and Mitchell 2004, Chang et al 2006, very little is known about the role of business groups in facilitating innovation in developed and research and development (R&D)-intensive economies. In this paper, we explore the relationship between business groups and innovation using a novel and comprehensive data set on patents, ownership, and financials for European firms.…”