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

Enrico Guzzini () and Donato Iacobucci ()
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Enrico Guzzini: Università degli Studi e-Campus, Italy

No 1205, Working Papers from c.MET-05 - Centro Interuniversitario di Economia Applicata alle Politiche per L'industria, lo Sviluppo locale e l'Internazionalizzazione

Abstract: 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.

Keywords: business groups; R&D investment; knowledge spillovers. (search for similar items in EconPapers)
JEL-codes: L2 O32 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2012-10
New Economics Papers: this item is included in nep-cse, nep-ind, nep-ino, nep-ipr, nep-pr~, nep-knm and nep-sbm
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Persistent link: https://EconPapers.repec.org/RePEc:cme:wpaper:1205

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