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Are large business groups conducive to industry innovation? The moderating role of technological appropriability

Chang-Yang Lee (), Ji-Hwan Lee () and Ajai S. Gaur ()
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Ji-Hwan Lee: Korea Advanced Institute of Science and Technology
Ajai S. Gaur: Rutgers Business School, Newark and New Brunswick

Asia Pacific Journal of Management, 2017, vol. 34, issue 2, 313-337

Abstract: Abstract This paper examines the impact of the share of business groups in an industry on the industry’s R&D intensity. First, we derive a simple theoretical model of industry R&D intensity in the presence of big business groups. Our model predicts that the effect of business-group share on industry R&D intensity differs across industries depending on the technological appropriability: A positive relationship for industries with low R&D appropriability, while a negative relationship for industries with high R&D appropriability. Based on these predictions, we develop and test our hypothesis using unique data on Korean manufacturing industries. Our results confirm the moderating role of technological appropriability, implying that the inverted-U shape between business-group share and industry R&D intensity frequently observed at the aggregate-sample level reflects the combination of those two opposite relationships.

Keywords: Technological innovation; Industry R&D intensity; Business groups; Technological appropriability (search for similar items in EconPapers)
Date: 2017
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