Synergistic governance and innovation: the positive effect of cross-holding partners

Jiajia Liu, Weiyi Li and Jiaqi Shi

Economics of Innovation and New Technology, 2025, vol. 34, issue 6, 885-919

Abstract: Innovation within enterprises stands as a crucial component of effective enterprise management, serving as the primary determinant influencing the company's developmental trajectory, scale, and pace. The primary objective of this study is to analyze the effects of cross-holding partnerships on firms’ innovation performance, as well as the interplay between internal cross-holdings and innovation results. By examining data from 2011 to 2021 of A-share listed companies, this paper empirically analyzes the impact of cross-holding shareholders on firm innovation performance. According to the study, cross-holding shareholders positively impact enterprise innovation performance, indicating a synergistic governance effect. Besides, the study finds that both information transparency and internal control play significant mediating roles in enhancing the relationship between cross-holding shareholders and enterprise innovation performance. The study's novelty lies in its in-depth exploration of cross-holding intricacies and their specific influence on innovation. By dissecting various cross-holding scenarios, the research contributes valuable insights that refine the understanding of how shareholder dynamics can shape innovation within enterprises. Based on the findings suggestions for practitioners include a nuanced approach to cross-holding arrangements, emphasizing the need for strategic alignment between shareholders and innovation goals. Additionally, developing transparency and communication among cross-holding entities may mitigate potential negative effects on innovation.

Date: 2025
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DOI: 10.1080/10438599.2024.2386471

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