Common ownership, tacit know-how, and the market for technology

Dennis Hutschenreiter

No 3/2026, IWH Discussion Papers from Halle Institute for Economic Research (IWH)

Abstract: Firms increasingly rely on markets for technology to acquire innovations developed outside their boundaries, yet acquiring intellectual property rights alone often does not guarantee successful implementation. Many technologies depend on tacit know- how that must be supplied by the provider after the transaction is completed. This paper examines whether common ownership between a technology provider and a potential adopter mitigates this implementation problem. I develop a model in which overlapping institutional investors cause the provider to partially internalize the adopter's gains from successful implementation, strengthening incentives to transfer tacit know-how. This mechanism operates only when know-how is unverifiable - absent this friction, common ownership leaves matching and outcomes unchanged. Under moral hazard, the model predicts that common ownership increases the likelihood of technology transfer to a given adopter, that this effect is stronger when tacit know-how is more important, and that common ownership improves post-transfer outcomes conditional on adoption. I test these predictions using U.S. patent reassignments between publicly traded firms. Using within-deal variation across competing potential adopters and plausibly exogenous variation from passive index-fund holdings, I show that common ownership increases the likelihood that a firm acquires a technology, particularly when the transferred bundle is more tacit. Common ownership predicts stronger subsequent innovation and higher future firm value, especially when ownership overlap is concentrated among investors with stronger incentives to monitor the provider. These findings show how ownership structure shapes interfirm technology transfer by affecting not only who acquires a technology, but also how much value is created.

Keywords: common ownership; institutional investors; moral hazard; patent reassignments (search for similar items in EconPapers)
JEL-codes: C78 D82 G23 L24 O34 (search for similar items in EconPapers)
Date: 2026
New Economics Papers: this item is included in nep-bec, nep-com, nep-mac and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:iwhdps:340107

DOI: 10.18717/dp8e2r-7v17

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