DP11064 Technological Progress and Ownership Structure
|Author(s):||Heng Geng, Harald Hau, Sandy Lai|
|Publication Date:||January 2016|
|Keyword(s):||hold-up problems, innovation, institutional ownership, patents|
|JEL(s):||G31, G32, L22|
|Programme Areas:||Financial Economics, Industrial Organization, Macroeconomics and Growth|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=11064|
Innovation processes under patent protection generate hold-up problems if complementary patents are owned by different firms. We show that in line with Hart and Moore (1990), shareholder ownership overlap across firms with patent complementarities helps mitigate such hold-up problems and correlates significantly with higher patent investment and more patent success as measured by future citations. The positive innovation effect is strongest for concentrated overlapping ownership and for the cases when the overlapping shareholders are dedicated investors.