Does Ownership Structure Matter for Firm Technological Innovation Performance? The Case of Korean Firms

Abstract

Manuscript Type: Empirical Research Question/Issue: This study examines the influence of firms' ownership structure on their technological innovation performance. First, we have examined whether ownership concentration positively influences technological innovation performance. Then we have investigated the primary reasons for the results derived from the first stage of our analysis by circumstantially exploring the impacts of four different ownership types. Research Findings/Insights: Using five sets of cross‐sectional data, consisting of 301 Korean firms, we found that ownership concentration does not have a significant effect on firm technological innovation performance. However, some ownership types (e.g., institutional and foreign) do have a positive effect. Theoretical/Academic Implications: Drawing on agency theory and the resource dependence perspective, our paper is the first to consider a comprehensive treatment of the effect of ownership types on innovation in an emerging country, in particular in contrast to previous studies that have focused on advanced economies. Since only partial predictions suggested by agency and resource dependence perspectives were supported, it appears that neither theory adequately captures the ownership‐technological innovation performance relationship. Thus, we suggest that future research should explore the question through a different theoretical lens to better understand the impact of ownership types. We suggest that transaction cost economics can be another path to approach the phenomenon. Practitioner/Policy Implications: This study suggests that managers should recognize how each characteristic of ownership structure (types) influences the building of firm‐specific capabilities for innovation. Policy makers and managers should be aware of the impact of the complete range of ownership types on technological innovation performance when they implement corporate governance reform with greater effectiveness. It also suggests that successful technological catch‐up and innovation not only require policies for upgrading technology capabilities, but also the setting up of a suitable supporting ownership structure that favors innovation of firms in emerging countries. We suggest that successful technological catch‐up and innovation require a supporting ownership structure.

Impact of ownership types on R&D intensity and innovation performance—evidence from transitional China

“…The prior research adopted agency theory and studied the relationship between ownership and firms' R&D by addressing the potential conflicts between shareholders and managers (Kim et al 2008;Belloc 2012;Choi et al 2012). Agency theory views modern corporations as contractual relationships between shareholder and management and asserts that agency problem arises when the desires or goals of shareholder and management conflict due to the separation of ownership and control (Jensen and Meckling 1976).…”

Investigating a neglected part of Schumpeter’s creative army: what drives new-to-the-market innovation in micro-enterprises?

“…Employment in the firm is also included which again we expect to be positively related to innovation. Second, an indicator of the independence of the firm is also included to reflect any potential resource advantage accruing to firms which are group members (Choi et al 2012).Third, firm age is included to capture any accumulated resource advantages (Balasubramanian and Lee 2008). Fourth, we include an exporting variable to capture any benefit which firms derive from selling in international markets (Love and Roper 2015).…”

Milyen példát mutatnak a sikeres külföldi exportorientált vállalatok az innováció terén a hazai vállalatok számára?

“…Ez utóbbi eredményt megerősíti Damijan et al (2014), a CIS öt felmérésének összevont adatain alapuló elemzése. Egy dél-koreai 301 fős vállalati mintán alapuló kutatás szerint a külföldi tulajdon pozitívan hat a vállalatok technológiai innovációs teljesítményére (Choi et al, 2012).…”