Innovation in Business Groups: Evidence from China

Dou, Huan; Li, Antai; Luo, Yonggen

doi:10.1080/1540496x.2020.1859365

Cited by 14 publications

(8 citation statements)

References 41 publications

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“…Owing to bounded rationality ( Simon, 1947 ), the parent firm does not have sufficient time and knowledge to assess the value of its affiliates in all dimensions; thus, it focuses its attention on a limited set of variables such as performance ( Arrfelt et al, 2013 ; Bardolet et al, 2017 ). Given that the affiliate’s performance level and its corresponding response impacts the business group’s welfare, the parent firm can influence the affiliate’s decision-making through resource allocation ( Arrfelt et al, 2013 ; Jia et al, 2013 ; Dou et al, 2021 ). Hence, we propose that the resource allocation criteria depends on the affiliate performance feedback.…”

Section: Hypotheses Developmentmentioning

confidence: 99%

“…When an affiliate’s performance is below the aspired level, both the parent firm and affiliate become motivated to reach the aspired level through risky decisions. Considering the resource constraints of underperforming affiliates, the parent firm can allocate more resources to them ( Arrfelt et al, 2013 ; Tan et al, 2018 ; Dou et al, 2021 ). Hence, the BTOF can shed light on why resource allocation deviates from the winner-picking approach based on the performance feedback and possible response of the affiliate.…”

Section: Hypotheses Developmentmentioning

confidence: 99%

“…The business group can provide valuable resources such as knowledge, capital, and information, which are hard to obtain from external markets ( Chang et al, 2006 ; Khanna and Yafeh, 2007 ; Dou et al, 2021 ). To ensure that resources are allocated efficiently, the parent firm should take the resource needs of affiliates with different performance feedbacks into account.…”

Section: Hypotheses Developmentmentioning

confidence: 99%

“…In this scenario, the parent firm can allocate more resources to support them. Hence, underperforming affiliates can pursue technology innovation in the context that resource constraints are alleviated through the resource allocation within the business group ( Belenzon and Berkovitz, 2010 ; Arrfelt et al, 2013 ; Tan et al, 2018 ; Dou et al, 2021 ).…”

Section: Hypotheses Developmentmentioning

confidence: 99%

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Affiliate performance feedback and technology innovation: The mediating effect of the parent’s response

Zheng

Sun²

2023

Front. Psychol.

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The relationship between firm performance feedback and technology innovation has been studied extensively, but limited attention has been paid to factors that mediate this relationship. We examine how a parent firm addresses an affiliate’s performance level and its influence on the affiliate’s technology innovation. Integrating the behavioral theory of the firm and the concept of parent functions, we argue that the parent firm addresses the affiliate’s performance level in two ways: hierarchy management and resource allocation. Specifically, unlike the case of outperforming affiliates, the parent firm facilitates the technology innovation of underperforming affiliates through hierarchy management and resource allocation. Regression analyses of 2010–2020 data of listed affiliates belonging to Chinese business groups provide strong evidence supporting our conjecture. Our study sheds light on the importance of considering the parent’s influence when affiliates adopt technology innovation in light of its performance feedback.

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Section: Hypotheses Developmentmentioning

confidence: 99%

Section: Hypotheses Developmentmentioning

confidence: 99%

Section: Hypotheses Developmentmentioning

confidence: 99%

Section: Hypotheses Developmentmentioning

confidence: 99%

See 2 more Smart Citations

Affiliate performance feedback and technology innovation: The mediating effect of the parent’s response

Zheng

Sun²

2023

Front. Psychol.

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“…And what is the mechanism of its impact? Further, enterprise groups composed of numerous subsidiaries play pivotal roles in economic growth, while listed subsidiaries, as subsystems embedded in enterprise groups, can realize resource sharing within enterprise groups (Dou et al, 2021;Min et al, 2022;Zheng et al, 2022). What are the differences in the performance of listed subsidiaries in enterprise groups in developing and applying AI as opposed to independent or single companies.…”

Section: Introductionmentioning

confidence: 99%

Facilitation or inhibition? Impact of CEO’s financial background on industrial AI transformation of manufacturing companies

Zhang²

2023

Front. Psychol.

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IntroductionThe purpose of this paper is to empirically test the impact of CEO’s financial background on industrial AI transformation of manufacturing enterprises based on upper echelons theory and imprinting theory.MethodsThe paper preliminarily takes listed manufacturing companies in Shanghai and Shenzhen stock markets that are affiliated to enterprise groups from 2014 to 2020 as samples, and manually collects and collates datas of CEO’s financial background and industrial AI transformation. The research hypotheses are tested by stata 15.0 software.ResultsIt is found that CEO’s financial background significantly inhibits the industrial AI transformation of manufacturing enterprises, and when the CEO works part-time in the parent company, it will strengthen the negative impact of CEO’s financial background on industrial AI transformation. Further research shows that enterprise financialization plays a partial intermediary role between CEO’s financial background and industrial AI transformation; Compared with private enterprise groups, the inhibiting effect of CEO financial background on industrial AI transformation is stronger in state-owned enterprise groups; CEOs with non-banking financial background have a stronger inhibitory effect on industrial AI transformation.DiscussionFirstly, based on the process of making business decisions, it verifies and clarifies the action mechanism of CEO’s financial background on industrial AI transformation through internal driving mechanism, which expands the research horizon of industrial AI transformation, and further applies the Imprinting Theory in biology to the research of business decision-making, which forms a beneficial complement to the relevant research on economic consequences of CEO’s financial background. Secondly, different from the research of single independent company, this paper focuses on the special situation of parent-subsidiary corporate governance, and explores the mechanism of action, deepening the research on the synergy of enterprise groups. Finally, this paper further explores the influence of CEO’s financial background on industrial AI transformation, which is conducive to a deeper understanding of the heterogeneity of managers except manpower and capital factors in the industrial AI transformation practice of manufacturing enterprises, and provides a new idea and a more comprehensive analysis perspective for industrial AI transformation.

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Excess is just as bad as deficiency: Parent director appointments and subsidiary innovation input

Wang,

Ye,

Zhang

2024

Manage Decis Econ

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Corporate parents are important to subsidiary development. Drawing on the parent–subsidiary relationship perspective, this paper examines the impact of parent director appointments on subsidiary innovation input. Although existing research indicates that disproportional board representation can enhance control, the literature is silent on the effects of proportional board representation. Using a sample of listed nonfinancial Chinese subsidiaries between 2007 and 2021, we find that parent director appointments in line with shareholdings significantly enhance subsidiary innovation input. The positive effect is more pronounced when the parent appoints an executive manager, and the subsidiary operates in regions with a favorable institutional environment. Based on the analysis of innovation willingness and resource, the mechanism test reveals that parent moderate appointment of directors can improve innovation input by alleviating financial constraints and fostering a greater appetite for risk.

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Innovation in Business Groups: Evidence from China

Cited by 14 publications

References 41 publications

Affiliate performance feedback and technology innovation: The mediating effect of the parent’s response

Affiliate performance feedback and technology innovation: The mediating effect of the parent’s response

Facilitation or inhibition? Impact of CEO’s financial background on industrial AI transformation of manufacturing companies

Excess is just as bad as deficiency: Parent director appointments and subsidiary innovation input

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