Overlapping ownership and product innovation

Rune Stenbacka; Geert Van Moer

doi:10.1016/j.ijindorg.2023.102980

Overlapping ownership and product innovation

Rune Stenbacka^*, Geert Van Moer

^*Corresponding author for this work

Economics, Helsinki

Research output: Contribution to journal › Article › Scientific › peer-review

4 Citations (Scopus)

Abstract

We characterize the effect of overlapping ownership (OO) on investments in drastic product innovation. The success probability of innovation increases with investment. We analyse two opposing forces: (1) OO induces firms to internalize that success on their own behalf erodes the rivals’ business, reducing investments; (2) OO softens competition in the product market, enhancing investments. Our analysis reveals that the competition-softening effect, by stimulating investments, can induce OO to benefit consumers, in particular when the R&D projects are complex. We also show that an incumbent technology raises the threshold required for OO to stimulate investments in innovation.

Original language	English
Article number	102980
Peer-reviewed scientific journal	International Journal of Industrial Organization
Volume	89
ISSN	0167-7187
DOIs	https://doi.org/10.1016/j.ijindorg.2023.102980
Publication status	Published - 09.06.2023
MoE publication type	A1 Journal article - refereed

Keywords

512 Business and Management
common ownership
cross-ownership
product innovation
competition

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

Access to Document

10.1016/j.ijindorg.2023.102980Licence: CC BY

1-s2.0-S0167718723000619-mainFinal published version, 0.99 MBLicence: CC BY

OpenUrl availability

Full text

Cite this

@article{c728d4fd62a24d3881c2f5d530fc9c74,

title = "Overlapping ownership and product innovation",

abstract = "We characterize the effect of overlapping ownership (OO) on investments in drastic product innovation. The success probability of innovation increases with investment. We analyse two opposing forces: (1) OO induces firms to internalize that success on their own behalf erodes the rivals{\textquoteright} business, reducing investments; (2) OO softens competition in the product market, enhancing investments. Our analysis reveals that the competition-softening effect, by stimulating investments, can induce OO to benefit consumers, in particular when the R&D projects are complex. We also show that an incumbent technology raises the threshold required for OO to stimulate investments in innovation.",

keywords = "512 Business and Management, common ownership, cross-ownership, product innovation, competition",

author = "Rune Stenbacka and {Van Moer}, Geert",

note = "Publisher Copyright: {\textcopyright} 2023 The Author(s)",

year = "2023",

month = jun,

day = "9",

doi = "10.1016/j.ijindorg.2023.102980",

language = "English",

volume = "89",

journal = "International Journal of Industrial Organization",

issn = "0167-7187",

publisher = "Elsevier BV * North-Holland",

}

TY - JOUR

T1 - Overlapping ownership and product innovation

AU - Stenbacka, Rune

AU - Van Moer, Geert

PY - 2023/6/9

Y1 - 2023/6/9

N2 - We characterize the effect of overlapping ownership (OO) on investments in drastic product innovation. The success probability of innovation increases with investment. We analyse two opposing forces: (1) OO induces firms to internalize that success on their own behalf erodes the rivals’ business, reducing investments; (2) OO softens competition in the product market, enhancing investments. Our analysis reveals that the competition-softening effect, by stimulating investments, can induce OO to benefit consumers, in particular when the R&D projects are complex. We also show that an incumbent technology raises the threshold required for OO to stimulate investments in innovation.

AB - We characterize the effect of overlapping ownership (OO) on investments in drastic product innovation. The success probability of innovation increases with investment. We analyse two opposing forces: (1) OO induces firms to internalize that success on their own behalf erodes the rivals’ business, reducing investments; (2) OO softens competition in the product market, enhancing investments. Our analysis reveals that the competition-softening effect, by stimulating investments, can induce OO to benefit consumers, in particular when the R&D projects are complex. We also show that an incumbent technology raises the threshold required for OO to stimulate investments in innovation.

KW - 512 Business and Management

KW - common ownership

KW - cross-ownership

KW - product innovation

KW - competition

UR - http://www.scopus.com/inward/record.url?scp=85162126855&partnerID=8YFLogxK

U2 - 10.1016/j.ijindorg.2023.102980

DO - 10.1016/j.ijindorg.2023.102980

M3 - Article

SN - 0167-7187

VL - 89

JO - International Journal of Industrial Organization

JF - International Journal of Industrial Organization

M1 - 102980

ER -

Overlapping ownership and product innovation

Abstract

Keywords

UN SDGs

Access to Document

OpenUrl availability

Other files and links

Fingerprint

Cite this