Overlapping ownership and product innovation

Rune Stenbacka*, Geert Van Moer

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

3 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 languageEnglish
Article number102980
Peer-reviewed scientific journalInternational Journal of Industrial Organization
Volume89
ISSN0167-7187
DOIs
Publication statusPublished - 09.06.2023
MoE publication typeA1 Journal article - refereed

Keywords

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

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