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Keywords

organizational advantages, R&D innovation, business group

Abstract

Business groups continue to grow and occupy an important position in the developing market such as China. Does this organizational form of business groups have some unique organizational advantages, which can compensate for the insufficient institutional environment for enterprise R&D innovation in the developing market and stimulate enterprise R&D innovation activities in the developing market. This paper selects business groups listed on Chinese Stock Exchange from 2011—2021 as the sample, and discusses the impact of the business group organizational advantages on enterprise R&D innovation. First of all, the stronger the business group organizational advantages, the higher the enterprise R&D innovation. This is because the financing organizational advantage of business group can provide sufficient funds for enterprise R&D and innovation activities, and the risk isolation organizational advantage of business group can lock in the losses of enterprise R&D and innovation activities, and the selective assistance subsidiaries organizational advantage of business group further reduces the risks of enterprise R&D and innovation activities and increases the profits of enterprise R&D and innovation activities, therefore the business group organizational advantages are positively correlated with the enterprise R&D innovation. Secondly, the higher the financing constraints, the stronger the effect of business group organizational advantages on enterprise R&D innovation. This is because the financing organizational advantage of business group can avoid market restrictions and provide excess funds for enterprises, and enterprises with high financing constraints have a stronger motivation to use the business group organizational advantages to obtain funds for research and development innovation, therefore financing constraints positively regulate the effect of business group organizational advantages on enterprise R&D innovation. Thirdly, the larger the asset size, the weaker the effect of business group organizational advantages on enterprise R&D innovation. This is because the financing organizational advantage of business group can avoid market restrictions and provide excess funds for enterprises, and the motivation of enterprises with more assets use the business group organizational advantages to obtain funds for research and development innovation is weaker, therefore asset size negatively regulates the effect of business group organizational advantages on enterprise R&D innovation. These results suggest that business groups have made up for the insufficient institutional environment for R&D innovation in the developing market such as China. R&D innovation in the developing market cannot be separated from the organizational form of business groups, leading to the development and growth of business groups in the developing market such as China.

DOI

10.16315/j.stm.2023.04.005

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