Innovation in business groups

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Using novel data on European firms, this paper investigates the relationship between business groups and innovation. Controlling for various firm characteristics, we find that group affiliates are more innovative than standalones. We examine several hypotheses to explain this finding, focusing on group internal capital markets and knowledge spillovers. We find that group affiliation is particularly important for innovation in industries that rely more on external funding and in groups with more diversified capital sources, consistent with the internal capital markets hypothesis. Our results suggest that knowledge spillovers are not the main driver of innovation in business groups because firms affiliated with the same group do not have a common research focus and are unlikely to cite each other's patents. © 2010 INFORMS.






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Belenzon, S, and T Berkovitz (2010). Innovation in business groups. Management Science, 56(3). pp. 519–535. 10.1287/mnsc.1090.1107 Retrieved from

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Sharon Belenzon

Fundación Damm Distinguished Professor of Business Administration

Sharon Belenzon is the Fundación Damm Distinguished Professor of Strategy at the Fuqua School of Business. His research explores the conditions under which firms in developed nations coalesce into groups, and how different attributes of such groups are related to resource reallocation, innovation, and firm performance. Professor Belenzon’s research is dedicated to advance the understanding of how firm organizational structure mediates, and is mediated by, firm strategy, and of how structure conditions the way in which resources are mobilized across different units of the organization, focusing on financial resources, innovation, managerial talent, and brands (names). His research has been featured in top academic journals, such as Management Science, Strategic Management Journal, Review of Economics and Statistics, Economic Journal, and Journal of Law and Economics. Professor Belenzon received his PhD from the London School of Economics, and completed post-doctorate work at the University of Oxford, Nuffield College. He has also been the recipient of the Kauffman foundation post-doctorate fellowship at the National Bureau of Economic Research. He earned MA and BA degrees in Economics from TelAviv University. At Fuqua, he teaches the core strategy course, Principles of Strategy, and the PhD strategy seminar, and is engaged in advising PhD students.

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