Abstract
AbstractIt is acknowledged that Asia’s remarkable economic achievements of the past 50 years build on institutional arrangements very different from the West, including the central role of business groups (BGs) as an organisational form. As the Asian economies move from extensive to intensive growth, we enquire whether the BG format will be as effective going forward, especially with respect to innovation. We argue that the ubiquity of BGs in Asia has been associated with the accretion of significant market power, as well as high overall concentration in the economy as a whole. Our empirical work draws on a sample of more than 9000 Asian firms across seven countries. We find that, unsurprisingly, given their access to additional resources, BGs are more innovative than non-affiliates. However we also find that the wider consequences of the BG form for innovation may be negative.
Funder
Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA)
Publisher
Springer Science and Business Media LLC
Subject
Economics and Econometrics
Reference37 articles.
1. Acemoglu, D., P. Aghion, and F. Zilibotti. 2006. Distance to Frontier, Selection, and Economic Growth. Journal of the European Economic Association 4(1): 37–74.
2. Aghion, P., N. Bloom, R. Blundell, R. Griffith, and P. Howitt. 2005. Competition and Innovation: An Inverted-U Relationship. The Quarterly Journal of Economics 120(2): 701–728.
3. Almeida, H., and D. Wolfenzon. 2006. Should Business Groups be Dismantled? The Equilibrium Costs of Efficient Internal Capital Markets. Journal of Financial Economics 79(1): 99–144.
4. Archibugi, D. 1992. Patenting as an Indicator of Technological Innovation: A Review. Science and Public Policy 19(6): 357–368.
5. Bae, K.-H., J.-K. Kang, and J.-M. Kim. 2002. Tunneling or Value Added? Evidence from Mergers by Korean Business Groups. The Journal of Finance 57(6): 2695–2740.