The Effects of Privatization on R&D Investments and Patent Productivity

55 Pages Posted: 1 Oct 2002

See all articles by Federico Munari

Federico Munari

University of Bologna - Department of Management

Maurizio Sobrero

University of Bologna - Department of Management

Date Written: March 2005

Abstract

Over the last two decades privatization programs in different countries have radically reduced the role of the State as a key player in the economic arena. We use agency theory to discuss the theoretical elationship between changes in the firm's principal-agent structure following privatization, incentives to invest in R&D and R&D performance. We compare the pre- and post- privatization R&D effort and outcomes of 35 companies that were fully or partially privatized in the European Union through public share offers between 1980 and 1997. Our results show that, after controlling for inter-industry differences, the switch to private ownership leads to a decrease in overall R&D effort and to a ontemporaneous increase in the quantity of patents granted and in their quality, measured by the intensity of citations. Taken together, these findings support the expectation of increased innovation productivity following State divestment.

Keywords: Privatization, R&D Investments, Patents, Inventions

JEL Classification: G34, O32

Suggested Citation

Munari, Federico and Sobrero, Maurizio, The Effects of Privatization on R&D Investments and Patent Productivity (March 2005). FEEM Working Paper No. 64.2002. Available at SSRN: https://ssrn.com/abstract=331721 or http://dx.doi.org/10.2139/ssrn.331721

Federico Munari (Contact Author)

University of Bologna - Department of Management ( email )

Piazza Scaravilli 1
Bologna, Bologna 40126
ITALY
051-2093954 (Phone)
051-2093949 (Fax)

Maurizio Sobrero

University of Bologna - Department of Management ( email )

Via Capo di Lucca 34
40126 Bologna, Bologna 40126
Italy
+39 051 2098076 (Phone)

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