The Ownership Concentration - Innovation Nexus: Evidence from SMEs around The World

Emerging Markets Finance and Trade

37 Pages Posted: 15 Jun 2020 Last revised: 22 Nov 2021

See all articles by Duc Nguyen Nguyen

Duc Nguyen Nguyen

Dalat University

Quynh-Nhu Tran

National Chiao Tung University

Quang-Thai Truong

University of Dalat; National Chiao Tung University

Date Written: May 20, 2020

Abstract

This study investigates whether ownership concentration improves or impedes firm innovation using a sample of small and medium-sized enterprises (SMEs) spanning 95 countries worldwide. We find that higher ownership concentration is associated with a lower likelihood of introducing innovative activities. Further, results reveal that concentrated ownership has detrimental impacts on innovation for firms with a higher degree of asymmetric information and firms led by less experienced managers. We also show that the negative association between ownership concentration and innovation only exists for financially constrained firms (i.e. younger enterprises and SMEs with high financing obstacles) and those with the highly concentrated ownership structure. Lastly, evidence suggests that institutional development alleviates the negative impact of ownership concentration on innovation.

Keywords: Innovation, SMEs, Ownership concentration

JEL Classification: O31, G32

Suggested Citation

Nguyen, Duc Nguyen and Tran, Quynh-Nhu and Truong, Quang-Thai, The Ownership Concentration - Innovation Nexus: Evidence from SMEs around The World (May 20, 2020). Emerging Markets Finance and Trade, Available at SSRN: https://ssrn.com/abstract=3606319 or http://dx.doi.org/10.2139/ssrn.3606319

Duc Nguyen Nguyen (Contact Author)

Dalat University ( email )

01 Phu Dong Thien Vuong Street
Da Lat, Lam Dong
Vietnam

Quynh-Nhu Tran

National Chiao Tung University ( email )

No. 1001, Daxue Rd, East District
Hsinchu, 300
Taiwan

Quang-Thai Truong

University of Dalat ( email )

01 Phu Dong Thien Vuong Street
Da Lat, Lam Dong
Vietnam

National Chiao Tung University ( email )

Taiwan

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
42
Abstract Views
408
PlumX Metrics