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Business Group Affiliation and R&D Investment: Evidence from China

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  • Zhukun Lou
  • Siyu Chen
  • Yingya Jia
  • Xiaoyu Yu

Abstract

This study investigates whether business group (BG) affiliation helps member firms overcome market imperfections in accessing capital for research and development (R&D). Using the data of Chinese listed firms, we find that BG affiliation is positively associated with firms’ R&D intensity. Moreover, the positive association between BG affiliation and R&D intensity is more pronounced when firms are affiliated to a larger BG or the firms’ own financial constraints are higher. We document that BG affiliation has stronger impacts on R&D investment in regions with lower-level marketization than in ones with higher marketization. Our findings provide new evidence for institutional void theory in China.

Suggested Citation

  • Zhukun Lou & Siyu Chen & Yingya Jia & Xiaoyu Yu, 2021. "Business Group Affiliation and R&D Investment: Evidence from China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 57(8), pages 2307-2322, June.
    • Handle: RePEc:mes:emfitr:v:57:y:2021:i:8:p:2307-2322
    DOI: 10.1080/1540496X.2019.1642195
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    Cited by:

    1. Xin Lyu & Subin Wen & Hui Li, 2023. "The Impact and Mechanism of Internal Informal Institutions on Green Innovation: Empirical Evidence from Chinese Listed Companies," Sustainability, MDPI, vol. 15(22), pages 1-26, November.

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