Does Ownership Structure Matter for Firm Technological Innovation Performance? The Case of Korean Firms

Manuscript Type: Empirical Research Question/Issue: This study examines the influence of firms' ownership structure on their technological innovation performance. First, we have examined whether ownership concentration positively influences technological innovation performance. Then we have investigated the primary reasons for the results derived from the first stage of our analysis by circumstantially exploring the impacts of four different ownership types. Research Findings/Insights: Using five sets of cross-sectional data, consisting of 301 Korean firms, we found that ownership concentration does not have a significant effect on firm technological innovation performance. However, some ownership types (e. g., institutional and foreign) do have a positive effect. Theoretical/Academic Implications: Drawing on agency theory and the resource dependence perspective, our paper is the first to consider a comprehensive treatment of the effect of ownership types on innovation in an emerging country, in particular in contrast to previous studies that have focused on advanced economies. Since only partial predictions suggested by agency and resource dependence perspectives were supported, it appears that neither theory adequately captures the ownership-technological innovation performance relationship. Thus, we suggest that future research should explore the question through a different theoretical lens to better understand the impact of ownership types. We suggest that transaction cost economics can be another path to approach the phenomenon. Practitioner/Policy Implications: This study suggests that managers should recognize how each characteristic of ownership structure (types) influences the building of firm-specific capabilities for innovation. Policy makers and managers should be aware of the impact of the complete range of ownership types on technological innovation performance when they implement corporate governance reform with greater effectiveness. It also suggests that successful technological catch-up and innovation not only require policies for upgrading technology capabilities, but also the setting up of a suitable supporting ownership structure that favors innovation of firms in emerging countries. We suggest that successful technological catch-up and innovation require a supporting ownership structure.