Innovation in business group firms: influence of network diversity

Abstract

Extant research on influence of ownership structure on innovation suggests a positive relationship between business group affiliation and innovation. While it is true that firms affiliated to business groups seem to benefit from availability of internal capital, determinants that influence the process of innovation have not been examined. This Paper aims to study the influence of network diversity on innovation for firms affiliated to a business group. We draw upon literature on resource based and principal-agency literature to study nature of knowledge exploration and exploitation by business group firms. We argue that network diversity impacts nature of innovation by business group firms.