Journal of Financial and Quantitative Analysis Vol. 53 No. 1 2018

Innovation Strategy of Private Firms

Huasheng Gao^{1,2,3,4,5,6,7}; Po-Hsuan Hsu^{1,2,3,4,5,6,7}; Kai Li^{1,2,3,4,5,6,7}

¹ Boston University · ² University of British Columbia · ³ University of International Business and Economics · ⁴ Shanghai University of Finance and Economics · ⁵ Fudan University · ⁶ University of Bristol · ⁷ University of Hong Kong

Abstract

We compare innovation strategies of public and private firms based on a large sample over the period 1997–2008. We find that public firms’ patents rely more on existing knowledge, are more exploitative, and are less likely in new technology classes, while private firms’ patents are broader in scope and more exploratory. We investigate whether these strategies are due to differences in firm information environments, CEO risk preferences, firm life cycles, corporate acquisition policies, or investment horizons between these two groups of firms. Our evidence suggests that the shorter investment horizon associated with public equity markets is a key explanatory factor.

DOI

10.1017/s0022109017001119

Volume

53

Issue

1

Pages

1-32

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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