Research Policy 2024

Does shareholder overlap alleviate patent holdup?

Heng Geng¹; Harald Hau^2,3; Sandy Lai⁴; Pengfei Liu⁵

¹ Victoria University of Wellington · ² University of Geneva · ³ Swiss Finance Institute · ⁴ National Taiwan University · ⁵ University of Auckland

Abstract

Patent protection can generate holdup problems for follow-on innovators when technologies protected in early patents complement their inventions. This study investigates whether institutional shareholder overlap between firms with precursory patents and follow-on innovators can reduce such patent holdup problems. Using patent citation links to track complementary patents, we find empirical support for such a holdup attenuation hypothesis of institutional shareholder overlap. Follow-on innovators with greater institutional shareholder overlap to precursory patent owners enjoy greater success with their patent portfolio, face less patent conflict as measured by patent litigation , and feature higher levels of R&D investments. The holdup attenuation effect is stronger if product complexity makes securing ex ante patent licenses more difficult.

DOI

10.1016/j.respol.2024.105167

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APA 7 MLA 9 Chicago (author–date) Harvard Elsevier Harvard (JFE, JBF…) The Accounting Review Academy of Management American Marketing Association INFORMS (Management Science) Copy citation Copied ✓