Innovation spillovers within business groups: Evidence from Korean chaebols

This study examines innovation spillovers within business groups, focusing on Korean chaebols. We find that an affiliated firm's innovation is affected positively by both within- and outsidegroup innovation spillover pools. Specifically, the impact of the within-group pool is more pronounced than that of the outside-group pool. We further find that within-group spillovers are stronger for affiliates with closer internal business relationships and for those whose controlling shareholders have higher group- or firm-level equity stakes. Finally, we show that greater withingroup innovation spillovers lead to higher group-level innovative performance. Overall, our study suggests a pivotal role of business groups in promoting corporate innovation via effective innovation spillovers. (JEL G15, G30, O32, O33).