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 outside-group 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 within-group 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). •We study the innovation spillovers within Korean business groups (i.e., chaebols).•We show that chaebols facilitate within-group innovation spillovers.•Increased within-group innovation spillovers lead to higher group-level innovation performance.