In Intracompany Governance and Innovation (NBER Working Paper No. 15304), authors Sharon Belenzon, Tomer Berkovitz, and Patrick Bolton find that while in the United States most innovating firms are publicly-traded conglomerates, a substantial fraction of innovation is concentrated in private firms and business groups in continental Europe. Business groups, the authors explain, "may take the form of pyramidal structures, where a single controlling company has direct or indirect controlling stakes in multiple subsidiary companies, or business alliances, where the companies in the alliance are connected through interlocking stakes."
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