Decision rights allocation and innovation: Evidence from China's listed business groups

This study investigates the impact of decision rights allocation in business groups on innovation performance. Using a sample of A-share manufacturing listed companies in China for 2009–2017, we find that group centralization has an inverted U-shaped relationship with innovation performance. This result suggests that moderate centralization is conducive to improving a group's innovation performance. Further, we determine that the relationship between group centralization and innovation performance varies according to the nature of ownership, growth opportunities, and market competition. State-owned property and growth opportunities of a group negatively moderate the relationship between group centralization and innovation performance; market competition positively moderates that relationship.