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Reveals that common ownership enhances specialized innovation strategy in firms, suggesting a focus on specialization over diversification.
We focus on non-financial institutions with more patient capital characteristics in common ownership to explore their impact on the choice of innovation strategy by using the sample of Chinese listed firms spanning 2007–2024. Our study finds that common ownership by non-financial institutions is significantly and positively associated with specialized innovation, which means they steer companies towards specialization rather than diversification. Absorptive capacity and knowledge diversity facilitate the impact of common ownership on specialization. In non-high-tech enterprises, among long-term shareholdings held by common investors, and in competitive industries, non-financial institutional common ownership plays a more significant role in promoting specialization.
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Liu et al. (2026) studied this question.
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