Effects of Ownership Structure and Control on Corporate Productivity

Abstract

This study developed and tested a model that attempts to describe the influence of ownership structure on productivity differences between firms. We theorized that diversification, investment in R&D, capital intensity, and ownership structure all determine firm productivity. Ownership structure was proposed to affect productivity both directly and indirectly through the mediators of diversification strategy, R&D expenditure, and capital intensity. Results based on data from a cross-sectional set of 122 Fortune 500 firms suggested that ownership affects a firm's posture toward diversification and investment in R&D. Those factors and capital intensity in turn explain differences in productivity between firms.