Innovation and Firm Co-ownership Network in China's Electric Vehicle Industry.

Firms are embedded in complex networks, where diverse ideas combine and generate new ideas. Shareholders of firms are often seen as critical external resources that have significant influence on firm innovation. The current literature tends to focus on the relationship between firms and their shareholders, while paying less attention to the connections between firms with the same shareholders. This article identifies two types of network spillover effects, intra-city network effect and inter-city network effect, by visualizing the co-ownership networks in China's electric vehicle (EV) industry. We find that firms with the same shareholders, which are defined as co-owned EV firms, are more innovative than non-co-owned ones. Furthermore, there are two dominant types of firm co-ownership ties formed by corporate and financial institution shareholders. While corporate shareholders help exploiting local tacit knowledge, financial institutions are more active in bridging inter-city connections. The conclusion is confirmed at both firm and city levels. This paper theorizes the firm co-ownership network as a new form of institutional proximity and tested the result empirically. For policy consideration, we have emphasized the importance of building formal or informal inter-firm network, and the government should further enhance the knowledge flow channel by institutional construction. [ABSTRACT FROM AUTHOR]