Effects Of Cross-shareholdings To Collaborative Innovation Between Upstream And Downstream Firms

The collaborative innovation between Upstream and downstream firms means "shock absorber" and "oscillator" to the relevant enterprises even to whole industrial chain. It will directly affect survival and development environment and the long-term and short-term operational efficiency of the entire industry chain. Therefore, the research of the collaborative innovation between upstream and downstream firms has a strong practical significance. The cross-shareholding is considered as a cooperative R&D way through property rights, and its economic, institutional and legal influence has caught the business community and the theoretical world wide attention. But the current study was limited to empirical research. Therefore, the quantitative study of the effect of cross-shareholdings to collaborative innovation between upstream and downstream has strong theoretical significance. This paper studies the changes of the collaborative innovation firm when upstream and downstream firms with or without cross-shareholdings in monopoly and duopoly, the main contents include:(1) Based on extensive literature, this paper systematically analyzed the motivation and organization forms of upstream and downstream firms’co-innovation, the profit distribution of cross-shareholdings. The paper discussed the shortcomings of existing studies, and elaborated the significance to research collaborative innovation between the upstream and downstream firms with cross-shareholdings.(2) This paper has researched on the motivation of collaborative innovation between the upstream and downstream in monopoly and duopoly. And then the paper compared the changes of the profit of the upstream and downstream firms with cross-holdings to non-cross-holding firms. At last, the paper took the Daan Gene for example.(3) Establishing two collaborative innovation models, the paper described the profit changes of upstream and downstream firms with cross-holdings and without the cross-holdings in monopoly and duopoly. Then it analyzed the effect of spillover effect, R&D output capacity and cross-shareholdings Proportion to the motivation of collaborative innovation. Finally, a numerical simulation has been used to test the validity of conclusions.Quantitative analysis the impact of cross-holdings to collaborative innovation between upstream and downstream firms through establishing model has make up the shortfall of the research of co-innovation between upstream and downstream; the same time, the model in this paper and conclusions can provide valuable basis for enterprise management and realization downstream firms to provide valuable basis for collaborative innovation.