Abstract
Innovations are a major driver of the global economy. Recently, the typical major owner become an institutional investor. Moreover, the stakes of institutional owners have increased, which lead to the ownership concentration among types. Traditional investment managers, banks, insurance companies and hedge funds have different goals and strategies, so their roles in firms differ significantly. In this article we analyze the influence of different types of investors on the innovation input and output of Russell 3000 index US companies. This research uses a GLS models to suggest on 17346 firm-year observations for period 2004–11 that different types of investors have different effects on the innovative performance of US companies. By focusing on the ownership concentration, we demonstrate first, that grey investors decrease innovative output; second, that passive independent institutions enhance innovation input and output in virtue of their active monitoring and long-term investment horizons; third, that the concentration of the industry, size and financial constraints play an important role in the innovative performance.
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