Ownership and innovation in the hospitality industry

Using a sample of international hospitality firms from 2015 to 2021, we investigate the relationship between ownership structure and innovation. We define innovative firms based on Miles and Snow's (1978) typology and use entropy balancing estimates to mitigate endogeneity concerns. We find that ownership concentration is negatively associated with innovation. Moreover, institutional investors are negatively associated with innovation, especially in innovation-friendly countries. In contrast, family investors are associated with higher innovation. We explain these results through the lens of socioemotional wealth and agency theory, as publicly traded companies are under pressure to deliver short-term returns, which is mitigated by the presence of a family with a longer-term approach. Thus, managers of hospitality companies need to be aware of the preferences of their shareholders in terms of innovation.