Hostname: page-component-586b7cd67f-rcrh6 Total loading time: 0 Render date: 2024-11-28T07:00:45.907Z Has data issue: false hasContentIssue false
  • English
  • Français

Finance, Corporate Governance and the New Techno-Economic Paradigm1

Published online by Cambridge University Press:  17 August 2016

Andrew Tylecote  and
Paulina Ramirez
Andrew Tylecote
Affiliation:
University of Sheffield Management School
Paulina Ramirez
Affiliation:
Birmingham University Business School
Get access

Summary

This paper assumes, with Perez (1983, 2002), that technological development follows a ‘long wave’ rhythm, in which new ‘techno-economic paradigms’ succeed one another at long intervals; the latest being the Information and Communication Technology (ICT) paradigm. When the new paradigm appears a tension develops between it and the existing socio-institutional framework. We argue that the financial and corporate governance system (FCGS), is a key element of that framework which is unusually resistant to change. The focus is on the UK FCGS, an outsider-dominated/stockexchange-based system, though with comparisons with the US and with ‘insider-dominated’ economies. Based on fieldwork conducted between 1999 and 2005, we find that Britain is still a long way from witnessing a new creative partnership of financial and industrial capital in most of the economy, needed to fully release the potential of the new paradigm. We discuss what form that might take.

Résumé

Résumé

Ce papier présuppose, avec Perez (1983, 2002), que le développement technologique suit un rhythme d'ondes longues, dans lequel les 'paradigmes techno-économiques' se succèdent à longs intervalles. Le plus récent est celui de l'informatique. Lorsque le nouveau paradigme apparaît, une tension se développe entre celui-ci et le cadre socio-institutionnel existant. Notre argument consiste à montrer que le système financier et de gouvernement d'entreprise (FCGS) constitue un élément clé de ce cadre, exceptionellement résistant au changement. Notre exemple principal est le FCGS britannique, un système 'boursier'/'outsider', que l'on compare aux systèmes américains 'insider'. Sur base d'une étude empirique menée en 1999-2000 et 2005, nous montrons que le Royaume Uni est toujours loin, dans la plupart de l'économie, de voir un nouveau rapprochement créatif entre capital financier et capital industriel qui puisse laisser émerger le potentiel du nouveau paradigme. Nous traçons ensuite un bref aperçu de la forme qu'un tel rapprochement pourrait prendre.

Keywords

système financier et de gouvernement d'entrepriseparadigme technoéconomiquesystème boursier/‘outsider’O16O33P16financial and corporate governance systemtechno-economic paradigmoutsider-dominated/stock-exchange basedO16O33P16
Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 74 , Issue 4 , 2008 , pp. 583 - 613
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 2008 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

*

[email protected]

**

[email protected]

1

The empirical research discussed in this paper was conducted within the Corporate Governance and Product Innovation (COPI) project, a research project funded by the Targeted Socio-Economic Research (TSER) program of the European Commission (DG XII) under the Fourth Framework Programme, European Commission (Contract no. SOE1-CT98-1113) coordinated by Andrew Tylecote. We are grateful to the European Commission for its support, and grateful also to two anonymous referees for their comments.

References

Berglöf, E., (1997), Reforming corporate governance: redirecting the European agenda, Economic Policy, (April), p. 93–123.Google Scholar
Berle, A. and Means, G.C. (1932), The Modern Corporation and Private Property, New York: Commerce Clearing House. Google Scholar
Beroutsos, A. and Conor, K. (2006), ‘A lesson in governance from the private equity firms’, Financial Times, 30 November, p. 15.Google Scholar
Blasi, J., Kruse, D. and Bernstein, A. (2003), In the Company of Owners: The truth about stock options, and why every employee should have them. New York: Basic Books.Google Scholar
British Venture Capital Association, (BVCA), (2006), The Economic Impact of Private Equity in the UK, Nov. 2006, Fig. 6, p. 18.Google Scholar
British Venture Capital Association (BVCA), (2007), Why Private Equity is Good for the UK (http://www.bvca.co.uk/doc.php?id=645, accessed 18th May.Google Scholar
Casper, S. and Matraves, C, (2003): ‘Institutional frameworks and innovation in the German and UK pharmaceutical industry’, Research Policy 32, 10, 1865–1879.Google Scholar
Casper, S. and Whitley, R., (2004): ‘Managing competences in entrepreneurial technology firms: a comparative analysis of Germany, Sweden and the UK’, Research Policy 33/1: 89–106.Google Scholar
Dimson, E., Marsh, P. and Staunton, M. (2002), Triumph of the Optimists: 101 Years of Global Investment Returns, Princeton UP.Google Scholar
Davis, J.H., Schoorman, F.D.Donaldson, L. (1997), Toward a Stewardship Theory of Management The Academy of Management Review, 22: 1, p. 20–47.Google Scholar
Deutsche Bundesbank (1997) Entwicklung und Bestimmungsgründe grenziibers-chreitender Direktinvestitionen [Developments and Causes of Foreign Direct Investment], Deutsche Bundesbank: Monatsbericht, Frankfurt.Google Scholar
Driver, C. and Shepherd, D. (2005) “Capacity utilisation and corporate restructuring: a comparative study of the US, UK and other EU countries”, Cambridge Journal of Economics 29 (1): 119–140.Google Scholar
Economist (1997) “Venture capitalists: a really big adventure”, 25 January, 19–21.Google Scholar
Economist, (2007a), ‘Buy-outs in Canada: DIY, April 19th.Google Scholar
Economist, (2007b), ‘Locusts in Lederhosen”, October 18th.Google Scholar
Fama, E.F. and Jensen, M.C. (1983), Separation of Ownership and Control, Journal of Law and Economics, 26.Google Scholar
Florence, P.S., (1961), Ownership, Control and Success of Large Companies: An Analysis of English Industrial Structure and Policy, 1936–1951, London, Sweet and Maxwell.Google Scholar
Franks, J. and Mayer, C. (1997), Corporate Ownership and Control in the U.K., Germany and France, Journal of Applied Corporate Finance 9 (4): 30–45.Google Scholar
Freeman, C. and Louçâ, F. (2001). As Time Goes By. From the Industrial Revolution to the Information Revolution, Oxford, Oxford University Press.Google Scholar
Gadiesh, O. and Macarthur, H. (2007), ‘Private matters’, Wall Street Journal 25–28 May, p. 13.Google Scholar
Gill, D., Martin, C. Minshall, T. Rigby, M. (2000), Funding Technology: Lessons from America. London: Wardour Communications.Google Scholar
Hope, J, Fraser, R. (2003), Beyond Budgeting: How Managers Can Break Free from the Annual Performance Trap. Cambridge, Mass: Harvard Business School Press.Google Scholar
Institutional Shareholder Services, (2007), Poison pills in France, Japan, the U.S. and Canada: Takeover barriers rise in Europe and Japan, but fall in North America. Rockville, MD: Institutional Shareholder Services.Google Scholar
Jensen, M.C. and Meckling, W.H. (1976), Theory of the Firm: Managerial Behaviour, Agency Costs and Ownership Structure, Journal of Financial Economics, 3 (4), p. 305–360.Google Scholar
Kaiser, R. and Prange, H. (2004) “The reconfiguration of national innovation systems: the examplee of German biotechnology”, Research Policy 33: 395–408.Google Scholar
Lazonick, W. and O’Sullivan, M. (2000), Maximizing shareholder value: A new ideology of corporate governance, Economy and Society, 29/1: 13–35.Google Scholar
London, S., (2006), Private equity eroded by its own success, Financial Times, Feb.15, p. 10.Google Scholar
Macdonald, S., (1990), Technology and the tyranny of export controls. London: Macmillan.Google Scholar
Mayer, C., (1996), Corporate Governance, Competition and Performance, OECD Economics Department Working Paper no. 164. Paris: OECD.Google Scholar
Morin, F., (2000) ‘A transformation in the French model of shareholding and management’, Economy and Society, 29/1: 36–53.Google Scholar
Organisation for Economic Cooperation and Development (1995), National Systems for Financing Innovation. Paris: OECD.Google Scholar
Organisation for Economic Cooperation and Development (OECD), (2005), Science Technology and Innovation Scoreboard, 2005.Google Scholar
Office for National Statistics (2007), http://www.statistics.gov.uk/cci/nugget.asp?id=107 Google Scholar
Pagano, U., Trento, S., (2002), ‘Continuity and Change in Italian Corporate Governance: The institutional stability of one variety of capitalism’, Working paper series, University of Siena Department of Economics, 365.Google Scholar
Perez, C., (1983), “Structural Change and Assimilation of New Technologies in the Economic and Social Systems”, Futures, 15(5): 357–375.Google Scholar
Perez, C., (2002), Technological Revolutions and Financial Capital: the Dynamics of Bubbles and Golden Ages, Cheltenham: Edward Elgar.Google Scholar
Ramirez, P., and Tylecote, A. (2004), Hybrid Corporate Governance and Its Effects on Innovation: A Case Study of AstraZeneca, Technological Analysis and Strategic Management, Vol. 16 No 1, 115–137, March.Google Scholar
Sahakian, C. &Tyrrell, S. (1999), UK Tracker Funds & Passive Fund Management. London: Business Insights.Google Scholar
Schumpeter, J.A. (1939:1982), Business Cycles (2 vols.), Philadelphia: Porcupine Press.Google Scholar
Taylor, M., (2004), ‘Empirical evidence against Varieties of Capitalism’s theory of technological innovation’, International Organization, 58(3): 601–631.Google Scholar
Tylecote, A., (1992), The Long Wave in the World Economy, London and New York: Routledge.Google Scholar
Tylecote, A., (2007), The role of finance and corporate governance in national systems of innovation, Organization Studies, October 2007. 28 (10), 1461–1481.Google Scholar
Tylecote, A., (1994), Long Waves, Long Cycles, and Long Swings, Journal of Economic Issues, Vol.28 no.2, June, 477–88.Google Scholar
Tylecote, A., and Ramirez, P. (2006), Corporate Governance: The UK compared with the US and ‘Insider’ Economies, Research Policy, Vol.35, Issue 1, p. 160–180.Google Scholar
Tylecote, A and Visintin, F. (2002), Financial and Corporate Governance Systems and Technological Change: The incompleteness of fit of the UK and Italy, Revista de Economia Politica e Industriale, 114, p. 81–108.Google Scholar
Tylecote, A and Visintin, F. (2007), ‘New Taxonomy of National Systems of Corporate Governance’, in Mjóset, L., Clausen, T. (ed.), Capitalisms Compared. Elsevier Science Comparative Social Research Yearbook.Google Scholar
Tylecote, A and Visintin, F. (2008), Corporate Governance, Finance, and the Technological Advantage of Nations. London: Routledge.Google Scholar
Visintin, F., Ozgen, B. Tylecote, A. and Handscombe, R. (2005), “Italian Success and British Survival: Case studies of corporate governance and innovation in a mature industry,” Technovation, 25, p. 621–629.Google Scholar
Walker, David (2007) We need better analysis of private equity, Financial Times, Dec.19. http://www.ft.eom/cms/s/0/5db49ff2-ae4c-11dc-97aa-0000779fd2ac.html Google Scholar
Woolley, P., (2004), ‘How hedge funds are destabilising the markets’, Financial Times, 28 Sept, p. 19.Google Scholar
Witt, M.A., and Lewin, A.Y. (2007), Outward Foreign Direct Investment as Escape Response to home Country Institutional Constraints, Journal of International Business Studies, 38, p. 759–594.Google Scholar
Young, D. and Scott, P. (2004), Having their cake: How the City and big bosses are consuming UK business. London: Kogan Page.Google Scholar