Antonio Andreoni (SOAS), William Lazonick (SOAS), Mike Best (University of Massachusetts Lowell), Colin Haslam (Queen Mary University of London), Damon Silvers (American Federation of Labor and Congress of Industrial Organisations), Deborah Johnston (SOAS)

Chair: Antonio Andreoni, SOAS University of London

Presenter: William Lazonick, SOAS University of London

Panel Discussion: Mike Best, University of Massachusetts Lowell, Colin Haslam, Queen Mary University of London; Damon Silvers, American Federation of Labor and Congress of Industrial Organisations

Innovation by Britain’s firms will be a key determinant of national success in an increasingly competitive global environment for high-value industries. As Britain considers how to develop an industrial strategy ‘fit for the future’, however, the decline in long-term productivity in the UK continues to puzzle managers, academics and policy-makers. Recent research has highlighted the need to examine sectoral dynamics and include questions of industrial policy in a relevant historical context. Such work has helped to focus on the specific British industries and firms where issues of competitiveness, productivity and innovation need to be studied in detail.

Conceptually, however, it remains necessary to enhance our understanding of the interplay between the development of innovative capabilities and the specific governance conditions that are required to generate sustained productivity growth at firm and industrial-ecosystem level. Developing such capabilities in innovative enterprises requires the commitment of financial resources to collective and cumulative learning processes within both the firm and its ecosystem. This commitment relies on the abilities and the incentives of those executives who exercise strategic control over the corporate allocation of financial resources and returns. We thus need to consider whether strategic decision-making within UK firms over the past two decades has been influenced by destructive financialization practices.

The GoFinPro project has added to existing research into issues of productivity and innovation in UK industry by conducting historical firm-level research in order to build comparative studies of firms and sectors to examine the potential influence of financialisation practices on the development of UK firms within their sectoral and national specificities. The key manufacturing sectors of pharmaceuticals and aerospace were chosen to investigate indicators that link changes in corporate governance and financial behaviour to innovative capabilities and productivity performance.

The GoFinPro Conference to be held at SOAS will bring together academics, policy makers and industry experts to discuss the findings of the study. The comparison of financialisation metrics of top UK firms with those of US and other European countries will consider how such practices have influenced productivity and competitiveness and what policy measures have facilitated or encouraged their adoption. The sectoral studies highlight the specific dynamics that explain why some UK firms have become more prone to value extraction that is not justified by value creation. The implications of the findings for future UK policy on corporate governance will be subject to debate.

The GoFinPro project has been funded by the Gatsby Foundation and has been carried out at SOAS University of London in collaboration with Institut Mines Telecom Business School in France.

Speakers: Deborah Johnston (SOAS) Antonio Andreoni (SOAS), William Lazonick (SOAS), Mike Best (University of Massachusetts Lowell), Colin Haslam (Queen Mary University of London), Damon Silvers (American Federation of Labor and Congress of Industrial Organisations)

Released by: SOAS Economics Podcasts