Innovation versus Going South

Andrew Tylecote

in Capitalisms and Capitalism in the Twenty-First Century

Published in print April 2012 | ISBN: 9780199694761
Published online September 2012 | e-ISBN: 9780191741289 | DOI:
Innovation versus Going South

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This chapter argues that major firms, and financial systems, in developed economies, face a broad strategic choice — between ‘innovation’ and ‘relocation’ or ‘going South’. The latter is currently unusually attractive, due notably to the large cost gradient between North and South and the freedom to produce in and export from the South. Choosing ‘innovation’ at the present juncture is made less attractive by the existence of a new ‘techno-economic paradigm’, based on information and communication technology, which is not yet established, and therefore tends not to present routes to profit which are reassuringly familiar to financiers. The focus here is on the response to this challenge by City of London financial institutions and the large firms which they influence as ‘outsider’ shareholders. It appears that they have a deep-rooted preference for ‘going South’ which can be altered only by broad institutional reform.

Keywords: techno-economic paradigms; information and communication technology; outsider capital; going South; innovation; industrial expertise; engagement; shareholder value

Chapter.  7990 words. 

Subjects: Organizational Theory and Behaviour

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