Innovative Enterprise and Sustainable, Inclusive Growth: A Policy Agenda William Lazonick The Academic-Industry Research Network Tea Petrin University of Ljubljana Working Paper 41/2018 July
Author Archive | William Lazonick and Tea Petrin
The Value-Extracting CEO: How Executive Stock-Based Pay Undermines Investment in Productive Capabilities
The business corporation is the central economic institution in a modern economy. A company’s senior executives, with the advice and support of the board of directors, are responsible for the allocation of corporate resources to investments in productive capabilities. Senior executives also advise the board on the extent to which, given the need to invest […]
The Functions of the Stock Market and the Fallacies of Shareholder Value
Conventional wisdom has it that the primary function of the stock market is to raise cash for companies for the purpose of investing in productive capabilities. The conventional wisdom is wrong. Academic research on sources of corporate finance shows that, compared with other sources of funds, stock markets in advanced countries have been insignificant suppliers […]
US Pharma’s Business Model: Why It Is Broken, and How It Can Be Fixed
Price gouging in the US pharmaceutical drug industry goes back more than three decades. In 1985 US Representative Henry Waxman, chair of the House Subcommittee on Health and the Environment, accused the pharmaceutical industry of “gouging the American public” with “outrageous” price increases, driven by “greed on a massive scale.” Despite many Congressional inquiries since […]
Comment on the SEC Pay Ratio Disclosure Rule
In this comment, we explain our objections to the SEC’s current formulation of the Pay Ratio Disclosure Rule on each of three grounds: 1) the erroneous estimation of CEO pay; 2) the unclear specification of the “median” worker; and 3) the risk of normalizing a pay ratio that is far too high. Then we present […]
Innovation, competition and financialization in the communications technology industry: 1996-2016
The objective of this paper is to document the relative position of different firms in the communications technology industry to take advantage of new opportunities and the potential influence of financialization on their innovative strategy and performance. To do so, we compare the performance of the leading sixteen firms in the industry over the past […]
European Ruling Highlights Apple’s Corrupted Business Model
There is much for U.S. authorities to learn from the European example of forcing corporations to pay their fair share of taxes, but more far-reaching oversight of executives’ allocation of resources is also required The European Commission’s decision to serve Apple with a 13 billion euro tax bill represents a step forward in compelling multinational […]
Innovative Enterprise or Sweatshop Economics? In Search of Foundations of Economic Analysis
In Capitalism, Socialism, and Democracy, Joseph Schumpeter asserts: “perfect competition is not only impossible but inferior, and has no title to being set up as a model of ideal efficiency.” For neoclassical economists, the large corporation is a “market imperfection” that, compared with “perfect competition,” should result in higher product prices and lower industry output. […]