The tension between innovation and financialisation is central to
the business corporation. Innovation entails a
'retain-and-reinvest' allocation regime that can form a foundation
for stable and equitable economic growth. Driven by
shareholder-value ideology, financialisation entails a shift to
'downsize-and-distribute'. This Element investigates this tension
in global pharmaceuticals, focusing on the two leading UK companies
AstraZeneca and GlaxoSmithKline. In the 2000s both adopted US-style
governance, including stock buybacks and stock-based executive pay.
Over the past decade, however, first AstraZeneca and then
GlaxoSmithKline transitioned to innovation. Critical was the
cessation of buybacks to refocus capabilities on investing in an
innovative drugs pipeline. Enabling this shift were UK
corporate-governance institutions that mitigated US-style
shareholder-value maximisation. Reinventing capitalism for the sake
of stable and equitable economic growth means eliminating value
destruction caused by financialisation and supporting value
creation through collective and cumulative innovation. This title
is also available as Open Access on Cambridge Core.
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