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Capitalisms and Capitalism in the Twenty-First Century$
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Glenn Morgan and Richard Whitley

Print publication date: 2012

Print ISBN-13: 9780199694761

Published to Oxford Scholarship Online: September 2012

DOI: 10.1093/acprof:oso/9780199694761.001.0001

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Innovation versus Going South

Innovation versus Going South

A Strategic Challenge for Capitalism in the Early Twenty-First Century

Chapter:
(p.190) 8 Innovation versus Going South
Source:
Capitalisms and Capitalism in the Twenty-First Century
Author(s):

Andrew Tylecote

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780199694761.003.0009

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

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