| Abstract: |
Traditional economic studies of innovation, built on the contribution of
Schumpeter, cannot explain why firms of the same size and market power can
show largely different innovation performances. Contrastingly, the literature
on corporate governance provides some useful insights for understanding
corporate innovation activity, to the extent that such literature examines the
economic consequences of different modes of coordination between firm
participants. The process through which individuals integrate their human and
physical resources within the firm is indeed central to the dynamic of
corporate innovation. This paper provides the first survey of the literature
on this issue. We start by discussing why a theory of the firm must be put at
the base of an economic analysis of corporate innovation. We then describe
three main channels – corporate ownership, corporate finance and labour –
through which a system of corporate governance shapes firm innovation
activity. Finally, we examine the recent literature on national structures of
governance. |