SOAS University of London

Department of Economics

Governing Financialisation, Innovation and Productivity in UK manufacturing (GOFINPRO), (Gatsby Foundation 2017-2019)

Gatsby Foundation 2017-2019, 180,000£

Co-Principal Investigators: Antonio Andreoni (SOAS), Marie Carpenter (TEM) and William Lazonick (Mass Lowell and SOAS)

Researchers: Mustafa Erdem Sakinc, Oner Tulum and Matt Hopkins

As a result of the widespread adoption of the ideology of “maximizing shareholder value” (MSV) in public US corporations since the 1980s, superior corporate performance has increasingly become defined as meeting Wall Street’s expectations for quarterly earnings per share. Through stock-based pay, senior management of these firms have been incentivized to focus, above all else, on boosting stock prices, and the result is trillions of dollars spent on stock buybacks that could have been invested in innovation in pursuit of increased productivity and long-term competitive advantage. Such financialised practices have clearly spread beyond the US, in particular in sectors such as biopharma where global competitive dynamics exert a powerful influence over strategic decisions related to investments in new technologies and markets.

The GOFINPRO research programme addresses this challenge by developing a new database of the financialisation of the UK corporations and collecting new evidence on its impact on innovation and productivity in key UK manufacturing sectors. The research on the financialisation of the UK corporations will include a comparison of the UK with the US and will be complemented by two sector-specific in-depth case studies to investigate the impact of financialisation on the manufacturing competitiveness – productivity growth and value addition – for two sectors in which the UK has traditionally had firms with significant competitive advantage. These are the bio-pharmaceutical and aerospace industries.

At the end of the two-year research programme in 2019, an international conference will be organised at SOAS to disseminate the results of the research among stakeholders in related corporate and policy fields. The project aims at informing corporate governance reforms, in particular employment relations and industrial finance, as well as the UK industrial strategy towards a path of sustainable and shared prosperity.

The research will be led by two Co-PIs at SOAS (Antonio Andreoni and William Lazonick) and one Co-PI at the Telecom Ecole de Management (TEM), Institut Mines- Telecom (IMT). The research network also involve researchers from the Academic-Industry Research Network (AIR-Net).