Perspectives from Intellectual Property, Labour, Competition and Corporate Law
Edited by Marilyn Pittard, Ann L. Monotti and John Duns
Chapter 28: Institutions and innovation: is corporate governance the missing link?
Innovation has been identified as an engine of growth in different areas of research in economics, business and management, and its positive effects have been theorized and observed at different levels of aggregation. Among the research streams that are most relevant to this theme, evolutionary theories of the fir, Schumpeterian frameworks (Old and New, European and North American) and the innovation systems literature have made fundamental contributions to the modern understanding of innovation and economic change. Evolutionary theory has also been discussed in prominent contributions to institutional economics. Many gaps in the literature do, however, remain on (1) the finer mechanisms through which specific institutional arrangements influence and are influenced by innovation, and (2) the policy and business challenge of aligning the legal framework and the needs of innovation-driven growth. In the field of law and economics, a growing body of work is looking at the relationship between firm-level corporate governance arrangements and the institutional framework at the level of company and employment law. The legal origins hypothesis maintains that the legal infrastructure of a given country – its constitution, its court system, the nature of its legislature, and the structure of the legal professions – shapes the content of its laws on, among other things, corporate governance, with consequences for economic development. The connection between the two debates – innovation on the one hand, and corporate governance on the other – has been made in the work of William Lazonick and Mary O’Sullivan, but with few other exceptions it has remained vastly under-researched relative to other aspects of the broad legal framework that constrains and enables firm behaviour (for example, in comparison with intellectual property rights).
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