Corporate Governance, Organization and the Firm

Corporate Governance, Organization and the Firm

Co-operation and Outsourcing in the Global Economy

New Perspectives on the Modern Corporation series

Edited by Mario Morroni

In recent years, applied studies have shown widespread, profound and increasing heterogeneity across firms in terms of their strategy, organization arrangement and performance. This book investigates the diversity of business firms, offering a picture of the different organizational settings they adopt in their endeavour to cope with increasing competitive pressure.

Chapter 3: The Governance of the Knowledge-Intensive Firm in an Industry Life Cycle Approach

Jackie Krafft and Jacques-Laurent Ravix

Subjects: business and management, corporate governance, economics and finance, corporate governance, industrial organisation

Extract

3. The governance of the knowledgeintensive firm in an industry life cycle approach Jackie Krafft and Jacques-Laurent Ravix INTRODUCTION1 3.1 Today, a growing body of literature is developing the concept that different types of rules and norms should govern entrepreneurial and public firms differently, depending on the industry in which they operate and the stage of development of the industry (Fransman 2002; Lazonick and O’Sullivan 2002; Filatotchev and Wright 2004; Becht et al. 2005). The present chapter contributes to this new literature by adding the empirical dimensions that are pointed out in the industry life cycle (ILC) literature. The purpose is to investigate the nature of the governance of the knowledge-intensive firm as seen from the perspective of an industry life cycle approach. By knowledge-intensive firm, we mean that firms, independently of their age and size, may be involved in the creation of new knowledge and may be the key actors in the development of innovation processes. As we shall see, the ILC can provide an appropriate, though incomplete, approach to analyse this question. This approach explicitly considers that small new firms enlarge product characteristics and are thus the initiators of innovation in the phases of emergence and growth of the industry, while large mature firms continue the process of innovation by investing in process capacities in the phases of maturity and decline of the industry. In the meantime, this framework is silent on modes of governance of the firm in relation to the development of the...

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