Corporate Governance, Business Group Governance and Economic Development Traps / Luis Dau, Randall Morck, Bernard Yeung.

Format:

Book

Author/Creator:

Dau, Luis.

Contributor:

National Bureau of Economic Research.

Morck, Randall.

Yeung, Bernard.

Series:

Working Paper Series (National Bureau of Economic Research) no. w28069.

NBER working paper series no. w28069

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2020.

Summary:

Every firm in a developed economy relies on the mere existence of countless other firms to keep prices competitive up and down all supply chains. Without this network externality, no firm forms; and without many firms, no network forms; locking in a low-income trap. Business group governance supersedes corporate governance in most developing economies and in the rapid catch-up development phases of most high-income economies by hierarchically coordinating firms in multiple industries, internalizing this network externality. High-income economies grow via creative destruction - creative firms imposing a negative externality upon firms they destroy or disrupt, but a larger positive innovation-related externality upon the whole economy. Business groups avoid creative self-destruction, innovation by one group firm that disrupts another. Corporate governance supersedes business group governance in high-income economies to facilitate productivity growth. If business group governance does not retreat, productivity growth is impaired and a middle-income trap can result.

Notes:

Print version record

November 2020.