"Investment in Innovation, Corporate Governance and Employment: Is Prosperity Sustainable in the United States?"

Over the past decades foreign enterprises have gained competitive advantage over U.S. industrial corporations not by paying lower wages than American companies pay, Lazonick and O'Sullivan argue, but by developing and utilizing broader and deeper skill bases than American companies do. Since the 1970s corporate America has become obsessed with shedding employees to cut costs and with distributing revenue to stockholders. However, the way for it to regain its competitive edge and thus to restore the promise of secure and remunerative employment for its workers is to reform its system of governance. It must reject organizational segmentation and extraction of short-term returns and instead emphasize organizational integration and long-term value creation through financial commitment to investment in the collective and cumulative learning that is the foundation of industrial innovation.

Japanese corporate governance and strategy: Adapting to financial pressures for change

Despite the crisis in the Japanese financial sector, prolonged recession, and competitive challenges, Japan's formidable productive system remains strong. Nevertheless, the system of corporate governance, which has pursued a strategy of retaining corporate revenues and reallocating labor resources and returns to labor in order to invest in productive capabilities, faces short-term pressures from a transformation of the financial sector and long-term pressures from the growth of intergenerational dependence. Current reforms seek to generate funding for the pension system and profits for financial enterprises from international securities and money markets. These reforms seem to work within the corporate governance framework that emphasizes the retain-and-reallocate strategy, but the question is whether they will create powerful pressures to extract returns from the domestic economy, thereby affecting how corporations are managed and resources allocated