The governance of innovative firms: an evolutionary perspective

Corporate governance has been in the recent years one of the most debated issues in conventional economic approaches. Agency theory has particularly contributed to the development of shareholder value as a key concept in companies’ governance both at a theoretical and empirical level. In this paper, we argue that an evolutionary perspective can be developed on the governance of innovative firms since (1) conventional economic approaches only consider a restricted part of this complex issue, and (2) this restricted vision applied in practice has driven the economic system into major coordination problems and turbulences. Based on empirical investigations into the telecommunications equipment industry, and guided by a simple model of evolutionary game, we propose new principles of corporate governance centred upon managerial entrepreneurship and its role on innovation, structural change and industry dynamics. The outcome of our paper is a set of rules of conduct for the manager and the shareholder. The role of the manager is to ensure an ex ante coordination of innovative investments; while the role of the investor resides in an ex post control of the feasibility of innovative choices.