Shareholders and innovation

The bust-up at Qinetiq seems to corroborate my prior, that shareholders have no function in human capital-intensive firms.
The point here is that Qinetiq's success depends upon innovation. But innovation can't be managed from top-down. It relies upon communication, inspiration and dedication. These spring from a sense of fraternity and vocation, not from hierarchy and class conflict.
However, shareholders exacerbate  the latter - especially if the flotation gave big windfalls to bosses - without contributing any great function.
Innovation-intensive companies, then, shouldn't have external, passive shareholders.
Shareholders seem to share this view. In the last 20 years, human capital-intensive innovative sectors - meeja, electronics and software - have under-performed the All-share. By contrast, the three best-performing sectors have been tobacco, banks and miners - industries with big physical capital requirements but little innovation.
And since floating in February, Qinetiq's price has dropped 18%, hugely under-performing the market.
Another thing: Today, I've outsourced my anti-managerialism to Matthew Stewart; this essay is brilliant (hat tip - Lynne.)

Comments

[dearieme]

What's your view on that "human capital-intensive innovative sector", the University of Oxford, being urged to hand its running over to some cabal of managerialists?

[The Moai]

Really could not agree more, based on own experience within techology firms. Management bury their noses in the trough and make a fast buck based on the hard work and innovation of those working 'below' them. It will be interesting, but probably depressing, to see how the creeping corporatization of universities affects academic innovation.