Focusing on the counterpoint to the prompt in the syllabus, this article discusses why we haven’t seen entrepreneurship grow as quickly as predicted in the 1980s, and in doing so it discusses the reasons why an entrepreneurial society hasn’t been able to take over. One of the sections entitled “Why the Tilt Towards Reliability,” explains that from the 1980s onwards shareholders were the predominant power shaping businesses’ decision making and this led to increased reliability and lower costs at the expense of the workers. Under this form of management workers’ ingenuity was intentionally curtailed to produce a predictable result that lowered the bottom line. However, the article ends on a positive note where the author explains that there has been a modern shift where the customers have taken over as the predominant power shaping businesses, and the most successful business now focus on consistently creating new value by tapping into their workers’ ingenuity thus placing less value on producing reliable profits in the short-term.
This article is interesting from a basic corporations law viewpoint. A maxim of corporations law is that the existence of the corporation, and the duty of the officers is to maximize shareholder return. This mindset, and the jurisprudence that developed throughout the 20th century enforced the idea that actions by the corporation that do not maximize shareholder return are a breach of fiduciary duty. It is thus hard to imagine how an established corporation would “innovate” in the type of way VC-backed firms are doing today in Silicon Valley and the Bay Area of San Francisco, where tens of millions of dollars are spent on startups that may never turn a profit before dying off. Moreover, there is probably an economic efficiency argument to be made where an ecosystem such as this exists; allow the VC firms to fund startups that burn cash and then wait to acquire the ones that pan out.