ABSTRACT
This chapter explains how the governance of innovative enterprise, with a focus on retain-and-reinvest, can support stable and equitable growth and why the ideology that companies should be run for the sake of Maximizing Shareholder Value, with a focus on downsize-and-distribute, results in unstable employment, inequitable income, and sagging productivity. Business firms make use of the knowledge and infrastructure provided by government agencies and the human capabilities provided by household units as foundations for making further in-company investments in human capabilities and physical capital that can generate goods and services that these businesses can sell on product markets. The innovative strategy is embodied in the fixed-cost investments required to develop the productive capabilities that may, if the strategy is successful, result in a higher-quality product. The higher fixed cost derives from both the size and the duration of the innovative investment strategy. Corporate governance for the common good would put an end to the various types of predatory value extraction.
