STRATEGIC MANAGEMENT AND FINANCIAL-MARKETS

Porter has argued that the U.S. capital investment system is deficient relative to those in Germany and Japan and this has caused a decline in the competitiveness of U.S. corporations. He suggests the increasing importance of financial institutions has led to transient ownership which encourages firms to focus on the short term. This paper argues that the openness and diversity of opinion encouraged by the U.S. financial system has significant advantages and transient ownership is consistent with firms taking a long view. It is suggested that the competitiveness of German and Japanese corporations may be due to the managerial incentives made possible by high growth rates.