The innovative enterprise and the developmental state

William Lazonick
Work package: 
WP 5
Publication number: 
01 September 2011

In this essay, William Lazonick provides a framework for analyzing the roles of “the innovative enterprise” and “the developmental state” in the organization, operation, and performance of an advanced economy, with specific reference to that of the United States. He argues that an analysis of the complementary roles of the innovative enterprise and the developmental state in generating economic growth is critical to a theory of how the economy operates and performs. It is organizations, not markets, that generate real per capita productivity growth. New economic thinking on the operation and performance of the economy requires a theory of “organizational success”. The paper is concluded with some policy implications of an economic theory of organizational success for dealing with inequity, instability, and the lack of innovation in the current US economy.