Abstract
This paper investigates the relations between corporate governance and innovation in France over the period 1985-2000, with special focus on the development of firms' capabilities. The literature on innovation has often referred to a fit between environmental niches and institutional arrangements of corporate governance. By contrast, this paper presents the French case as an illustration of the numerous possibilities for institutional arrangements in ownership and control of industry and their multiple combinations with the national innovation system. The paper discusses the changing role - and importance - over time performed by the French system of corporate governance and its impact on the development of innovative capabilities by firms. The paper demonstrates that the impact of the national system of corporate governance on the innovative system is strongly mediated by the distribution of power and the conduct of business strategy inside large domestic firms.
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